Chemours reports profit, increased cash flow in difficult 2nd quarter

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The Chemours Company, Wilmington, remained profitable and reported increased cash flow in the second quarter.

Earnings came in well above analysts’ forecasts.

Highlights

  • Net Sales of $1.1 billion
  • Net Income of $24 million.
  • Adjusted earnings before interest, taxes, taxes, depreciation and amortization (EBITDA) of $166 million
  • Free Cash Flow of $50 million, a $167 million improvement from the prior year
  • On July 29, the company’s board of directors approved a third-quarter dividend of $0.25 per share, consistent with the prior quarter. Chemours has a dividend yield of 5.5 percent.

Covid-19 response

  • All Chemours sites remain operational
  • On target to reduce fiscal year 2020 costs by $160 million
  • Preserving strong balance sheet, ample liquidity of $1.4 billion with no near-term senior debt maturities

“Our results in the second quarter reflect disciplined execution of our cash generation strategy in spite of the significant impact of COVID-19 on global demand,” said Chemours CEO Mark Vergnano. “We remain focused on both our employees’ safety and fully supporting our customers’ needs. At the same time, the team has reduced costs and improved operating efficiency through this difficult period. These efforts combined with our strong liquidity position give us tremendous confidence that we will be in a strong position to respond when market conditions improve.”

Second quarter 2020 net sales were $1.1 billion in comparison to $1.4 billion in the prior-year second quarter. Results were driven primarily by lower volume across all segments.

Secondquarter net income was $24 million. Results included a $13 million charge related to the Fayetteville facility that has been dealing with chemical discharges..

Fluoroproducts
Fluoroproducts segment net sales in the second quarter were $523 million in comparison to $711 million in the prior year. Lower volumes were primarily driven by the impact of Covid-19 on global automotive and industrial markets.

Chemical Solutions
Chemical Solutions segment net sales were $82 million, a 37 percent decrease versus the prior-year second quarter. Volumes were down 16 percent year-over-year primarily driven by Covid-19 related mine closures. Adjusted EBITDA of $19 million was 19 percent higher in comparison to the prior-year quarter, reflecting an improvement in margins to 23 percent from 12 percent in the prior-year primarily due to portfolio management actions and lower costs.

Titanium Technologies
Titanium Technologies segment net sales in the second quarter were $488 million in comparison to $567 million in the prior-year quarter. Volumes were down nine percent versus the prior-year second quarter, a result of softer demand primarily in Europe, Latin America and Asia. North America was relatively flat, as the do it yourself trends helped support demand. Chemours’ produces titanium products used in paint and coatings.

Adjusted EBITDA decreased by 26 percent to $94 million, in comparison to $127 million in last year’s second quarter.

Liquidity
Total liquidity was $1.4 billion, comprised of $1 billion of cash.

Outlook

Vergnano stated, “The first half of 2020 has been one of the most difficult periods in our short history. I am proud of the way Chemours has responded and our ability to focus and execute through these uncertain times. The outlook for the second half, while improving, remains unclear. Looking ahead, as we navigate this uncertain time, we remain focused on the execution of our short-term response plan and long-term strategy. The Chemours Team will continue to work in strong partnership with our customers to deliver the full potential of our value proposition because we win only if our customers win.”

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