The Chemours Company (CC) Earnings

Management highlights

### Overall Strategic Progress - Chemours is halfway through its Pathway to Thrive strategy, which was designed to strengthen the company's foundation, de-risk the balance sheet, improve resilience, and create strategic portfolio optionality to maximize shareholder value. - Significant progress has been made on cost productivity, lean operational improvement, debt reduction, legacy liability resolution, and portfolio shift to high-value growth end markets. No portfolio action is off the table to unlock step-change value creation for shareholders, including transformational partnerships and existing portfolio reshaping. ### Operational and Commercial Highlights - Disciplined commercial execution and pricing actions across all segments; adjusted EBITDA exceeded consensus expectations, while net sales came in slightly below expectations due to softer residential stationary AC demand in TSS. - TT has delivered consistent pricing discipline, with three global TiO2 price increases since December 2025, and an optimized manufacturing footprint that delivers operational flexibility to adjust production to match demand. - APM's Performance Solutions portfolio has strong order book momentum driven by long-term demand tailwinds in data center and semiconductor end markets for AI infrastructure; two-phase liquid cooling product trials have increased 70% year-over-year, with initial nominal sampling sales completed with multiple customers. - Combined sales into high-growth data center, semiconductor, AI, and advanced electronics end markets represent a high single-digit percentage of total Chemours sales across TSS and APM, with further upside from liquid cooling and next-generation refrigerant development. ### Financial and Balance Sheet Progress - Strong cash generation supported close to $270 million of additional 2028 Euro term loan repayment in Q2 2026, $103 million more than previously guided. - Recent settlements with the U.S. EPA and West Virginia Department of Environmental Protection resolved notable legacy environmental litigation, de-risking the balance sheet and improving leverage and cash positioning. - Net debt reduction remains the top capital allocation priority to improve financial flexibility and reach the long-term target of sustained net leverage below 3x adjusted EBITDA.

Guidance

- **Third Quarter 2026 Consolidated Guidance**: Net sales expected to decrease 5% to be flat sequentially compared to Q2 2026. Consolidated adjusted EBITDA is guided to $175 million to $205 million. Corporate expenses are expected to be $40 million to $45 million. Capital expenditures are projected at ~$65 million, with free cash flow of at least $50 million. - **2026 Full Year Consolidated Guidance**: Full-year 2026 net sales expected to grow 1% to 5% over 2025. Adjusted EBITDA is guided to $775 million to $825 million. Capital expenditures expected to be $250 million to $280 million, with full-year free cash flow conversion above 25%. Net leverage ratio is expected to reach ~3.8x adjusted EBITDA by the end of 2026. - **Segment-specific Third Quarter Guidance**: TSS net sales expected to decline 15% to 20% sequentially, with adjusted EBITDA of $125 million to $140 million, pressured by aftermarket destocking and seasonality. TT net sales expected to increase 2% to 5% sequentially, with adjusted EBITDA of $70 million to $80 million, driven by realized pricing gains. APM net sales expected to increase 5% to 9% sequentially, with adjusted EBITDA of $20 million to $30 million, reflecting $5 million of revenue pulled forward into Q2 from timing shifts. - **Long-term Targets**: Management reaffirmed a long-term target of at least $1 billion annual adjusted EBITDA with free cash flow conversion exceeding 40%. TSS stationary aftermarket is expected to return to mid-to-high single-digit annual long-term growth after 2026 destocking concludes.

Segment performance

1. Thermal and Specialized Solutions (TSS): Net sales were slightly down year-over-year, driven by lower volumes from elevated post-channel-fill inventory in the North American stationary AC aftermarket and softer residential demand. This volume decline was partially offset by higher pricing, primarily from strength in automotive Freon refrigerant applications. Adjusted EBITDA increased year-over-year, with expanding margins, supported by higher pricing and favorable timing of certain costs. TSS contributed ~X% of total company revenue, with 25% year-over-year volume drop in the stationary aftermarket in 2026 compared to 2025's pre-buy boosted period. 2. Titanium Technologies (TT): Net sales increased slightly year-over-year, driven by broad global pricing strength across all regions, offset by lower volumes in most markets excluding non-China Asia and Latin America. Three cumulative TiO2 price increases announced since December 2025 delivered ~5% year-to-date price increase. Adjusted EBITDA improved year-over-year, while adjusted EBITDA margin remained flat, as pricing gains offset higher inflation-driven input costs. TT contributed ~X% of total company revenue, with pricing momentum outpacing inflationary headwinds. 3. Advanced Performance Materials (APM): Net sales declined year-over-year, driven by lower volumes from the 2025 Q3 closure of the SPS Capstone line, partially offset by higher pricing across the portfolio. Adjusted EBITDA declined year-over-year due to lower sales volumes from the line closure and residual costs from the now-resolved Washington Works outage. The high-growth Performance Solutions sub-segment delivered 8% year-over-year net sales growth, with more than 40% of Performance Solutions sales focused on data center, semiconductor and AI end markets. APM contributed ~X% of total company revenue, with Performance Solutions growing as a share of the APM portfolio.

Risks & headwinds

- Softened macroeconomic conditions, higher interest rates, and housing market affordability pressures are weighing on residential stationary AC demand and aftermarket order activity in TSS, with ongoing destocking expected to continue through the end of 2026. - Elevated inflation and higher input costs (particularly sulfuric acid for sulfate-produced TiO2) continue to pressure cost structures across segments, though pricing actions have offset these headwinds to date. - Chinese TiO2 exports remain elevated year-to-date, creating ongoing supply pressure in global TiO2 markets. - The 2025-2026 stationary refrigerant technology transition under the U.S. AMAC regulation created unexpected channel inventory volatility that is taking longer than initially expected to normalize. - Legacy environmental and legal liabilities continue to weigh on free cash flow conversion, requiring ongoing settlement and resolution efforts to de-risk the balance sheet.

Analyst Q&A

• Q: The Q3 TSS margin guide implies a high-20s margin, below the historical 30%+ baseline. Is this a one-quarter issue or a permanent reset, and what is the primary driver? /

  A: The lower Q3 margin is almost entirely driven by unfavorable product mix from slower stationary aftermarket sales, not input costs or absorption issues. Management reaffirmed TSS is structurally a 30%+ margin business, and margins will recover in 2027 as aftermarket restocking begins. Seasonal Q4 margins have historically been slightly lower due to product mix, but this is a temporary trend. There is approximately $65 million in 2026 aftermarket demand that was pulled forward into 2025's pre-buy, creating the 2026 year-over-year headwind.

• Q: What surprised management to cause the material downward shift in TSS expectations this year, given OEM outlooks are still positive? /

  A: The 25% year-over-year drop in aftermarket volume stems from two unexpected developments this year: a colder-than-expected spring in the Northeast U.S. that suppressed seasonal demand, and reduced consumer willingness to spend on HVAC repairs amid macroeconomic uncertainty, which led distributors to hold back on inventory restocking. OEM strength in new units does not flow through to aftermarket sales until units are installed and in operation, so any upside from stronger OEM outlooks will mostly benefit 2027 rather than 2026. TT outperformance has partially offset TSS weakness in full-year guidance.

• Q: Management mentioned open portfolio optionality at the halfway point of Pathway to Thrive. Can you elaborate on what strategic actions are being considered? /

  A: The comment on portfolio optionality reflects that Pathway to Thrive has achieved its core goals of strengthening the balance sheet, de-risking legacy liabilities, improving cash flow, and shifting the portfolio to higher-value end markets, which has created flexibility to pursue value-enhancing actions. No specific transactions are being announced, and management will not speculate on potential moves, but all options are on the table to unlock step-change value, including divestitures of product lines/assets, and new strategic partnerships.

• Q: What is the go-to-market model for Chemours' two-phase liquid cooling products for AI data centers? /

  A: Two-phase liquid cooling is still an emerging market with no meaningful current commercial penetration, so it represents entirely upside for Chemours. The value chain is complex, so Chemours sells across multiple ecosystem stakeholders: the company first secures design specification in data center architecture, working with hyperscalers, and ultimately sells finished products to equipment OEMs, similar to Chemours' existing refrigerant business model, with demand pulled through by end-customer specifications.