CC - Earnings call transcript Q1 2022

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Operator

Good morning. My name is Emma and I will be your conference operator today. At this time, I would like to welcome everyone to The Chemours Company First Quarter 2022 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers ' remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator Vice Chief Senior may Officer, begin. President Lock, Development and you Jonathan

Jonathan Lock

the Quarter and Company's Call. welcome Vice Chemours Hi, to Financial Chief First and Ralhan, today Officer. Mark President and Officer, I'm by XXXX Newman, Executive President Chief Sameer Senior joined Conference Earnings

and made assumptions our has that supplemental start, of in information undertakes uncertainties future I'd comments statements our remind of including events and website are as with filed statements call, realized. as These uncertainties, SEC. that presentation not you may to we Chemours this of not result in or future risks forward-looking described results and Chemours well are new our on guarantees and contain any impact and be may provided differ statements update forward-looking involve forward-looking and a Before business certain the that and the information. developments and expectations COVID-XX documents like on the performance Actual as the no risks of other on the on to duty future based operation,

at useful company's end financial - call, the non investors GAAP During refer the presentation. believe and adjustments measures terms to GAAP our performance. the are and to of that in this will evaluating A release - reconciliation we non certain course management of of included are the

With audio the transcript, will our posted an call earnings Newmanø. full As on This to our a turn alongside call CEO, recording, our purely a website release. earnings focus I'll to reminder, prepared our has Mark Q&A. our and plus over deck been remarks, that, morning's

Mark Newman

for and I is well joining morning, hope good everyone. thank And Jonathan. us. Thanks, everyone you

more earnings refreshing format time and said, with to keeping and our here. this made have Jonathan useful As a make everyone starting quarter, change this to efficient order for simplicity value, in call our we in

for we're with Q&A. now Emma, ready that, So

Operator

yourselves limit one ask that At time, to you follow-up. and one this we question

first with of the comes John Markets. question from McNulty Your line BMO Capital

open. line now Your is

John McNulty

question. solid for some segment Thanks and if it's things, a F-Gas dumping, I morning. you're parse the stronger next really year? the on what or out but tied you Congratulations guess taking the really, understand us drove margins lot buckets we in to mix, help it's year Aim Good how of suppose a to to And expected, Yeah. you bit I can than was my the whether to about Act and or handful a I to of jump that that, even of TSS guess, the that sustainability like maybe through that the and better results. as seeing. various and think the some the as into huge Can strength little rest look less,

Mark Newman

Hey, John, morning. thanks and good

and the of Let our of me sort he get I'll to rest then year Sameer with then the into sees quarter with reflect guidance. how numbers start for TSS, ask the keeping and first in the I'll on

in it foaming momentum you which will evidence benefit was, ' on long-term mega TT. with ore of are are low refrigerants, secular agents. all which relates which Semicon, affecting You in and Today three going the businesses, EVs to despite unfolding. but limitations, saw, warming obviously, trends and to And know, think benefit are showed was coming, particular propellant, I global It wide three hydrogen TSS as trends, really here. all on quarter Chemours APM, as strong. improvements of beginning are businesses the the the And

guide and the APM. of provided in to earnings, us that gives the So despite there's on increasing for come quarter going in our their is In a year, showing worse TSS that the importance lot the confidence and the company, contributions which me we've on to the year. ore the limitations

relates the things of like and that going it in on to question, I'd I the in to quarter couple As year a there's highlight. think your

First of all, demand -- refrigerant demand remains very strong.

you going they're restaurants, coming can to hotels. imagine, to back to going As offices, folks they're are

OEM demand shifts volume by on like. -- we we're some But is as on having auto full-year the on by you'll a stationary a Clearly, that in Semicon lots there's weak based So ongoing QX is chefs. OEM the year-over-year from the customers. market, see structure Obviously, particularly reports demand earnings here of was from looking improvement as the market. shortage. perspective impacted iron

is issues a U.S., the are at Clearly in it implementation is affecting supply when also there's to the demand strong. some obviously that availability. relates the time as of taking effect Here Aim Act China

view is in Europe the to QX make our particularly out to the ongoing year, stationary on Aim very framework remains We're by is is the look strong strong, working. better. also So developments but institutional Act side, demand encouraged we and as F-Gas

But this multi-year is growth, margins, secular So see and business commentary great other maybe Sameer any I'll XX%. secular ask a full-year. if to EBITDA North on of long-term there's growth

Sameer Ralhan

be at Yeah, a given. year, Mark. you in very portfolio that Hey mechanism add other about of quick about entire regarding is talked the The we you kind the the I as headwinds, the guide work TSS -- trends Well automotive really demand market TSS its in of would strong thing we're think that so reflected that strong have that's business, you. place. of the just only benefiting and and the good a just year they John, shaping feel feel is OEM how we despite for about the and very rest the regulatory the we will business, the

is all cylinders. TSS business firing So

John McNulty

as front Mark, from I of to little thought. And then looks you into brought were it years, maybe drag through other I over you a on capacity helpful may of an ore start you OR the you it little front Got think that one points guess. How debottlenecking give issues than about that up supply couple color. that think update be the I to that? next an TiOX guess, as longer of us coming it also, And may on and about bit that's to on? like capacity a you add how does issue can to the the you're the on thinking looking factor -- bit

Mark Newman

question couple answer I'll of the maybe in ways. a So

outcomes. we second look moving second at remain is our in full As will the that ore the When we now situation recognize the for exactly but half constraint around, we into year, ore half. constraints ore contemplates, got meaningfully probably been in having I that to narrowed. of before guide our guidance think able our not mind, range range With QX. Clearly, the narrow we've resolved

the to job phenomenal QX, where that done but this finding a go into team going has So yeah, we now acknowledge of ore can. is it

more the well-defined. highest then so terms application. make in now of the view into we my customers value And range is, in and point continue availability I'd contracted give the ore And outcomes to priority our of third to are

has Yeah. focus to team inflation. asked ahead strategic and nice grow. on done the as think higher-value on our the And serving that last we're obviously, So a I price making our whom we we cost you And capacity. sure question of mechanisms, first, staying was job, then applications want customers with we're

to capacity focus XX%. the on continue releasing We and

is of constrained we as of improving to in to not for through the you all really four the few business. CEO to And the on plan take But run my cycle. know, a way as focus You TiOX saw, steps know, more earnings priorities the fact, continue one we're quarters. that's you quality

customers through with We servicing capacity those have how on we're book take to that and expand grow best more cycle. the business, the constrained, despite being volatility of actions will as as earnings we customers those focused reduce we're well

John McNulty

Thanks for it. much very color. the Got

Operator

Your the line next question Arun from Capital Viswanathan with comes Markets. of RBC

now Your is line open.

Arun Viswanathan

this on Great, the thanks question. for my taking Congrats progress year.

for dynamics foundational you and include could would within in recovery do how rates give be you when guess stationary. if you think positive business do levels I of or doing? kind that that believe is maybe level some you TSS would guess growth the some cited of of some -- what I kind us some margin frame us OEM, anything maybe earnings help that or maybe You've

Mark Newman

been question. lot Arun, insights have that TSS actually, segment. -- remind XX, I'll going just our We're we we're this feel multi-year Investor see I secular growth. and clearly do, her mini everybody business list more May, business great the and May view and team into time where to a is right. Alicia It's Yeah. this provide Day with on in as a to we'll a

it's would range. I think say, single-digit high in the we mid to

propellants warming, As which people for all are and adopt just agent. as as different but foaming butter, many well of applications, low global bread not refrigerants,

then around really in global and phenomenal we verticals So world. making on warming E.U. the the those all team's job both in U.S. drive have of in the and capacity a the to of low adoption doing products the sure

secular we a growth, EBITDA we see thirties, the could is a here, this this margins this has low call we're clearly higher with to of long-term EBITDA margins North mid-to-high but start, in off generally -- single-digit that business it So year, be in in XX%. might a, we the a of year think, we're capture so to growth speaking, looking we great decade

Arun Viswanathan

Thanks, that's very helpful.

expect just if there maybe PIF side? follow-up, you on What districts? by any Now, a with that I year-end, Thanks. assets. could, updates settlement are Would water a the working asked you there's about

Mark Newman

know, with legacy We continue one priorities reach three resolve River. and that of are is barrier my Cape Delaware. as seepage to Fear on wall that an you focused the and with to remediation state to specifically, we of focused the were Last work able consistent it's year, and In North MOU. will reduce the manage very to other very we're the agreement Carolina, the live work

is having MOU to companies in on and three then aligned do have that signed legacy I'd And but liabilities, So bias smart to very forward a the to team the focused a resolve way. move say that. are

stakeholders our would communities and and shareholders Our applaud. our

focused including is General outcomes I the the the Dave Shelton, quite here. specific So that should done but something in future, work comment team there here, you won't on our Counsel, getting is to know ongoing.

Arun Viswanathan

Thanks.

Operator

UBS. Your comes Josh next Spector question with from

Your line is now open.

James Cannon

Cannon in I the a James bit. could talk if quite is about the was quarter pricing was Josh. wondering for up you this guys, Hey TSS

more you comments than Opteon the of much If some if your expense little that's towards expectations? if share shifts pricing faster bit that actions HFCS how is dynamics a of on initial market and just driving your is versus a in could

Mark Newman

question. the for Thanks

there's there a today for demand greater a in stationary, as refrigerants institutional lot improvement particularly is Clearly, to that. is HFC. I strong. the of also, today related continue my mix year, market bias demand you've and which I refrigerants, or picking adoption as but returning increased Opteon just And in of travel think, legacy use some to the folks as to of seasonal result the a in very earlier a HFCs in respects, up remarks, said is We which in see offices, in the impact and factor of biased seen, remain to stationary in

the So a this a to the regulatory is shift wouldn't anybody that very which in very F-Gas impacts come. perspective, many dynamics. there marketplace And on From providing proactive. U.S, are to which Europe, isn't will team pricing your is years to here the focused the supply-demand point, continue aimed team I in in want think structural for

James Cannon

Thank Great. you.

Operator

question Barclays. with next the from Your comes line Mike Leithead of

open. now is line Your

Michael Leithead

this Thanks. wanted of Good just guess or to in worth. to conference also was I kind for I And Q&A switch first the morning, guys. to on or straight back what kind call you saw HFC comment, maybe it's illegal going? is T&SS. hoping situation go legacy format stick the about I update what the on and could of maybe quarter in talk you you side can us just the how imports you Europe's market in the refrigerant pricing just on

Mark Newman

the Michael, all, thanks for of first feedback call on format. Well, the

being for value is Chemours Another core customer-centered.

recognition to some driven Aim feedback the well the structural is this US as on the to good in in as Act marketplace, the said, in in really well from also Those combination an helpful are customer get maybe enforcement just regulations They from working very of seeing taking some take being in to went by it's as clearly, TSS, way shifts the are both in demand both of I'll the here here by On So ask for I and of by. of as a U.S. as the be place I happened are comment Sameer? regulations industry demand that Europe that driven Europe. regulations host favorable whole participant, F-Gas some also not as pricing quarter. Sameer regard. the transition to Aim to actions enforcement to with Europe ongoing in We're as the and mentioned. market in to in in HFCs, And there. will in clearly, Europe the we already we're steps. the by encouraged on EPA give actions F-Gas helping. it that learn but is encouraged very their to that in EPA a out draft the the regulators want There in I we're effect, relates this But HFCs and Opteon impact what think of factors

Sameer Ralhan

just on then pricing let I'll bit the address the Thanks, -- enforcement. first a more Yes. Michael, little and color me move Mark. side to EP add

customers the as step a this the potential back, to side, well our we very is transition technology Mark global new future. as Opteon dynamics And On pricing low we're the but over market is are positioned to said, refrigerant going help warming strong, to time. of

customers think use the ultimately, solution that of kind about to providing pricing. a we're And the so and it's as value offerings we

-- business value Visa, TSS, in APM, the businesses. it's as should seeing the the way you be the that's of in use what pricing is, margin So you're about all as APM thinking on about so the and our well TSS, the and transition and

loan things especially won't said, it's side the that's and in on some us put EPS and look go the enforcement, AMAK. to great to confidence U.S., So some Mark comfort the the give into the pricing. forcing in I as and in mechanisms really place of been And the say in which a in as we specifics. enforce then ability EPS Europe the all how from

and been to ability even already all on -- these last the that cross-agency Europe the ready the has but a on the Look people things, to And basics the bringing market. Customs everybody criminal would tracking, people, for is Again, a same nice get There's like in XX-day to really task scores, up phenomenal peak what's having we're improve in hear there's Department into Department from took while across not. is mechanisms the agencies, Homeland team how Air U.S., the on in gave which time products in lot --it's credit trends seeing go back of penalties. coordinate it Justice. pricing standardize does of the are all that to which thing Protection, been while of Authority across lot simple customs also are Security, things QR us the providing AMAK allowances comfort similar the figure Alicia is page. place. if structural in in set on advance in all and I to border experience, provide includes the thing importing we going material say, Clean the transition a force place. refrigerants already in And a that place, the us power Europe in a Act we any to the, to notice took the agency out control are is You're And which gives that things Border and get of whether the

Michael Leithead

that? then super maybe it the would've That's only If which cash maybe conversion $XX Why you little I I full-year or million the at Sameer. one bit goes at so, million about is by And thought. Great. lower context. for EBITDA flow, than up Operating is second raised $XXX midpoint. helpful call outlook, though, a guidance look

Sameer Ralhan

supply the because the inventories capital. we driving chain as to There's product mostly marketplace are raw of you well-positioned more dynamics growth nothing be make just how as now, the it, about sure side. place primarily is That's have it's working we to that in look we on right the in driven business the think side capital a at in to working want the the by the stressed on that

Mark Newman

The bigger Yeah. If XXX. that our balance working a we're indicates rewarded guide than business. with I in margins getting capital terms on could the Obviously, comments, higher make in couple for a input though, obviously of is sheet our of it's costs today. greater investment that

a XX% that by in take be the of XXX conversion. midpoint in range, we business. want to divide to XX% you And and our typically it XX% you're If conversion the cash cash at

in the So the a floor view as guide. XXX

into some here working [Indiscernible] the expanding way a double-digit. PFA industry that years Semicon capacity. I look, businesses, record beyond other already on the that goes especially would we're by The seeing that And APM our We're the capital had in point in make of seeing we as which Teflon our we're we're demand U.S.. is, capacity, of quarter. but are sold our out expanded And for

investments seeing our the for ourselves prudent So we of we to to cash areas guide flow to leave multi-years explosive free business very in flexibility in growth want come. make some candidly where

So nothing focus that floor. a with our three that wrong you from But in flow want sure we are would understand make this shareholder you opportunities creation I our with cash seeing that calendar all again, us perspective, want also, make some to to consistent there's value shareholder It's year. a guide. in businesses,

Michael Leithead

Great. Thank you.

Operator

the from line comes question Advisors. next Ahmed Alembic of Hassan Global Your with

now is line Your open.

Hassan Ahmed

Morning Mark.

Just commentary your wanted revisit to about of constraints. or some

better something for a to of function going there the there? And Is something there secular, it and wanted or growth. if on is logistics more primarily in what industry shipping supply of prospects chain more say capacity terms understand. that does issues Just is slash secular

Mark Newman

to within which a Yeah has anything here, been XXXX. twelve I point year all wouldn't our fiscal that's secular frame, that's months’ at is I wouldn't more clearly,

mentioned conflict limitations within having year months can minerals you you our or further with longer your Even do. to that's plans to logistics you the Richards there's--there's it takes I in access it by if on XX think shores are forced compounded located. our Bay And get or today, frame, we're on lot where just the what Also, our here identify that your market. in the a on today spot this acknowledging that minutes, question. starting based Ukraine,

just secular--it's like respect a we it where I this would we are a to was with to And felt not again, QX. in it's not fiscal recognition So point, expect and it's that really beyond just the to the I of part XXXX. be limit that acknowledge clear, volumes sometime Again, example, us secular a sure us, for guide year flat time quarters, And is as was expect in it higher. of a clearly, QX was guide. quarter to updated TT would in make coming our in will normally it it be to we that

want maybe next out, a call I is I year affect And so to our which issue think quarters. or this just fiscal will XXXX three two

Hassan Ahmed

Understood. it been And a to as obviously, Very strong material degree to fair sticking for TT, pigment be side, chlorine, ore, raw on has inflation, seen well. helpful. of be it follow-up, pricing other we've as the a going

As red, right a global are you see see how these they do it of take you cost all at the look and still holistically the the you Because in now? now? what do percentage are moves curve, in if of you right red

Mark Newman

Yeah. for focus grateful our on the I'm comment but Clearly, very and curve competitors, continued not cost our on where efficiency. Hassan we're going on to sit

until constrained, cost obviously, gas and U.S., its prices on unlikely said are look here I'd natural plants I'm though at to dynamics also in mid-twenties business world, the tied even glad we've that in the to the of at is here, up. are So majority this the margin those XX% today of or reinforce as our target we're prior say our not in level ore calls, but EBITDA I'll it be I

Sameer Ralhan

but look, definitely is. it's Sameer, the cost also you add perspective longer the point what over customer's just as more is, look term, important, curves I'll are one overall

about chain staying generate. even phenomenal supply do margin as in reflected have is also to profile the so. talked and of to margin headwinds. ability in does meet old But issue, margin commitments we a play job constraints conditions teams Our the inflationary product circuit value that's the optimize if these a well your the that's Mark it the ahead done tough the that if where into can and the because our the in old headed limit

Hassan Ahmed

Sameer. Very -- Thanks Thanks, clear.

Operator

America. of DeYoe with Bank Matthew

now line open. Your is

Matthew DeYoe

Morning. was TT, XX% TiOX Sticking pricing higher with year-over-year.

curiously consider strongly tie-ups, TPI the your in contract. of Just the kind

are in or your you. quarter. of China increase So an how so on Is XX% mix? the forth. see 'XX And of and this you issues question Thank comps resolve back do how the the securing remainder of pricing for in as big then you given that sticky sales supply a

Mark Newman

Yes.

quarter would demand shifts into some structural view -- of So I a into COVID I strong in there's is say The come off actions. globally. mentioned, QX. of just And a my continues regulatory which by combination the aided factors we that the coming economic as here,

of pipeline half. in remember seasonality obviously, that And more business coming that to this in pricing some clearly, increases half. hit we our in the the see So half are anticipation the actions versus have through tends first cost second of will second the some us

the So strong low higher. our about. segment could be goal year, EBITDA in to for is talked XX's to be rate growth start, with long-term we we the of kind with had But this clearly margins that the I the

Matthew DeYoe

Thank Mark. you,

Operator

the from Jefferies. question line comes with of Laurence next Alexander Your

Your is now open. line

Kevin Estok

Kevin on taking my Laurence. Hi. This Thank Estok question. you for is for

The the China has to you operations. remainder your do non-U.S. the to lockdowns first guess was business wondering year. with I for your I of in how impact expect question

meaningful in that and Eastern Thank Europe sales growth front, the in Russia, I natural you. if had in whether and think Ukraine, any smaller you European location. get you

Mark Newman

stressful the are and humanitarian given prayers very in clearly, situation China. Ukraine in So thoughts the we're and go way, our impacted to issues. folks And a out in monitoring who Mainland those

quarter. the to of As Sameer of we the part had and mentioned as comment the you China, business our will impact suspend contributions which in with along announced in humanitarian crisis. in both I'll ask Russian did guidance the we We that more specifically charts, saw, aid with Russia, operations our Ukraine to on any But entities. I

Sameer Ralhan

Thanks, Mark.

world. -- is what look at, is and our that the and previous the the Kevin, we in X% Russia you're supply year, that the in perspective, said so revenue placing seeing goes in we the see business, majority As Ukraine in any in don't from of parts TiOX we've industry, given around other demand the dynamics the volume of TT issues the that

tied any feel did perspective it we take a XX this in major good you the cost from that of And roughly in than we when write-offs. the have anticipate of charge side, impact. overall, pretty So inventory to the quarter, our an shouldn't other market. look we from receivables look, But at million tied the that, operations, impact don't the topline perspective, to of on it's any the China And some for interesting rest year.

and looking a a from tab business gets don't overall, are in keeping We very at closely this we on that. way. a impacted impact a different expect But material Each point slightly direct.

Now, China some the we shutdowns on into are say economy, in those constructive which our as broader on that raw our but I perspective. helping very stays from APM good that speculate overall seeing, business. are one businesses chain, now. impact monitoring there. sitting with then we position our can't are overall, economy would the procure materials, demand are supply really well And an that any with Chinese yes, partners so That's if we'll the but only that, keep we shutdown, the on spillovers the one Those -- and I and electronics exposed materials will on and us today stretched have businesses, we're today, a speculate them in it get global do may have impact chains right

reflected are that anticipate we we gave. the that guide impact the why in is this So

Kevin Estok

Okay. Thank you.

Operator

line Andrews question next Stanley. Vincent comes with Morgan the Your of from

open. is line now Your

William Tang

for is This Tang William Vincent. Hey, guys.

a for Just quick follow-up me.

Can the the posing production in continuing exports China Just elsewhere? side, you extent heightened terms price the we've risk talk on and TiOX about of year-to-date. demand, exports seeing -- region in what local Chinese what a see been to you're you sequentially to to increase Chinese seeing in TiOX

Mark Newman

all, the which grades in First of and we customers China applications and serve. we limited and markets see between intersection very exports

So our of that, but noticed we've impact book business. has say I'd limited also on

of high-end A in end spectrum, area business on laminates TiOX coatings lot market at the in tends side the export for the and Our from both example. laminates be perspective. of our the to work are of China the for furniture, high

So out so they that understand in remains of very those for demand coming being yes, products business globally China, our say, businesses impact of demand part And limited I'd terms very on Chinese and in more of the we where China on we TiOX customers of far, down our because serve. book product strong. in and have there's

William Tang

you. Thank

Operator

concludes the back now over Q&A. Newman. call I to turn Mark That today's

Mark Newman

you to more key look Yes. to segment focused everyone. been respect was a like Day, mini-Investor you TSS, just remain share on of to all there's questions soon we And and felt forward of Thank you, the very we our with great it seeing call at on to creation. we was reinforce great time In -- it that long-term with on value four I forward. that going closing, areas will just our lot

hand first And in which witness quarter. you some of the

the cycle customers. is earnings while strategic our improve growing TT with through to first The

we conversion, and make to with cash team continuing Ed great said, that business business higher enjoys have of take the steps a I As will book and earnings his best today. quality that

is innovative TSS to products and drive objective Our growth second APM chemistry. with behind class-leading secular in

quarter, related this come. is the see to the impact already But you much there's APM, In races. starting TSS to more the of to see to off in higher-value As mix we're applications. shift

Our heart very thinking that's revolution or science you're Semicon. EVs happening Clearly, of today. advanced one is clean energy, electronics in the in whether of to or APM integral We're at hydrogen the we're also all to the of efforts U.S. key Semicon producer the is the but chain. Semicon the on to U.S. PFA market, supply PFA global Teflon of our -- a only and reestablishing we're

membrane Atlantic said of And earlier, driving So the as on the I hydrogen we're that and in sides both -carbonization very to of is the about there de planet. the revolution key be excited will work area. our our happening Nafion

cash our X, This is to flow XXXX. way with authorization, we key continue Our meaningful authorization invest to to shareholder QX. of is, to the in which will And finally, they will complete then having meeting continue a few to manage have existing And we recent our million MOU, area. new in we I intend made approved the $XXX return MOU. a area my majority free thinking in our a professionals resolve generate for Board, are over isn't continue through X, make progress both the the X, liabilities returning value dedicated all focus dividends cash and compounding of three And X, shareholders. third company. the to the to value shareholders. time. in drive consistent objective item And really in of repurchases, to and companies our completing We earlier, creation to the we behind through legacy as majority stock with of significant progress our signed But has this the keen impact of and in said

So significant very excited pay significant priorities, drive four for you with key great a will dividends everyone and as share Thank you to is can have these leadership how our think want on to focused in shareholders as that the value and we're to years come. I a which we day. team we

Operator

for This Thank concludes today's conference attending. call. you

disconnect. You may now

The Chemours Company (CC) 3 May 222022 Q1 Earnings call transcript