The Chemours Company Reports Robust Second Quarter 2022 Results

Strong demand drives record TSS and APM performance, now targeting the high end of Adjusted EBITDA guidance range and increasing Free Cash Flow outlook

WILMINGTON, Del.–(BUSINESS WIRE)–$CC–The Chemours Company (“Chemours”) (NYSE: CC), a global chemistry company with leading market positions in Titanium Technologies, Thermal & Specialized Solutions, and Advanced Performance Materials, today announces its financial results for the second quarter 2022.


Second Quarter 2022 Results & Highlights

  • Record Net Sales of $1.9 billion, up 16% year-over-year, including record Net Sales in all three segments
  • Net Income of $201 million with EPS of $1.26, up $0.87 year-over-year
  • Adjusted Net Income* of $302 million with Adjusted EPS* of $1.89, up $0.69 year-over-year
  • Adjusted EBITDA* of $475 million, up 30% year-over-year
  • Strong global demand for our refrigerants and higher value, differentiated polymer products led to record Adjusted EBITDA for both TSS and APM
  • Free Cash Flow of $229 million, up 21% year-over-year
  • Now targeting the high end of our full year Adjusted EBITDA guidance range of $1.475 billion to $1.575 billion and increasing our Free Cash Flow outlook to greater than $600 million
  • Announced Corpus Christi, Texas plant expansion to support strong demand for low GWP Opteon™ refrigerants
  • On July 27, 2022, the Company’s Board of Directors approved a third quarter dividend of $0.25 per share, consistent with the prior quarter

The second quarter’s results demonstrate the strength of our highly focused portfolio,” said Mark Newman, Chemours President and CEO. “We achieved record-setting performances in TSS and APM, and our results in these two segments are a testament to their long-term secular growth potential. In TT, we continued to meet customer commitments despite challenging logistics conditions, and I am proud of the team’s efforts to serve our customers despite being ore constrained. The long-term growth prospects and earnings quality of the company remain strong in the face of challenging global macroeconomic conditions.”

Second quarter 2022 Net Sales were $1.9 billion, 16% higher than the prior-year quarter. Price was a positive contributor to the improved results, up 23%, partially offset by volume headwinds of (1)% and currency headwinds of (2)%, on a year-over-year basis. Portfolio change, driven by the sale of our Mining Solutions business in 2021, was a (4)% headwind on a year-over-year basis.

Second quarter Net Income was $201 million, resulting in EPS of $1.26, inclusive of a $165 million charge associated with the legacy environmental remediation programs at our Fayetteville Works site. Adjusted Net Income was $302 million. Adjusted EPS was $1.89, up $0.69 vs. the prior-year quarter. Adjusted EBITDA for the second quarter of 2022 rose 30% to $475 million in comparison to $366 million in the prior-year second quarter, a result of higher pricing partially offset by raw material inflation and logistics challenges. Price vs. cost differential continued to be favorable in the second quarter. Currency was a (7)%, or $(27) million headwind vs. the prior-year quarter due to a stronger USD.

Titanium Technologies (TT)

Delivering high-quality Ti-Pure™ pigment through customer-centered innovation and sustainability leadership

In the second quarter, Titanium Technologies segment Net Sales were a record $968 million, up $109 million, or 13%, from $859 million in the prior-year quarter. Compared with the prior-year quarter, price increased by 23%, volume declined by (8)%, and currency was a (2)% headwind. Lower volumes reflect the impact of ore constraints, which affected our ability to maximize production across our circuit. Price increased by 6% sequentially, driven by all customer channels as demand for our Ti-Pure™ pigment remained strong. Volume was flat on a sequential basis reflecting ongoing ore constraints despite steady demand for our products across all end-markets and regions. Segment Adjusted EBITDA was $216 million, flat to the prior-year quarter, resulting in a segment Adjusted EBITDA Margin of 22%. Adjusted EBITDA remained largely unchanged as the impact of the aforementioned increase in price was largely offset by lower volumes and higher raw material, energy, and logistics costs.

Thermal & Specialized Solutions (TSS)

Driving innovation in low GWP thermal management solutions to support customer transitions to more sustainable products

The Thermal & Specialized Solutions segment delivered record-breaking second quarter financial results. Net Sales were $518 million, up $178 million, or 52%, from the prior-year quarter. Price contributed 39%, and volume increased 15%, while currency was a slight (2)% headwind. Prices increased in most markets across the business due to changing market and regulatory dynamics and measures taken to recover increases in the cost of raw materials. Volume increased due to the continued adoption of Opteon™ low GWP refrigerants and other specialized solutions. Price increased 1% and volume increased 21% on a sequential basis. Segment Adjusted EBITDA improved $98 million, or 85%, to $213 million vs. the prior-year quarter, driven by the aforementioned increase in price and favorable product mix, partially offset by higher raw material costs. Second quarter Adjusted EBITDA Margin of 41% reflects strong expansion from the prior-year quarter driven by favorable pricing and product mix. The company also announced an $80 million investment at our Corpus Christi, Texas plant to expand Opteon™ YF capacity to support the continued transition to lower GWP refrigerants. This capacity expansion, anticipated to be complete by the end of 2024, pending final permit approvals, and current de-bottlenecking projects, will increase our Opteon™ YF capacity by approximately 40%.

Advanced Performance Materials (APM)

Creating a clean energy and advanced electronics powerhouse

The Advanced Performance Materials segment delivered record-breaking financial results for the second consecutive quarter. Segment Net Sales were $401 million vs. $362 million in the prior-year quarter, an increase of 11%. Price contributed 15% to the stronger results, while volume and currency were headwinds of (1)% and (3)%, respectively. Global average selling price increased due to a larger proportion of sales in high-value end markets, such as advanced electronics, semiconductors, and clean energy, as well as customer-level price adjustments to offset rising raw material and energy costs. Modestly lower volumes were primarily a result of supply chain challenges and lower demand in non-strategic end markets consistent with our strategy to drive higher value, differentiated product offerings. Sequentially, price increased by 2%, and volume rose 4%, reflective of strong demand for our differentiated offerings, while currency was a headwind of (2)%. Adjusted EBITDA of $107 million was up $28 million, or 35%, from the prior year quarter, and Adjusted EBITDA Margin was 27% representing a 500 basis points improvement over the prior-year period due to strong operating leverage and price for our higher value products, partially offset by higher raw material and energy costs and growth investments.

Other Segment

The remaining Chemical Solutions business in Other Segment had Net Sales and Adjusted EBITDA in the second quarter 2022 of $28 million and $(2) million, respectively.

Corporate and Other Activities

Corporate and Other was an offset to second quarter Adjusted EBITDA of $(59) million vs. $(63) million in the prior-year quarter. The improvement over the prior year was driven by lower legacy legal costs and the recognition of qualified spend recovery as per the MOU agreement with DuPont and Corteva, partially offset by regulatory and environmental-related costs.

Liquidity

As of June 30, 2022, consolidated gross debt was $3.7 billion. Debt, net of $1.2 billion cash, was $2.5 billion, resulting in a net leverage ratio of approximately 1.6 times on a trailing twelve-month Adjusted EBITDA basis. Total liquidity was $2.0 billion, comprised of $1.2 billion cash, and $0.8 billion of revolving credit facility capacity, net of outstanding letters of credit.

Cash provided by operating activities for the second quarter of 2022 was $291 million vs. $256 million in the prior-year quarter. Capital expenditures for the second quarter of 2022 were $62 million vs. $67 million in the prior-year second quarter. Free Cash Flow for the second quarter of 2022 was $229 million vs. $189 million in the prior-year quarter. In the quarter, we repurchased $128 million of common stock, resulting in total share repurchases of $272 million through the first half of the year.

Outlook

Adjusted EBITDA for FY 2022 is now expected to be at the high end of the previously updated guidance range of $1.475 billion to $1.575 billion. We now expect Free Cash Flow to exceed $600 million vs. our previous guidance of greater than $550 million.

Mr. Newman concluded, “We now anticipate achieving the high end of our full year Adjusted EBITDA range and are raising our cash flow outlook to greater than $600 million as a result of our strong first half results. We are laser focused on delivering a strong 2022, while managing through increasingly uncertain macroeconomic conditions. As a management team, we are fully aligned on our four key strategic priorities – improving the earnings quality of TT, driving secular growth in TSS and APM, while managing and resolving legacy liabilities, and returning the majority of our Free Cash Flow to shareholders. We believe continuing to execute against these priorities is key to unlocking long term value for all our stakeholders.”

Conference Call

As previously announced, Chemours will hold a conference call and webcast exclusively for Q&A on July 29, 2022, at 8:30 AM Eastern Daylight Time. A transcript of the prepared remarks, the webcast, 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 6,400 employees and 29 manufacturing sites serving approximately 3,200 customers in approximately 120 countries. Chemours is headquartered in Wilmington, Delaware and is listed on the NYSE under the symbol CC.

For more information, we invite you to visit chemours.com or follow us on Twitter @Chemours or LinkedIn.

Non-GAAP Financial Measures

We prepare our financial statements in accordance with Generally Accepted Accounting Principles (GAAP). Within this press release, we may make reference to Adjusted Net Income, Adjusted EPS, Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow, Adjusted 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 Effective Tax Rate, Return on Invested Capital and Net Leverage Ratio to evaluate the company’s performance excluding the impact of certain noncash charges and other special items which we expect to be infrequent in occurrence in order to have comparable financial results to analyze changes in our underlying business from quarter to quarter.

Accordingly, the company believes the presentation of these non-GAAP financial measures, when used in conjunction with GAAP financial measures, is a useful financial analysis tool that can assist investors in assessing the company’s operating performance and underlying prospects. This analysis should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. This analysis, as well as the other information in this press release, should be read in conjunction with the company’s financial statements and footnotes contained in the documents that the company files with the U.S. Securities and Exchange Commission. The non-GAAP financial measures used by the company in this press release may be different from the methods used by other companies. For more information on the non-GAAP financial measures, please refer to the attached schedules or the table, “Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures” and materials posted to the company’s website at investors.chemours.com.

Forward-Looking Statements

This press release contains forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which involve risks and uncertainties. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to a historical or current fact. The words “believe,” “expect,” “will,” “anticipate,” “plan,” “estimate,” “target,” “project” and similar expressions, among others, generally identify “forward-looking statements,” which speak only as of the date such statements were made. These forward-looking statements may address, among other things, the outcome or resolution of any pending or future environmental liabilities, the commencement, outcome or resolution of any regulatory inquiry, investigation or proceeding, the initiation, outcome or settlement of any litigation, changes in environmental regulations in the U.S. or other jurisdictions that affect demand for or adoption of our products, anticipated future operating and financial performance for our segments individually and our company as a whole, business plans, prospects, targets, goals and commitments, capital investments and projects and target capital expenditures, plans for dividends or share repurchases, sufficiency or longevity of intellectual property protection, cost reductions or savings targets, plans to increase profitability and growth, our ability to make acquisitions, integrate acquired businesses or assets into our operations, and achieve anticipated synergies or cost savings, all of which are subject to substantial risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Forward-looking statements are based on certain assumptions and expectations of future events that may not be accurate or realized. These statements are not guarantees of future performance. Forward-looking statements also involve risks and uncertainties that are beyond Chemours’ control. In addition, the current COVID-19 pandemic has significantly impacted the national and global economy and commodity and financial markets, which has had and we expect will continue to have a negative impact on our financial results. The full extent and impact of the pandemic is still being determined and to date has included significant volatility in financial and commodity markets and a severe disruption in economic activity. The public and private sector response has led to travel restrictions, temporary business closures, quarantines, stock market volatility, and interruptions in consumer and commercial activity globally. Matters outside our control have affected 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, 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, 2022 and in our Annual Report on Form 10-K for the year ended December 31, 2021. Chemours assumes no obligation to revise or update any forward-looking statement for any reason, except as required by law.

* For information on our non-GAAP measures, please refer to the attached “Reconciliation of GAAP Financial Measures to non-GAAP Financial Measures (Unaudited)”

The Chemours Company

Interim Consolidated Statements of Operations (Unaudited)

(Dollars in millions, except per share amounts)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net sales

 

$

1,915

 

 

$

1,655

 

 

$

3,679

 

 

$

3,091

 

Cost of goods sold

 

 

1,418

 

 

 

1,391

 

 

 

2,697

 

 

 

2,530

 

Gross profit

 

 

497

 

 

 

264

 

 

 

982

 

 

 

561

 

Selling, general, and administrative expense

 

 

254

 

 

 

172

 

 

 

395

 

 

 

310

 

Research and development expense

 

 

25

 

 

 

27

 

 

 

55

 

 

 

51

 

Restructuring, asset-related, and other charges

 

 

1

 

 

 

5

 

 

 

12

 

 

 

 

Total other operating expenses

 

 

280

 

 

 

204

 

 

 

462

 

 

 

361

 

Equity in earnings of affiliates

 

 

16

 

 

 

10

 

 

 

28

 

 

 

20

 

Interest expense, net

 

 

(40

)

 

 

(47

)

 

 

(82

)

 

 

(97

)

Other income, net

 

 

38

 

 

 

21

 

 

 

44

 

 

 

21

 

Income before income taxes

 

 

231

 

 

 

44

 

 

 

510

 

 

 

144

 

Provision for (benefit from) income taxes

 

 

30

 

 

 

(22

)

 

 

76

 

 

 

(17

)

Net income

 

 

201

 

 

 

66

 

 

 

434

 

 

 

161

 

Net income attributable to Chemours

 

$

201

 

 

$

66

 

 

$

434

 

 

$

161

 

Per share data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share of common stock

 

$

1.29

 

 

$

0.40

 

 

$

2.75

 

 

$

0.97

 

Diluted earnings per share of common stock

 

 

1.26

 

 

 

0.39

 

 

 

2.69

 

 

 

0.95

 

The Chemours Company

Interim Consolidated Balance Sheets (Unaudited)

(Dollars in millions, except per share amounts)

 

 

 

June 30, 2022

 

 

December 31, 2021

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,248

 

 

$

1,451

 

Accounts and notes receivable, net

 

 

1,066

 

 

 

720

 

Inventories

 

 

1,219

 

 

 

1,099

 

Prepaid expenses and other

 

 

73

 

 

 

75

 

Total current assets

 

 

3,606

 

 

 

3,345

 

Property, plant, and equipment

 

 

9,264

 

 

 

9,232

 

Less: Accumulated depreciation

 

 

(6,153

)

 

 

(6,078

)

Property, plant, and equipment, net

 

 

3,111

 

 

 

3,154

 

Operating lease right-of-use assets

 

 

220

 

 

 

227

 

Goodwill

 

 

102

 

 

 

102

 

Other intangible assets, net

 

 

13

 

 

 

6

 

Investments in affiliates

 

 

177

 

 

 

169

 

Restricted cash and restricted cash equivalents

 

 

100

 

 

 

100

 

Other assets

 

 

401

 

 

 

447

 

Total assets

 

$

7,730

 

 

$

7,550

 

Liabilities

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

1,249

 

 

$

1,162

 

Compensation and other employee-related cost

 

 

111

 

 

 

173

 

Short-term and current maturities of long-term debt

 

 

24

 

 

 

25

 

Current environmental remediation

 

 

239

 

 

 

173

 

Other accrued liabilities

 

 

263

 

 

 

325

 

Total current liabilities

 

 

1,886

 

 

 

1,858

 

Long-term debt, net

 

 

3,656

 

 

 

3,724

 

Operating lease liabilities

 

 

178

 

 

 

179

 

Long-term environmental remediation

 

 

468

 

 

 

389

 

Deferred income taxes

 

 

54

 

 

 

49

 

Other liabilities

 

 

273

 

 

 

269

 

Total liabilities

 

 

6,515

 

 

 

6,468

 

Commitments and contingent liabilities

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

Common stock (par value $0.01 per share; 810,000,000 shares authorized; 194,761,628 shares issued and 155,572,669 shares outstanding at June 30, 2022; 191,860,159 shares issued and 161,046,732 shares outstanding at December 31, 2021)

 

 

2

 

 

 

2

 

Treasury stock, at cost (39,188,959 shares at June 30, 2022; 30,813,427 shares at December 31, 2021)

 

 

(1,517

)

 

 

(1,247

)

Additional paid-in capital

 

 

1,005

 

 

 

944

 

Retained earnings

 

 

2,102

 

 

 

1,746

 

Accumulated other comprehensive loss

 

 

(378

)

 

 

(364

)

Total Chemours stockholders’ equity

 

 

1,214

 

 

 

1,081

 

Non-controlling interests

 

 

1

 

 

 

1

 

Total equity

 

 

1,215

 

 

 

1,082

 

Total liabilities and equity

 

$

7,730

 

 

$

7,550

 

The Chemours Company

Interim Consolidated Statements of Cash Flows (Unaudited)

(Dollars in millions)

 

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net income

 

$

434

 

 

$

161

 

Adjustments to reconcile net income to cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

146

 

 

 

163

 

Gain on sales of assets and businesses, net

 

 

(27

)

 

 

(2

)

Equity in earnings of affiliates, net

 

 

(23

)

 

 

(19

)

Amortization of debt issuance costs and issue discounts

 

 

4

 

 

 

4

 

Deferred tax benefit

 

 

(9

)

 

 

(39

)

Asset-related charges

 

 

5

 

 

 

 

Stock-based compensation expense

 

 

17

 

 

 

20

 

Net periodic pension cost

 

 

4

 

 

 

3

 

Defined benefit plan contributions

 

 

(7

)

 

 

(8

)

Other operating charges and credits, net

 

 

(8

)

 

 

24

 

Decrease (increase) in operating assets:

 

 

 

 

 

 

 

 

Accounts and notes receivable

 

 

(339

)

 

 

(288

)

Inventories and other operating assets

 

 

(86

)

 

 

(60

)

(Decrease) increase in operating liabilities:

 

 

 

 

 

 

 

 

Accounts payable and other operating liabilities

 

 

182

 

 

 

336

 

Cash provided by operating activities

 

 

293

 

 

 

295

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

Purchases of property, plant, and equipment

 

 

(168

)

 

 

(127

)

Proceeds from sales of assets and businesses

 

 

33

 

 

 

 

Foreign exchange contract settlements, net

 

 

(1

)

 

 

(7

)

Other investing activities

 

 

(9

)

 

 

 

Cash used for investing activities

 

 

(145

)

 

 

(134

)

Cash flows from financing activities

 

 

 

 

 

 

 

 

Debt repayments

 

 

(7

)

 

 

(27

)

Payments on finance leases

 

 

(6

)

 

 

(5

)

Payments of debt issuance cost

 

 

(1

)

 

 

 

Purchases of treasury stock, at cost

 

 

(272

)

 

 

(13

)

Proceeds from exercised stock options, net

 

 

48

 

 

 

11

 

Payments related to tax withholdings on vested stock awards

 

 

(4

)

 

 

(2

)

Payments of dividends to the Company’s common shareholders

 

 

(78

)

 

 

(82

)

Cash used for financing activities

 

 

(320

)

 

 

(118

)

Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents

 

 

(31

)

 

 

(9

)

(Decrease) increase in cash, cash equivalents, restricted cash and restricted cash equivalents

 

 

(203

)

 

 

34

 

Cash, cash equivalents, restricted cash, and restricted cash equivalents at January 1,

 

 

1,551

 

 

 

1,105

 

Cash, cash equivalents, restricted cash and restricted cash equivalents at June 30,

 

$

1,348

 

 

$

1,139

 

 

 

 

 

 

 

 

 

 

Supplemental cash flows information

 

 

 

 

 

 

 

 

Non-cash investing and financing activities:

 

 

 

 

 

 

 

 

Purchases of property, plant, and equipment included in accounts payable

 

$

41

 

 

$

43

 

Treasury Stock repurchased, not settled

 

 

2

 

 

 

2

The Chemours Company

Segment Financial and Operating Data (Unaudited)

(Dollars in millions)

 

Segment Net Sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months

 

 

 

 

 

 

 

 

 

 

 

 

 

Ended

 

 

Sequential

 

 

Three Months Ended June 30,

 

 

Increase /

 

 

March 31,

 

 

Increase /

 

 

2022

 

 

2021

 

 

(Decrease)

 

 

2022

 

 

(Decrease)

 

Titanium Technologies

$

 

968

 

 

$

 

859

 

 

$

 

109

 

 

$

 

928

 

 

$

 

40

 

Thermal & Specialized Solutions

 

 

518

 

 

 

 

340

 

 

 

 

178

 

 

 

 

425

 

 

 

 

93

 

Advanced Performance Materials

 

 

401

 

 

 

 

362

 

 

 

 

39

 

 

 

 

385

 

 

 

 

16

 

Other Segment

 

 

28

 

 

 

 

94

 

 

 

 

(66

)

 

 

 

26

 

 

 

 

2

 

Total Net Sales

$

 

1,915

 

 

$

 

1,655

 

 

$

 

260

 

 

$

 

1,764

 

 

$

 

151

 

Contacts

INVESTORS
Jonathan Lock
SVP, Chief Development Officer
+1.302.773.2263
[email protected]

Kurt Bonner
Manager, Investor Relations
+1.302.773.0026
[email protected]

NEWS MEDIA
Cassie Olszewski
Media Relations and Financial Communications Manager
+1.302.219.7140
[email protected]

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