Chemours Co Q4 FY2024 earnings call

Management Statement and Operational Highlights

• Pathway to Thrive Strategy: Focus on four pillars - operational excellence, enabling growth, portfolio management, and strengthening the long-term. Efforts include a $250 million cost savings plan starting in 2025.
• Segment Updates:
  • TSS achieved quarterly sales record driven by Opteon Refrigerants growth; completed Corpus Christi site expansion for Opteon.
  • TT Transformation Plan delivered ~$140 million in annual savings, exceeding initial target; expects at least $60 million more in run rate savings by end of 2025.
  • APM had softer sales in end markets but made progress in high-purity Teflon PFA production for semiconductors.
  • Corporate remediated four material weaknesses in internal control.
• Executive Appointments: Damian Gumpel named President of TT Business; Diane Picho appointed Chief Enterprise Enablement Officer.

Segment Performance

• TSS: Fourth quarter net sales were $390 million, a 3% increase year-over-year. Full year net sales were $1.8 billion, a 1% decrease year-over-year. Fourth quarter adjusted EBITDA was $123 million (-1% YOY), and full year adjusted EBITDA was $576 million (-16% YOY).
• TT: Fourth quarter net sales were $632 million (-3% YOY), full year net sales were $2.6 billion (-4% YOY). Fourth quarter adjusted EBITDA was $77 million (+20% YOY), and full year adjusted EBITDA was $312 million (+8% YOY).
• APM: Fourth quarter net sales were $324 million (-1% YOY), full year net sales were $1.3 billion (-9% YOY). Fourth quarter adjusted EBITDA was $48 million (+20% YOY), and full year adjusted EBITDA was $161 million (-41% YOY).
• Other: Fourth quarter net sales were $13 million, and full year net sales were $54 million.

Guidance

• First Quarter 2025: TSS net sales expected to increase sequentially due to Opteon growth; TT volumes stable but regional mix impact; APM top line impacted by softer demand. Consolidated net sales expected flat to slightly down sequentially, adjusted EBITDA slightly down.
• Full Year 2025: Adjusted EBITDA expected in range of $825 million to $975 million. Operating cash flow expected to improve, funding CapEx ($250M-$300M) and dividends subject to Board approval.

Risks

• Regulatory: Unfavorable regulatory changes in APM, uncertain PFAS rules from EPA.
• Macroeconomic: Worsening macro environment affecting TT and APM, input cost pressures in TSS.
• Operational: Seasonal headwinds, inventory management issues in certain segments.

Q: How does the bridge from 2024 to 2025 EBITDA guidance work, considering one-time costs?

A: Shane Hostetter mentioned Q1 has operational headwinds like TSS site-specific outage, TT weather-related items, APM plant shutdown, totaling ~$15M-$20M, but these are non-recurring. Q2-Q3 expected to show seasonality.

Q: Can you elaborate on green shoots in TT?

A: Denise Dignam said green shoots in TT include share gains in Europe, better coatings market season in Q2, and housing market index increase correlating to coatings demand.

Q: What about CapEx and data center opportunity?

A: Shane Hostetter said CapEx guided $250M-$300M, focused on liquidity; Denise Dignam mentioned immersion cooling still a big part, with commercialization next year but some IP confidentiality.

Q: Explain inventory trends and their impact?

A: Shane Hostetter said inventory confluence of planned maintenance, TSS quota work-down, and TT inventory checks; focused on optimizing working capital going forward.

Q: Thoughts on PFAS and New Jersey trial?

A: Denise Dignam said EPA rule on PFAS abeyed for 60 days for science-based review; New Jersey trial set for May, with potential for settlement.