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Chemours(CC) - 2023 Q3 - Earnings Call Transcript
CCChemours(CC)2023-10-27 13:17
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Financial Data and Key Metrics - The company achieved double-digit growth year-to-date of 11% in its performance solutions business, despite demand weakness in advanced materials [5] - The TSS business delivered another record net sales, marking the seventh consecutive quarterly net sales record [12] - The company expects a 100millionimprovementinTTearningsprofileinto2024,drivenbycostsavingsandtransformationefforts[56][82]BusinessLinePerformance−TheAPMbusinesssawdemandweaknessinadvancedmaterialsbutremainstiedtolong−termseculargainsinadvancedelectronicsandcleanenergy[5]−TheTTbusinessexperiencedvolumeweakness,withdemanddeteriorationstartinginlateQ32022,butsignsofdecelerationindemandreductionareemerging[8][76]−TheTSSbusinessispoisedforgrowthwiththeadoptionofOpteonandtheupcomingcommercializationofimmersioncoolingtechnologyin2025[12][22]MarketPerformance−ThecompanyisseeinggreenshootsinAsiaPacificinventorylevels,indicatingpotentialrecoveryintheregion[63]−TheTTbusinessisexpectedtoseeflattoslightlydownvolumesinQ4,whichistypicallyaweakerquarterforTT[47]StrategicDirectionandIndustryCompetition−ThecompanyisfocusedondrivingcostreductionsinTT,growingTSS,andexpandingAPMinhigh−valuemarketslikeadvancedelectronicsandhydrogen[43]−Thecompanyiscommittedtobeingthelowest−costandmostcompetitiveTiO2producerglobally,witha100 million improvement in TT earnings profile into 2024, driven by cost savings and transformation efforts [56][82] Business Line Performance - The APM business saw demand weakness in advanced materials but remains tied to long-term secular gains in advanced electronics and clean energy [5] - The TT business experienced volume weakness, with demand deterioration starting in late Q3 2022, but signs of deceleration in demand reduction are emerging [8][76] - The TSS business is poised for growth with the adoption of Opteon and the upcoming commercialization of immersion cooling technology in 2025 [12][22] Market Performance - The company is seeing green shoots in Asia Pacific inventory levels, indicating potential recovery in the region [63] - The TT business is expected to see flat to slightly down volumes in Q4, which is typically a weaker quarter for TT [47] Strategic Direction and Industry Competition - The company is focused on driving cost reductions in TT, growing TSS, and expanding APM in high-value markets like advanced electronics and hydrogen [43] - The company is committed to being the lowest-cost and most competitive TiO2 producer globally, with a 100 million cost savings target for 2024 [36][56] - The immersion cooling market represents a significant growth opportunity, with an estimated 2billionto2 billion to 3 billion addressable market by 2030 [32] Management Commentary on Operating Environment and Future Outlook - Management highlighted the challenging environment in 2023 but remains focused on long-term shareholder value and improvements across its businesses [33] - The company expects meaningful growth in HFO volumes in 2024, driven by OEM adoption [16] - The company is optimistic about the long-term secular growth in both TSS and APM, despite near-term challenges [70] Other Important Information - The company is working on product registration for its immersion cooling technology, with commercialization planned for 2025 [22] - The company is addressing permitting delays at its Washington Works Plant, which impacted Q3 growth in performance solutions, with expectations of resolution by early 2024 [57] Q&A Session Summary Question: TT Business Demand Weakness - The company explained that the demand weakness in TT is decelerating, with indications of regaining demand in the AP order book [8] Question: HFO Step Down and HFC Volumes - The company noted higher HFC pricing in Q4, indicating increasing interest in HFCs ahead of the step down, with expectations of continued ramp-up in HFO volumes in 2024 [13][16] Question: TT Margins and Cost Curve - The company acknowledged compressed margins in TT but highlighted efforts to drive down both variable and fixed costs, with expectations of margin expansion in 2024 [24][49] Question: Data Center Cooling Opportunity - The company discussed the significant potential of the immersion cooling market, with estimates of a 2billionto2 billion to 3 billion addressable market by 2030 [32][62] Question: TT Productivity Program and Data Center Cooling CapEx - The company outlined its cost-saving initiatives in TT, with $100 million in savings expected in 2024, and discussed the phased approach to capital expenditure for immersion cooling technology [25][75] Question: TiO2 Market Trends - The company noted prolonged destocking in TiO2 markets but sees green shoots in Asia Pacific, with expectations of a cyclical turn in the future [63] Question: TSS Business and Equipment Changes - The company expects growth in TSS in 2024, driven by equipment transitions and adoption of new technologies [71] Question: Input Cost Reductions - The company highlighted reductions in input costs and ongoing efforts to optimize manufacturing costs across its operations [60][79]