CC - Earnings call transcript Q2 2022

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Operator

Good morning. My name is Rob and I will be your conference Operator today. At this time, I would like to welcome everyone to the Chemours Company second 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.

to followed question on by keypad. like simply this your would star press the you ask during a time, telephone If number one

you and Chief again Officer, you your you If your Lock, Development to conference. begin one. Jonathan President star, Thank question, Vice Senior may like would press withdraw

Jonathan Lock

Ralhan, Welcome and Chief Chemours I’m morning Company’s Financial by today Hi, Executive joined XXXX and Newman, quarter President everybody. Mark good and Senior second Officer. to the President Chief Officer, Sameer call. Vice earnings conference

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

Mark Newman

I you Thank Jonathan. I today. and joining everyone well doing us hope appreciate you is

in and the execute our Our growth chain environment. pursuing are of we even ability a record-setting quarter challenging demonstrates to structural the supply strength

four in priorities through flow power the remain returning shareholder believe resolving of generate secular driving to that growth and will priorities over cash TSS With managing of value that, and generated time. improving four let’s Rob, Q&A. we and TT We Our shareholders. free majority liabilities, the these earnings significant APM, the line the open cycle, legacy for

Operator

RBC first Your instructions] from [Operator comes line Capital from the Viswanathan Arun question Markets.

is line open. Your

Arun Viswanathan

taking here. obviously morning. hope know, performance Great, for you are strong some my thanks guys question. Good well. I very I guess--you

sounds Maybe was that Your our expectations it could similar that is pricing so just and TSS persisting. comment you last in like above on quarter, to first?

Mark Newman

the remains Hey, QX we our our in the good APM I we had very business, a as seeing in TSS we pleased at Opteon results. legacy our performance, we quarter to a us all businesses have businesses. industry-leading segments, three Candidly, record saw in had in new morning our environment, growth also low of growth, all which Yes, brand that. established Arun. hotel the results, and when continue also record whether number advantage coming we as taking in to decade that another in TSS warming demand had to restaurant transition perspective, look record-setting see advantage demand, this we’re online Clearly so in APM, ways quarter. which taking of business ahead this dynamics contributed a structural said, our with have Demand global are last--in space, various we believe strong, the in in TSS quite we’re very of continue and market and space, the a in remains from dynamic a in as our in growth obviously our supply-demand QX institutional of see refrigerants, high our volume with strong and it’s which from users, I back refrigerants in of space results remains post-COVID a environment we Clearly and market. and office you a particular, to we dynamic so refrigerant

Sameer Ralhan

to Sameer. there’s Arun, said, you what especially and to one across use, pricing is at as Mark I the focus point talked this just pricing more to big around in we’ve our APM, but well. value want and look as the thing businesses, TSS in driving the is past, as a

there’s trends on as so essential to really in the into due in customers, look in now. them, is--which are which enabling big numbers our you well, as and we know, As driving value that the focus secular the we deliver so and our you’re pricing a that products larger value used seeing

Arun Viswanathan

I Mark. follow-up PFAS just side just as on now, and well flow you uses, the of quick the your a be cash Sameer thanks priorities potentially you’ll Great, guess Thanks. us remind for funding what return? some capital can for as

Mark Newman

Yes.

TSS, long In capacity, APM. just on the for projections. updated of in in based to projection continue the added and based business our term for TSS We need to our the be especially on investment frame in invest time growth, we on Corpus growth so announced our and XXXX

for investing growth, out. semicon, We’re where example remain for we around APM in sold

growth expect return demand are saw These even just the Act high passed, You coming CHIPS more get projects. we so there.

fluoro cash creation in our and towards through reduction term I’ll meeting ask on we’re our also based we targets greenhouse But maintain to the of level diet long allocate and or so our on cash investing business compounds, year in of we’re of of doing to date. Sameer able stock to the flow repurchases also and shareholders, and value the our and run gas sustainability a stock for free and dividend repurchases. growth. we’re move return organic steady generation, majority We’re to and obviously of that stable just comment as a investors to investing

Sameer Ralhan

beginning to That’s have year. share how in Thanks year. flow ability have the the Mark first Mark. continue the a side. the what and the of you to the with and of meanwhile, the we’ve line away as of seen, even investing in chip Arun, to growth debt as we us in expect free diet do our had pretty for provides outlined we’re that, buybacks on half of the strength said, We’ll cash

You down us--our as have putting flow while to gross continue strengthen as billion, we free debt progress the to seen provides $X.X well side fronts. all the strength execute the down, of get us in continue escrow debt the our to Again, that on cash balance and ability to the commitment well to to make on sheet. money

Arun Viswanathan

Thanks.

Operator

of of Bank from comes line DeYoe America. from question Matt next the Your

You line is open.

Ross Huffman

first set first to which GenX, the the this Do Matthew advisory EPA for for this think for circular question inclusion GenX. step Hi, you to is a this any GenX year? in health is Ross is My decisions be later Huffman on I is of that pending consideration DeYoe. made think the first

Mark Newman

gave due have challenging we an don’t perspective, we between advisory a drinking been the But we’ve the in MCL, State the circular. precedes legal health health Carolina, to so consent of process charge and In basis, the saw, Clearly clearly our health understand standard, we’re water assessment the and we so this followed believe something particular a based the a--you science in assessment like in I that our took should a that and the a perspective, the health rise as North the are consent advisory from see we connect connection to view, the process from to it flawed quarter, on between or exposure science. this, thing we advisory both as related the the order it challenge order, in advisory but know, toxicity decided the tie-in from perspective. see normal a so the in and on and is quarter. an charge Yes, it the challenging you given is a

Ross Huffman

like thank responsive look it, follow-up, a kind volume guess QX, heat that’s in you. we weather in driving of is Europe something quick to is and Got in that of the wave just for if that something your lot a business, I general? at

Mark Newman

raising refrigerants, to and of growth, normally question. single given we refrigeration season class where really retrofits global you rising but in not transition growth create mid we Clearly will terms to are term we also great increased the growth this are ability in decade term our of just more digit obviously equipment. extend business. or may see of an high-mid that existing speaks a digit have that long a refrigerants in extend when Typically--it’s demand, growth although the in it it a a it deliver market The leader. really the long somewhat single point season to Typically of see, a the upgrades, sustainable summer, but simply temperatures, refrigerants we warm a replacement you as or either projection can see

Ross Huffman

Great, thank you.

Operator

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

open. is Your line

John McNulty

in of look two may the good of journey given and your really at on Thanks the more of you business? highlighted side prepared in this one anything we guess questions. and your a segment, also transformation Obviously the chunky you shift in maybe taking about there continues, give year APM you’re a for peak that we little this margin in that multi-year solutions. quarter’s toward continue and a morning. shouldn’t actions unusual high Was Yes, value strength assume type necessary year of bit the and my I some the maybe margins growth us on business. Can as for commentary, kind

Mark Newman

the John, for in we sustain a earnings of here normal it in anything Sameer, over as but be this high to accelerating more go many seasonality. about of continues really volume mix forward. on clearly our historically do to ago, is excited point in we’re teams of are Hey sold with to the quarter, having you the profile. accomplished, you has journey margin lines, the What double from with about we’re have APM thanks sort look the the I basis, a we I margins so it’s a year digit still low came business. business, print would full little where result really on a demand, wouldn’t real we’re ability ready and you so a if out to XXs and we’re said contributor operating think year going think but question. what where the very unusual the change really great guide product very become transforming of and total the on leverage, anything great we’ve so a modest Clearly this EBITDA company, else? When at from proud point and not margins APM the

Sameer Ralhan

Mark. Nothing,

half, the You move see the the think some at typically year, of and that the the second look QX, drove second out volume have, some half into laid business we first this quarter, outlined. target as coming you the a especially overall have plant we comes but know, full it most us as margin; Mark seasonality operating the as which you’ll in in for still it in turnarounds we that with as the so John, in we well, as is pretty and the and leverage, I and the the that’s that in low XXs, of came the

John McNulty

strong, it the enough. it, about XX%. that on both? segment, pricing that side, pricing? should really the dynamics how really largely guess, HFC almost up think XX%, this high we Then the speak really level Was or Got the to or of was can TSS drove Opteon side kicking in you fair I was the obviously

Mark Newman

both. say Yes, it’s I would

are want Clearly, was with I is, Opteon, strong which as at lot our also expect of a higher. how demand, prices today felt good John, platform, works. growing obviously know, refrigeration maybe time ready facility. facility the Again, based and class, facility. we’re on adoption customers cost that to the to warming the some beyond of strength we there class, for to right lowest some is a the that’s we be basically capacity low demand regard. we really incremental adoption was to seeing of legacy ’XX, a our that, the refrigerants It the add product refrigerants. is base quota we of world in the out this transfer the benefiting support as time of to speaks view, but you Corpus would our and it seeing base in global you really speed thesis our it to project add mean, mechanism incremental installed to adoption and refrigerant We’re whole a as thought refrigerant our that as and within capacity in as that, business increased

John McNulty

Got very it. the for color. Thanks much

Operator

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

Your open. line is

Mike Leithead

Great, morning thanks. guys. Good

charge spend remediation in the there? that the environmental how just was related XQ XQ, related cash us First the spend just think and on one, what about help in XX next with can Fayetteville months we should you to just over cash

Sameer Ralhan

next this look years, chunk know, That’s spend million next slow is Yes flow the offsite look the of $XXX big long with per up of when wall, million agreement XX as will one. very frankly, maintenance, XX% that, as is $XXX the overall, onsite a one. Mike, the Dupont be Corteva, free zoom there’s from on roughly and and A spend. that of MOU the $XXX burn this just charge them, is really you the beyond I’ll a Essentially to from operations you that take at Sameer. and at and the recovery at that, million subject perspective. so construction if Fayetteville operations have remaining and the a you that monitoring is overall spent the years we three really over cash over and site,

Corteva of MOU, As and million year. million that Dupont recoverable half kind that of of and so from per is out, we $X all that’s roughly year laid us, amongst a roughly per $XX

numbers. construction So the wall, small beyond of the upfront, these are it’s that but the really pretty

Mike Leithead

and talk in Chemours? if you it, TiOX, we’re step constrained comfort ore Got makes through I for the for constraints say, availability quarter. take you your your Then talked in where we can obviously back, a a next, ore, ore guess over years sourcing the sense. few picture world secondly bigger probably a fourth for bit in just just about about

Mark Newman

have we to largest work presence. sourcing. the significant our ore strengthen continue a for the suppliers. We buyer of Yes, look ore do market all to with so opportunities Clearly we’re commercial we ilmenite, strategic

relieve with here the of confident ore QX, the our of a can junior consistent space. the host ore in miners we is Sitting we work also remain will prior more our outlook, that on some mechanisms, market more through view in today, again, bring with We constraints whole supply. and

world given presence short that’s our and dynamics be in QX, given more said clearly to the we’re need of we brought the I is that the achievable. in very ores, market online, As not and but titanium-bearing mining confident market,

Mike Leithead

Great, thanks.

Operator

Your comes next question line from of Josh UBS. the Spector from

is open. line Your

Josh Spector

Yes, hey Thanks guys. for taking question. my

do on least estimates, there but opportunity versus focusing and of that’s half on you similar second down impressive year-over-year, Were How back side, comment the you or Just automotive the earlier this saw at to biggest note think given that’s some market. may if the some Thanks. that else pretty the be seeing or going where volume to TSS half, surprise, of at curious anything second kind XX% develops number. you’re where our was Especially the growth, in bigger sell-ins a point? could you different? there there by that

Mark Newman

folks reminded year, to half, Yes, the subject second I’d seasonality. we’ve normal say all is

said earlier. second normal QX, auto demand make marginally better, You see in as but which it expect weaker. half, slightly I QX auto, up a be With clearly would and On seasonality summer that in could mentioned, with being of consistent we you the we year-over-year. IHS a see QX forecasts, lot where normally hot

numbers. a into But is really of I is very based on from the The our or X% think driver side. remains auto volume baked the challenged outlook. so X%, our IHS that for perspective, around that’s is chain transition stationary full so supply us big year on the industry

AIM the QX, global Clearly air moving related so growth to to very adoption for in transition. in that that and F-gas that with serve from see to where with of that at Europe growth. As low OEMs kind markets making have is it’s large OEMs and this both this Again, of chillers conditioning, going seeing I really are on quite of growth stationary to cooling equipment major two warming, is said signed U.S., decade kind investment we in we’re now well. supermarkets have in the basis we we’re Corpus, to of a up equipment, so implied that

Josh Spector

Thanks.

about second you is in half I’m see some is higher be there another is products if costs transient transpiring should the cost some considering is products? we integrated more or XXXX, you of the in your that on or raw material curious side, where guys you could comment second back talked that step-up half, how Just - that? purchased into than it

Sameer Ralhan

Hey Josh, this is Sameer.

longer, the when Let other you look that and the be little in stuff second into of places, it that supply me quote year dynamic the manufacturing right? some That’s half. months materials things dynamic through and through take this so components as see, and to inventory and just Essentially cost see both from where on more, sit the just you’re yes, to in in. past, raw the of almost side our in the you’re frankly, well half, different own can APM some they that the of the six inventory, it material really in some happened the side in TSS for Mark channeling segments. a inflation we as second early or purchase kind really going moving then is through jump the of the a be showing go at components, the to the the or up system the As chains that going through can told polymers, tend and we’ve to side

Josh Spector

you. Okay, thank

Operator

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

open. is Your line

Vincent Andrews

is still outlook, your or Hi talked possibly of My guys. proportion, is that at and uncertainty given now? for that increase is that contracts macro to past. target the [Indiscernible] being about the in there level question kind any right desire currently, sold through you’ve the ABA that

Mark Newman

our past, like said consider all of the be of level meet a allows contracted book we a been XX%, experiencing, in we of about can what target clearly best in No, ensure ability that to business, needs. market, the us and have to as our we we’ve customer tight we’ve and we

team I’m be delivery ore rates of this how achieved to they proud the high year. Now, our of upper despite really we’ve had challenges of in have and to very, honest, some very TT the promise, XXs

would customers to modulate it contracted from spot the remain in number around I and forward, will Going clearly expect depending market. demand on demand target, and the that

and you really forward a potential a is see the I this as for is some further weakening. change. about seeing mentioned I go any going point weakness, level think clearly we our To view if fundamental any don’t this franchise see the strength prudent is we

We’re is in the seeing especially circuit a how some book strong this modulate is any the of global you this needs and market thing, have really the optimize franchise focused the in business weakness going really place. book today proud Europe, what of of if a with on team very to contract China, weakening we AP It’s to in from business of built great we’ve we’re and parts and here, great forward of but here. see macro

Vincent Andrews

talking Got how I you little thinking a you as within follow-up, inventory have update on what quarters. few run side, seems Could other situation kind own you the about past been of, guys right give have the some channel of the are to for a well about destocking TiOX as guess, little retailers just us on their players coatings over to kind opposite producers it, and opportunities, guess as and now? which inventories then I TiOX both about talked

Mark Newman

the coatings are particularly some an they would we’ve our we to Asia. EU is though and say that good both way supply as travel build don’t Clearly customers also of we about in have users our I look read we Net-net, comments we even the little the massive know, incentive destocking, the feel in around in consumer, on have You segment the laminate space. and may spending at certainty commitment the and assessment be relationships relatively strategic consumer, were supply our that around is of better they money the beginning pricing so enjoy, low. bit our at inventories U.S. still the contracts than inventory with They be pigment, the the large they given number data the strength and and year, at of of moment. relatively they our a than to the remains may more really a strong

Vincent Andrews

Got it, thank you.

Operator

the ask if question, to your would Again, like one press number you keypad. on a then please telephone star

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

line Your is open.

Kevin Estok

you’re your was This a as I I is end Kevin demand. ones do you good I which specifically has reopening. know rise, happening how guys the greatest see curious little most? touched in you the as risks maybe for Estok morning. well but with on of China maybe currently, and Hi, the recessionary changes where on the just what I’m tepid sort Laurence. that’s Obviously deteriorating see there and you been recovery impacting wondering markets, bit guess seeing

Mark Newman

consumer you most and read in we’ve specifically obviously beyond has all of business, print been I’d say read, we macro report to date say we’ve guys more I’d global the on Listen, in that much not parts our seen Asia, at Europe same data the GDP. of U.S. product that, the in we to and recent China. robust weakness our coatings, we’ve seen of of for around point. very several fade In less on for in strategic half. business first we’ve some been Clearly seen in capacity reuse higher TSS, but that able out applications example, a this value lines. We’ve remain seen sold some use. parts the APM, to

half, job a and TT, we say I’d say team second would go really expect thoughts? expect QX. seasonality I and coming as a has a the nice you go Sameer, done normal global through great the perspective. any even don’t half the expansion if seasonality there also more back of as We in out we year, QX do macro into we some the saw from other normal in are the of if know team COVID, job expect I the and to have I we changes into

Sameer Ralhan

around Europe frankly. tremendous continue pockets, and everybody It’s like see businesses great, Mark, well, execute and APM you you we think and read No, macro The Asia opportunities, said really said. we it in to like execute what’s and right. TSS the in I else,

Kevin Estok

you. Thank Okay, great.

Operator

There are remarks. at questions time. back call for the over further Mr. no Newman, you some I to closing Mark this turn

Mark Newman

a investor in so this and future you interest and businesses, last in about team the you talked has we’re the and as out seeing especially the care. from of the look also APM. as the coming for about we the proud our TT, thank met long listen, immensely support side, that We’ve all three lot your example to accomplished, with against challenges businesses, we’ve Well take for to year meeting I’m in drive growth what weeks that term here, in Chemours. I to the road. can continued immensely where get two the we delivering across meetings, Take on ore but forward look business on we’re you our commitment those in the of how and in growth we’re TSS and excited

Operator

participation. This concludes your today’s conference call. you Thank for

now may You disconnect.

The Chemours Company (CC) 29 Jul 222022 Q2 Earnings call transcript