Tuesday, Nov.
3, 2026 CALL PARTICIPANTS President and Chief Executive Officer - Denise DignamSenior Vice President and Chief Financial Officer - Shane W.
HostetterVice President, Head of Strategy and Investor Relations - Brandon Ontjes Net Sales -- $1.54 billion, representing 3% year-over-year growth driven by 5% higher pricing and a favorable mix shift in performance solutions.Adjusted EBITDA -- $200 million, reaching the high end of management guidance due to pricing momentum in the Titanium Technologies segment.Adjusted EPS -- $0.21, compared with $0.17 in the prior-year period.Thermal & Specialized Solutions (TSS) Sales -- $510 million, a 9% year-over-year decline resulting from lower demand in the North American stationary air conditioning aftermarket.Titanium Technologies (TT) Sales -- $680 million, an 11% increase driven by a 10% rise in global pricing across all regions.Advanced Performance Materials (APM) Sales -- $337 million, up 8% year over year as 26% growth in Performance Solutions more than offset broader industrial market weakness.Performance Solutions Sales -- $153 million, representing 26% growth driven by robust demand from AI infrastructure, data center, and semiconductor end markets.TT Adjusted EBITDA -- $85 million, reflecting a significant increase from $25 million last year due to pricing discipline and modest volume growth in North America and Asia Pacific.APM Adjusted EBITDA -- $24 million, a 71% year-over-year increase resulting from a favorable mix shift toward higher-value products.TSS Adjusted EBITDA -- $136 million, down 30% from the prior-year period due to lower Opteon volumes and higher sulfur input costs.Full-Year Adjusted EBITDA Guidance -- $775 million to $800 million, updated to reflect broader pricing momentum and seasonal volume impacts.Full-Year Net Sales Guidance -- Approximately 2% growth for the year, supported by demand in high-value performance materials.Free Cash Flow Conversion -- 15% to 20% for the full year, lowered to reflect $150 million in restricted cash related to a judicial consent order and upcoming legal settlement payments.Capital Expenditures Guidance -- $220 million to $230 million, focused on manufacturing stability and strategic expansion.Net Leverage Ratio -- 4.3x at quarter-end, with management targeting a reduction to below 4.2x by the end of 2026.Debt Reduction -- 50 million euros prepaid on the Euro Term Loan B in the third quarter, totaling 280 million euros in debt reduction for the year.Kuan Yin Asset Sale -- $340 million in total net consideration, including $56 million in gross proceeds from the final land parcel sale completed in the third quarter.AI Infrastructure Concentration -- 10% of total company sales, reflecting growing exposure to high-performance technology markets through TSS and APM.Q4 TSS EBITDA Guidance -- $105 million to $115 million, reflecting seasonal declines as the North American cooling season concludes.Q4 TT EBITDA Guidance -- $60 million to $65 million, impacted by normal seasonality and the timing of sales benefits realized in the third quarter.Q4 APM EBITDA Guidance -- $40 million to $45 million, supported by order book strength and continued operational improvements.Cost Savings -- Management reported it is ahead of its Pathway to Thrive goal to achieve $250 million in run-rate savings by the end of 2027.Greenhouse Gas Emissions -- 57% reduction in Scope 1 and 2 emissions since 2018, nearing the company goal of a 60% reduction by 2030.Chlorinated Organic Chemical Emissions -- 80% reduction in air and water process emissions since 2018, according to the 2025 Sustainability report.Transaction Taxes -- $25 million paid in the third quarter related to the Kuan Yin property sale, with an additional $5 million expected in the fourth quarter.
Need a quote from a Motley Fool analyst? Email [email protected] Hostetter stated, "These dynamics together with timing of our net working capital spend, partly related to turnaround plans at APM, have lowered our cash flow projections for the remainder of the year," when explaining the revised free cash flow conversion guidance.Dignam noted that "Many of our customers continue to navigate a persistently weak housing market and broader macroeconomic uncertainty," which pressured volumes in the Titanium Technologies segment.Hostetter warned that "we continue to see weaker demand volumes across our key regions" within the Titanium Technologies business, specifically identifying persistent challenges in EMEA and China.
The Chemours Company (CC +1.86%) reported third quarter results that highlighted a strategic emphasis on expanding its presence in artificial intelligence and semiconductor infrastructure end markets.
Management noted significant sales concentration in these sectors across its thermal and performance materials segments.
The company reported progress in its Pathway to Thrive initiative, including reaching a settlement with the state of North Carolina to resolve legacy litigation and completing the divestiture of its former Kuan Yin manufacturing site.
The financial outlook for the year was updated to reflect seasonal demand patterns in cooling and titanium markets alongside pricing discipline intended to offset macroeconomic uncertainty in the housing and industrial sectors.
Launch of Faizeon brand: Denise Dignam stated, "We created the Faizeon brand to give our growing portfolio clear, dedicated identity in the liquid cooling data center market bringing together years of fluid development technical expertise and industry collaboration under 1 brand."Performance Solutions order book: Shane W.
Hostetter noted that "demand trends have strengthened the Performance Solutions order book, and continue to support strong momentum from attractive end markets."TiO2 trade protection: In response to potential anti-dumping duties, Denise Dignam stated, "we will aggressively defend the U.S.
market," regarding Chinese imports.Strategic architecture: Dignam indicated that there could be a "data center architecture designed for 2-phase in 2027," utilizing the company's new cooling fluids.Operational excellence: Hostetter indicated that the company is utilizing "business systems, which I think is really being helpful from a lean mindset in driving out costs locally at the manufacturing sites." INDUSTRY GLOSSARY AIM Act: The American Innovation and Manufacturing Act, which mandates the phasedown of hydrofluorocarbons (HFCs).APM: Advanced Performance Materials, a segment producing polymers and resins for high-performance applications.Faizeon: The company's brand for liquid cooling fluids designed for AI infrastructure and data centers.GWP: Global Warming Potential, a measure of how much heat a greenhouse gas traps in the atmosphere.JCO: Judicial Consent Order, a legal agreement used to resolve environmental and litigation matters.PFAS: Per- and polyfluoroalkyl substances, a group of synthetic chemicals used in industrial processes.TiO2: Titanium dioxide, a white pigment used in coatings, plastics, and laminates.TSS: Thermal & Specialized Solutions, the segment focused on refrigerants and thermal management.TT: Titanium Technologies, the segment responsible for the production of titanium dioxide.
Full Conference Call Transcript Operator: Good morning.
My name is Marvin.
I will be your conference operator today.
I would like to welcome everyone to Chemours Company Third Quarter 26 Results Conference Call.
Currently, all participants are in listen only mode.
A question and answer session will follow the conclusion of the prepared remarks.
I would like to remind everyone that this conference call is being recorded.
I would like to hand the conference call over to Brandon Ontjes, vice president, head of strategy and investor relations of Chemours.
You may begin your conference.
Brandon Ontjes: Good morning, everybody.
Welcome to The Chemours Company's Third Quarter 26 Earnings Conference Call.
I am joined today by Denise Dignam, Chemours' President and Chief Executive Officer and our Senior Vice President and Chief Financial Officer, Shane W.
Before we start, I would like to remind you that comments made on this call as well as in the supplemental information provided on our website contain forward-looking statements involve risks and uncertainties as described in Chemours' SEC filings.
These forward-looking statements are not guarantees of future performance, and are based on certain assumptions and expectations of future events that may not be realized.
Actual results may differ, and Chemours undertakes no duty to update any forward looking statements as a result of future developments or new information.
During this call, we will refer to certain non GAAP financial measures that we believe are useful to investors evaluating the company's performance.
A reconciliation of non GAAP terms and adjustments is included in our press release issued yesterday evening.
Additionally, we also posted our earnings presentation on our website yesterday evening.
With that, I will turn the call over to Denise Dignam.
Denise Dignam: Thank you, Brandon, and thank you, everyone, for joining us this morning.
On today's call, I will start with highlights from our third quarter performance before turning it over to Shane to walk through our fourth quarter outlook and initial perspective on 2027.
I will then close with an update on our strategic execution under Pathway to Thrive.
Our third quarter results reflected strong year over year performance in Titanium Technologies and Advanced Performance Materials, paired with disciplined commercial and operational execution across the company despite weakening macroeconomic conditions across our key end markets.
Net sales were up 3% year-over-year as expected, driven by continued pricing momentum in TT and growth of 26% in APM Performance Solutions business.
More than offsetting the anticipated softness in TFS due to expected weaker demand in the North American stationary AC aftermarket for Opteon blends.
Adjusted EBITDA was $200 million at the high end of our guidance range with all businesses contributing above expectations.
With this update, I also want to highlight the progress that we have made under Pathway to Thrive to derisk our balance sheet for continued efforts to reduce litigation exposure and address leverage.
On the litigation front, we were able to reach a settlement with the state of North Carolina and 11 local entities to resolve claims of PFAS and other discharges from our Fayetteville work site as well as those unrelated to our site.
In addition, we received final approval of the judicial consent order with the state of New Jersey.
This was a meaningful step toward completing our settlement and establishing previously agreed funding from our MOU partners to support settlement payments over decades.
These developments reflect our continued focus on derisking the balance sheet.
With this, let me expand on the quarter's business activities.
In TSS, third quarter performance reflected the anticipated softness in the North American stationary AC aftermarket.
Demand for Opteon blends was lower compared with the prior year period which benefited from the initial channel fill associated with the stationary AC technology transition under The U.S.
While lower aftermarket volumes and higher costs weighed on earnings in the quarter, we remain confident in the long term fundamentals of TSS, We believe that the expanding installed base of lower GWP systems at our advantaged position with HVAC OEMs and aftermarket distributors, will provide a strong foundation for future growth.
As the 2026 cooling season comes to a close in North America, we continue to build on our advantaged position.
Managing the business with discipline and positioning TSS to capture the attractive aftermarket opportunity in front of us.
Looking further ahead, the business' attractive growth is underpinned by our innovation led foundation and our intellectual property portfolio, ensuring protection for the breadth of our Opteon products ending into the 2030s.
In TT, third quarter performance reflected strong commercial execution against a challenging demand backdrop.
Many of our customers continue to navigate a persistently weak housing market and broader macroeconomic uncertainty across most key end markets.
Even in this environment, the team delivered growth through a combination of pricing and volume improvement with strength in North America, Latin America, and Asia Pacific outside of China, more than offsetting softer demand in EMEA and China.
This execution helped us deliver earnings above the high end of our range, As an additional point, this quarter did include approximately $5 million of earnings benefit from sales and costs timing between the third and fourth quarter.
Importantly, global pricing increased 10% year-over-year in the third quarter, underscoring the success and discipline of the global pricing increase we executed over the past year.
Pricing improved across every region and was the primary driver of the significant year over year increase in earnings and margin.
This performance demonstrates the value of our differentiated Ti Pure products consistent commercial approach and the ability to execute pricing actions while continuing to deliver quality and service our customers expect.
While housing and other key end markets remain under pressure, we are confident in the actions we are taking to strengthen TT through the cycle.
Our work to optimize our manufacturing circuit to demand, with a focus on pricing execution regulatory diligence and market selectivity underpinned by cost reduction efforts have been key elements to enhance the value in a competitive TiO2 market.
We will continue to control what we can control and remain ready to capture the opportunity as market conditions change.
In APM, third quarter performance reflected continued progress toward a higher value portfolio mix, The business delivered year over year growth despite mixed conditions across broader industrial end markets.
Supported by pricing, improved volumes and strong momentum in Performance Solutions.
This deliberate mix shift also contributed to meaningful year over year improvement in earnings and margin.
Notably, Performance Solutions sales increased 26% year-over-year and 8% sequentially underscoring the robust demand signals we continue to see from certain end markets inclusive of those in the AI infrastructure and semiconductor space.
Continued order book strength across data center and semiconductor applications demonstrate the critical role of our differentiated products now approaching nearly half of Performance Solutions enabling increasingly complex high performance technologies.
As Performance Solutions becomes a larger part of APM, it reinforces our confidence in the business' path towards higher value growth and stronger earning potential.
More broadly, Chemours continues to expand its presence attractive AI infrastructure end markets, inclusive of data centers and semiconductors with differentiated offerings across APM's Performance Solutions business and TSS.
As of today, we have seen strong growth markets with our sales concentration across TSS, and APM now at 10%.
With that, I will turn it over to Shane to walk through our outlook as we move into the fourth quarter.
Hostetter: Thank you, Denise, and good morning, everyone.
As shared in the earnings materials available on our investor website, I would now like to discuss our expectations as we look ahead.
Beginning with TSS, For the fourth quarter, we expect TSS's net sales to decline sequentially in the high teens to low 20% range.
Reflecting traditional seasonal patterns as the North American cooling season concludes.
We expect adjusted EBITDA to be between $105 million and $115 million primarily reflecting the associated seasonal volume and mix impacts.
As we look ahead, we are watching the economy closely and monitoring key demand drivers across TSS, including OEM stationary HVAC unit shipments in North America, as well as light vehicle builds.
Given the seasonality of the business, we expect better visibility into the aftermarket as we move further into the first quarter of 27 when seasonal restocking comes more into view.
The near term environment remains dynamic, we remain confident in the business' long term fundamentals.
Supported by our positions with OEMs and aftermarket distributors and disciplined commercial execution.
For our TT business, we expect TT's net sales to decline sequentially in the high single digits to low teens percentage range.
And adjusted EBITDA to range between $60 million and $65 million in the fourth quarter.
These expectations reflect challenging end markets as well as normal seasonality, paired with the timing of earlier reference sales and cost benefits in the third quarter which will negatively impact fourth quarter earnings.
While the sequential outlook reflects these timing and seasonal factors, we continue to see weaker demand volumes across our key regions.
With some slight strength in Latin America.
Reflecting a challenging and competitive global demand environment.
We also feel well positioned on pricing anticipated to be up high-single-digits over the prior year.
Following the 3 announced increases over the past.
The traction achieved across regions reflects consistent execution, close customer engagement, and our focus on protecting the value of our Ti Pure offerings.
Longer term, we remain focused on controlling what we can control through commercial and operational agility.
Underpinning this value focused approach.
We are managing production to demand and advancing cost productivity across our manufacturing to strengthen earnings and cash flow through the cycle.
Turning now to our APM business.
For the fourth quarter, we expect APM's net sales to increase sequentially in the low to mid teens percentage range.
Driven by continued strength in Performance Solutions.
We expect adjusted EBITDA to be between $40 million and $45 million reflecting the benefit of higher sales and continued cost and operational improvements across APM's manufacturing.
The circuit is currently working well.
And our focus remains on consistent execution and reliable customer service.
At the same time, the business is addressing broader demand tailwinds across AI infrastructure, data center, semiconductor, and related end markets.
The quality and differentiated capabilities of our products continue to earn customer loyalty.
These demand trends have strengthened the Performance Solutions order book, and continue to support strong momentum from attractive end markets.
As we fulfill that demand, and shift the portfolio towards higher value performance solutions product, we see a clear path to stronger earnings to sustain growth in APM.
Looking to our consolidated outlook, we now expect net sales to grow around 2% compared with 2025, and adjusted EBITDA to now be between $775 million and $800 million.
As we move further into the fourth quarter, this outlook reflects broader pricing momentum in TT with seasonal volume partially offset by anticipated cost, continued APM demand strength in high value end markets supported by operational improvements.
And stationary aftermarket weakness in TSS, which we expect will result in modestly lower earnings to close the year.
Looking at liquidity, we now anticipate free cash flow conversion to be between 15% and 20%, which reflects capital expenditures between $220 million and $230 million.
This free cash flow conversion outlook reflects notable recent developments most of which were not in our previous outlook.
First, the increase of restricted cash related to the PFAS insurance proceeds MOU in connection with the finalization of the judicial consent order.
With the state of New Jersey.
Which we expect to be more than offset by related legal settlement payments to the state of New Jersey and payments associated with our settlement with the state of North Carolina.
Both falling in the third and fourth quarters.
These dynamics together with timing of our net working capital spend, partly related to turnaround plans at APM, have lowered our cash flow projections for the remainder of the year.
Transaction taxes associated with the sale of our Kuan Yin property of approximately $25 million also impacted the third quarter with the remaining $5 million in the fourth quarter.
Our net leverage ratio is now expected to be below 4.2x adjusted EBITDA at the end of 2026.
Related to our leverage position, we have continued to prioritize debt repayment.
In the third quarter, we prepaid an additional €50 million for our Euro Term Loan B bringing total debt reduction for the year to €280 million.
Additionally, as anticipated, we closed the sale of the final parcel of land associated with our former manufacturing facility in Kuan Yin.
Delivering the remaining approximate $56 million of consideration from the transaction.
This land sale completed earlier than anticipated marks the conclusion of a multiyear effort by our team.
And underscores our ability to rightsize our operational footprint drive smart cost cutting initiatives, maximize the value of our noncore assets, and deploy proceeds in a responsible fashion.
Going forward, we will continue to prioritize debt reduction as a key element of our capital allocation strategy.
Strengthening the Chemours balance sheet and enhancing our long term financial flexibility.
The work to derisk our balance sheet is foundational to executing the 4 pillars of Pathway to Thrive.
As we look ahead to 2027, we expect uncertain macroeconomic conditions to persist.
We remain focused on controlling what we can control and are confident in the cost measures we have taken and the improvements we are driving across our operational circuit through the Chemours business system.
To strengthen our resilience and execution.
Even in this challenging environment, we expect....
