The Chemours Company (“Chemours” or “the Company”) a global leader in delivering innovative performance chemistry through Thermal & Specialized Solutions (“TSS”), Titanium Technologies (“TT”), and Advanced Performance Materials (“APM”), announced its financial results for the third quarter 2024 and provided an update on the Company’s corporate strategy.
Key Third Quarter 2024 Results & Highlights
Net Sales of $1.5 billion, in line with the corresponding prior-year quarter, with TSS achieving record third quarter Net Sales, driven by year-over-year growth of 21% in Opteon™ Refrigerants
Net Loss attributable to Chemours of $27 million or $0.18 per diluted share reflecting a non-cash impairment charge of $56 million1, compared with a Net Income attributable to Chemours of $12 million, or $0.08 per diluted share, in the corresponding prior-year quarter
Adjusted Net Income2 of $61 million, or $0.40 per diluted share, compared with $65 million, or $0.43 per diluted share, in the corresponding prior-year quarter
Adjusted EBITDA2,3 of $208 million compared to $2114 million in the corresponding prior-year quarter
Cash returned to shareholders through dividends of $38 million in the quarter
“In the third quarter, we delivered strong results, meeting our Net Sales expectations and exceeding our Adjusted EBITDA expectations. We set a Net Sales record for TSS5, driven by robust 21% year-over-year growth in Opteon™ Refrigerants and made steady progress in APM with high single-digit year-over-year growth in our Performance Solutions portfolio. Our TT segment delivered a 23% year-over-year increase in Adjusted EBITDA amid the lingering impacts of the now resolved Altamira temporary facility closure in the second quarter, underscoring our resilient and effective operational execution,” said Denise Dignam, Chemours President and CEO. “We are also outlining our refreshed corporate strategy, designed to position Chemours for sustainable growth and long-term value creation, with a sharpened focus on near-term execution.”
Total Chemours
Third quarter 2024 Net Sales of $1.5 billion increased 1% compared to the prior-year quarter. A 5% increase in volume was partially offset by a 3% decrease in pricing, with currency a slight 1% headwind.
Third quarter 2024 Net Loss attributable to Chemours was $27 million or $0.18 per diluted share, reflecting an impairment charge of $56 million in the APM segment, compared to Net Income attributable to Chemours of $12 million, or $0.08 per diluted share, in the prior-year quarter. Adjusted EBITDA for the third quarter of 2024 was $208 million, compared to $211 million in the prior-year quarter. The decline in Adjusted EBITDA was primarily driven by lower pricing, and to a lesser degree, currency and portfolio changes, partially offset by increased volumes and reduced costs.
Thermal & Specialized Solutions
TSS segment third quarter 2024 Net Sales were $460 million, up 6% compared to the third quarter 2023. Net Sales growth was primarily driven by a volume increase of 8%, partially offset by a price decline of 2%, while currency impact remained relatively flat. The decline in pricing was largely attributed to softer Freon™ Refrigerant prices due to elevated market hydrofluorocarbon (HFC) inventory levels, partially offset by stronger Opteon™ Refrigerant pricing primarily in EMEA. Volume growth was driven by stronger demand for Opteon™ Refrigerants, supported by continued adoption in stationary end markets, as well as strong performance in Foam, Propellants, and Other (FP&O).
TSS segment third quarter 2024 adjusted EBITDA decreased 13% to $141 million compared to the prior year, with Adjusted EBITDA Margin down 6 percentage points to 31%. This decline was primarily driven by the previously mentioned decrease in Freon™ Refrigerant pricing, higher costs associated with securing additional near-term quota allowances and increased raw material costs. The decreases in segment Adjusted EBITDA and Adjusted EBITDA Margin were partially offset by volume increases in Opteon™ Refrigerants, supported by continued adoption of low GWP products, especially in the stationary end markets.
On a sequential basis, Net Sales decreased by 10%, driven by typical seasonal trends across refrigerants portfolios and the previously mentioned price declines in Freon™ Refrigerant pricing, partially offset by increased volumes in Opteon™ Refrigerant stationary end markets.
Titanium Technologies
TT segment third quarter 2024 Net Sales were $679 million, down 2% compared to the third quarter 2023. This decline was primarily driven by a 2% reduction in pricing. Volumes provided a 1% tailwind year-over-year, while unfavorable currency movements created a less than 1% headwind for the segment's Net Sales compared to the prior-year quarter.
Adjusted EBITDA increased 23% to $85 million compared to the prior year, while Adjusted EBITDA Margin also improved by 3 percentage points to 13%. The TT earnings increase was driven by cost savings realized through the TT Transformation Plan, which was partially offset by the impact of the previously mentioned decline in pricing as well as the $18 million of costs related to the unplanned weather-related downtime at our Altamira, Mexico manufacturing site.
On a sequential basis, Net Sales increased 1%, driven by a 1% increase in price.
Advanced Performance Materials
APM segment third quarter 2024 Net Sales were $348 million, up 1% compared to the third quarter of 2023. The change in Net Sales was primarily driven by a 9% increase in volume, partially offset by a 7% decrease in price, with currency fluctuations presenting a 1% headwind. Volume growth was seen across both Advanced Materials and Performance Solutions, while the price decline was attributed to soft market conditions in our macroeconomically exposed end markets and changes in product mix.
APM segment third quarter 2024 adjusted EBITDA decreased 43% to $39 million, with the Adjusted EBITDA Margin falling by 9 percentage points to 11%. This decline was primarily due to product mix and lower absorption of fixed costs.
On a sequential basis, Net Sales increased by 3%, driven by volume growth of 3% primarily within Performance Solutions, while both pricing and currency impacts remained unchanged.
Other Segment
The Performance Chemicals and Intermediates business in the Company’s Other Segment had Net Sales and Adjusted EBITDA for the third quarter 2024 of $14 million and $3 million, respectively.
Corporate Expenses6
Corporate Expenses were a $57 million offset to Adjusted EBITDA in the third quarter 2024, up $3 million versus the prior-year quarter.
Liquidity
As of September 30, 2024, consolidated gross debt was $4.1 billion. Debt, net of $596 million in unrestricted cash and cash equivalents, was $3.5 billion, resulting in a net leverage ratio of approximately 4.4x times on a trailing twelve-month Adjusted EBITDA basis. Total liquidity was $1.2 billion, comprised of $596 million in unrestricted cash and cash equivalents and $652 million of revolving credit facility capacity, net of outstanding letters of credit. The Company retained $70 million in restricted cash and cash equivalents, including $50 million held in escrow under the terms of the Memorandum of Understanding (MOU) related to potential future legacy liabilities, and an additional $20 million representing its estimated interest in an escrow account for insurance proceeds.
Cash provided by operating activities for the third quarter of 2024 was $139 million compared to $131 million in the prior-year quarter. Capital expenditures for the third quarter of 2024 amounted to $76 million, compared to $86 million in the prior-year quarter. During the current quarter, the Company paid $38 million in dividends to shareholders.
Fourth Quarter 2024 Outlook
In the fourth quarter, TSS anticipates a sequential low-teens Net Sales decline driven by refrigerant seasonality, while expecting TSS to maintain overall double-digit year-over-year growth in Opteon™ Refrigerants. TSS Adjusted EBITDA is expected to decrease in the low-20% range sequentially due to refrigerant seasonality.
TT expects a mid- to high-single digit sequential Net Sales decline, with seasonality driving lower volumes, as well as impacts from mix of regional sales. Adjusted EBITDA is expected to decrease between mid-to-high teens, consistent with the referenced sequentially-lower volumes and mix.
APM expects a low-single digit Net Sales decline in the fourth quarter, driven by macro weakness in Advanced Materials end markets slightly offsetting increases in Performance Solutions. Adjusted EBITDA is anticipated to be broadly flat sequentially due to the favorable contribution from Performance Solutions sales and cost reduction efforts across the business.
The Company anticipates a consolidated Net Sales decrease in the mid to high-single digits sequentially, with consolidated Adjusted EBITDA down in the high teens to low 20% range compared with third quarter 2024 results. Corporate Expenses, as an offset to Adjusted EBITDA, are expected to be generally in line with the third quarter.
Overall unrestricted cash in the fourth quarter is anticipated to remain generally in line with the third quarter, generating a positive operating cash flow. Cash uses in the fourth quarter will be concentrated around planned maintenance activities and the expansion of TSS’s production site at Corpus Christi, Texas. The Company expects total capex in the fourth quarter to be in the range of approximately $100 million, due to elevated growth capital spend in TSS.
Chemours Corporate Strategy Update
Chemours today also outlined a refreshed corporate strategy, “Pathway to Thrive,” which builds on the Company’s strong foundation in TSS, TT, and APM, and includes actionable steps to create short- and long-term value centered around four pillars: Operational Excellence, Enabling Growth, Portfolio Management and Strengthening the Long Term.
“Over the last several months, we have taken a hard look at the business to develop a strategy that will unlock value for shareholders and build on our commitments to the customers and communities we serve,” said Denise Dignam. “We have three strong businesses, a strong management team, good operational execution, and clear competitive differentiators that position us well to execute. Our strategy balances growth with disciplined capital allocation, including ongoing cost actions that are core to how we run our business.”
Operational Excellence: Chemours expects to achieve incremental run-rate cost savings of greater than $250 million across the Company from 2024 through 20277. This will include a continuation of successful cost reductions through the TT Transformation Plan, adding an incremental $100 million8 of anticipated cost savings, plus $150 million in targeted cost savings across the other businesses and corporate costs9.
The Company will apply a programmatic approach to achieve these targets, leveraging its manufacturing excellence, standardized operating model and continuous improvement to adapt to changing markets. Given progress on cost-out execution efforts as of the third quarter of 2024, the Company anticipates achieving 50% of the planned run-rate cost savings by the end of 2025.
Enabling Growth: Chemours is committed to strategically investing in high-return, innovative growth initiatives across its portfolio, targeting a sales CAGR exceeding 5% from 2024 to 2027. In the near term, the Company will prioritize expanding in rapidly growing end markets, concentrating on data center cooling, next-generation refrigerant, and semiconductor fabrication. Investments in these growth enablers will be guided by Chemours’ disciplined capital allocation program, with funding primarily from the Company’s strong cash flows and cost efficiency. By leveraging these growth opportunities and focusing on commercial effectiveness, Chemours will be poised to enhance its competitive positioning and capture significant market share in an evolving landscape.
Portfolio Management: The Company is strategically optimizing its portfolio by shifting its focus from products to applications in higher-growth, higher-margin markets. This will be paired with regular holistic portfolio analysis focused on asset base returns in order to drive shareholder value. The Company will also evaluate its asset footprint to ensure the asset base is best positioned to meet the Company’s future needs.
Strengthening the Long Term: Chemours has made measurable progress resolving legacy liabilities, highlighted in the national public water systems settlement finalized earlier this year. The Company will continue to prioritize seeking reasonable resolutions for the benefit of Chemours’ shareholders and other stakeholders. Chemours will also maintain its commitment to responsible manufacturing and continue to engage in advocacy efforts that create global awareness, as well as regulations and policies globally that recognize the criticality of the Company’s chemistries.
Conference Call
As previously announced, Chemours will hold a conference call and webcast on November 4, 2024, at 8:00 AM Eastern Standard 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.
