Chemours’ 3rd quarter earnings, sales decline

The Chemours Discovery Hub, located on the University of Delaware's Science, Technology and Advanced Research Campus, houses more than 300 researchers and scientists.

The Chemours Company a global chemistry company with market positions in Titanium Technologies (“TT”), Thermal & Specialized Solutions (“TSS”), and Advanced Performance Materials (“APM”), posted lower sales and earnings.

Zacks reported earnings came in below its forecasts.

Chemours is based in Wilmington and has a research center in Newark.

Markets have weakened in the chemical industry due in part to the “destocking” of inventories as supply chain disruptions wanted and markets weakened.

3rd quarter highlights

  • Net Sales of $1.5 billion
  • Net Income of $20 million with EPS of $0.13
  • Adjusted net income  of $96 million with Adjusted EPS  of $0.63
  • Adjusted EBITDA (earnings before taxes, interest and other expenses) of $247 million and Adjusted Free Cash Flow  of $81 million
  • Launched TT (titanium) Transformation Plan to drive approximately $100 million in cost savings starting in 2024
  • Announced development of Opteon 2P50, a new specialty fluid for two-phase immersion cooling, including applications in data centers
  • Completed sale of the Glycolic Acid business to PureTech Scientific Inc., generating net cash proceeds of $138 million
  • ARCH2 hydrogen hub (Appalachian region) in which Chemours is a project development partner, was selected by the U.S. Department of Energy for a grant award
  • On October 26, the company’s board approved a third-quarter dividend of $0.25 per share.
  • Given the weaker demand outlook, we now anticipate full-year Adjusted EBITDA to be between $1.025 billion and $1.075 billion, with Adjusted Free Cash Flow guidance greater than $225 million.

“Our third quarter results reflect the weaker global macroeconomic environment primarily impacting our TT segment and the Advanced Materials portfolio in APM,” said Mark Newman, CEO. “We have stepped up our efforts to improve the TT segment’s earnings with the launch of our TT Transformation Plan, which commenced with the recent Kuan Yin facility closure, and has been augmented by incremental efforts to streamline our workforce and other measures to drive cost savings and long-term margin improvement. While experiencing macro-driven weakness in our Advanced Materials APM portfolio, we remain committed to sustainability-led growth in our Performance Solutions APM portfolio, achieving double-digit year-to-date top-line growth over the previous year. Our TSS business continues to deliver top-line growth and strong Adjusted EBITDA Margins and remains well positioned for continued growth in low GWP Opteon refrigerants, with the planned US AIM Act quota stepdown in 2024.”

Third quarter 2023 Net Sales of $1.5 billion were 16% lower than the prior-year quarter, driven by lower Net Sales in TT and APM’s Advanced Materials portfolio. Price was down slightly (1)%, while volumes were down (15)%, and currency was flat, on a year-over-year basis.

Third quarter net income was $20 million, resulting in EPS of $0.13, down $1.39 vs. the prior-year quarter. Adjusted net income was $96 million, resulting in Adjusted EPS of $0.63.

Adjusted EBITDA for the third quarter of 2023 declined 32% to $247 million compared to $363 million in the prior-year third quarter, driven primarily by lower volumes in TT and the Advanced Materials portfolio in APM. In the third quarter, price declines were more than offset by lower costs. Reduced sales volume primarily drove lower adjusted EBITDA vs. the prior-year quarter, while currency, portfolio adjustments, and other income were slightly unfavorable.