Chemours(US:CC)2024-05-01 15:09Financial Data and Key Metrics Changes - Consolidated net sales for Q1 2024 were approximately $1.4 billion, down from $1.5 billion in Q1 2023, reflecting a 6% decrease in volumes and a 5% decline in price across all three businesses [36] - Consolidated adjusted EBITDA decreased 37% year-over-year from $304 million to $193 million, primarily due to demand weakness and lower cost absorption [14][36] - Net income for Q1 2024 was $52 million, compared to $145 million in the prior year quarter, with net income per diluted share at $0.34 versus $0.96 [37] Business Segment Performance Changes - In the TT segment, net sales decreased 7% year-over-year to $588 million, driven by a 7% decline in pricing, while adjusted EBITDA remained flat at $70 million [17][18] - TSS segment net sales were approximately $449 million, down 8% from Q1 2023, with a 6% decrease in volume and a 2% decrease in price [19] - APM's net sales for Q1 2024 were $299 million, a 23% decrease compared to the prior year, primarily due to an 18% decline in volume [43] Market Data and Key Metrics Changes - The volume decrease in TSS was primarily due to lower demand in foam, propellants, and other product portfolios, with weaker demand in the automotive OEM market [19][21] - Pricing in the refrigerants product portfolio decreased due to higher market inventory levels, while Opteon blends pricing remained strong [20][42] - The company maintained $607 million in restricted cash, primarily held for the Water District Settlement Fund [23] Company Strategy and Development Direction - The company is focused on becoming one of the lowest-cost TiO2 producers globally, with a transformation plan that has already eliminated approximately $90 million in operating expenses [56] - Capital allocation strategy includes selective investments in organic and inorganic growth, resolving contingent liabilities, maintaining appropriate leverage, and returning cash to shareholders [24] - The company anticipates continued growth in TSS driven by regulatory transitions towards low GWP solutions, with 80% of TSS sales concentrated in North America and EMEA [85] Management's Comments on Operating Environment and Future Outlook - Management noted signs of a modest recovery in economically sensitive end markets served by APM, although no broad market catalysts have been observed [30] - The company expects net sales to increase approximately 15% sequentially in Q2 2024, with TT achieving similar growth due to strength in the order book [83] - Management emphasized the importance of maintaining strong customer relationships and reliability in supply as key competitive advantages [131] Other Important Information - Corporate expenses for Q1 2024 were $55 million, a $10 million increase from the prior year, with expectations for higher expenses in Q2 [15][16] - The company is actively working on remediation of material weaknesses disclosed in its annual report, devoting substantial resources to enhance internal controls [47] Q&A Session Summary Question: What caused the gap in EBITDA guidance? - Management explained that the gap was primarily due to shifts in ore costs and changes in corporate costs, with a focus on supply chain optimization [72][94] Question: What is the outlook for TSS earnings? - Management indicated that while there are high levels of HFC inventory, they expect mid to high-single-digit growth driven by regulatory transitions [99] Question: How will the company manage its leverage profile? - Management stated that they expect cash to remain flattish in the first half of the year, with a source of cash anticipated in the second half, aiming for a leverage ratio around 3 times in the long term [125][126]