Chemours Company (The)

Ladies and gentlemen, thank you for standing by and welcome to the Chemours Company second quarter earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this time, you will need to press star plus the number one on your touch-tone phone. If you require any further assistance, please press star zero. Thank you. I would now like to hand the conference over to your speaker today. Jonathan Locke, Vice President of Corporate Development and Investor Relations. Please go ahead.

Good morning, and welcome to the Chemours Company's second quarter 2020 earnings conference call. I'm joined today by Mark Vergnano, President and Chief Executive Officer, Mark Newman, Senior Vice President and Chief Operating Officer, and Sameer Rahan, Senior Vice President and Chief Financial Officer. Before we start, I'd like to remind you that comments made on this call as well as the supplemental information provided in our presentation and on our website, contain forward-looking statements that involve risks and uncertainties, including the impact of COVID-19 on our business and operations, and the other risks and uncertainties described in the documents Chemours has filed with the FCC. 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 the course of this call, management 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 are included in our release and at the end of this presentation. I will now turn the call over to our CEO, Mark Vergnano, who will review the highlights from the second quarter. Mark?

Thank you, Jonathan, and thank you everyone for joining us today. We are living in unprecedented times, and the last three months have been some of the most challenging I can remember. It started with COVID-19, first in Asia, then in Europe and the Americas. We have witnessed the incredible resilience of the human spirit and our collective response. In late May, we saw social justice take center stage and a societal awakening of tremendous proportion. I am extremely proud of this company's response to both of these dramatic events in the first half of 2020. We have acted quickly on a global scale to face these challenges head-on and will emerge stronger and more united as a result. Regarding COVID-19, as I said in our first quarter call, our response was swift and strong. Early safety measures implemented across all our sites have proven effective, and we have maintained operational continuity across all our global footprint. We continue to manage through the current surge of cases in the United States with our internal health and epidemiology team fully engaged. As a leadership team, we have had to make many timely yet tough decisions as the pandemic has worn on. Through it all, we've maintained our true north of putting our people and customers first. As a company, we remain committed to coming out of this pandemic stronger and more competitive. Turning to social justice, the murder of George Floyd on May 25th set off a firestorm of protest and civil unrest not seen in a generation. His unfortunate death put into focus many of the deep-seated issues our society has and has caused all of us, including this leadership team, to rethink and reframe our behavioral norms and practices. We have taken the opportunity to reflect and strengthen a number of our own internal practices in regards to inclusion and diversity of the company. This includes a zero tolerance policy towards any type of discrimination, including racism. an expansion of our safety obsession value to include the holistic elements of emotional and psychological safety, and expanded training and education programs across the entire company. These types of actions are not new to Chemours. They, along with our 10 by 30 corporate responsibility commitments, form the basis of why we think of Chemours as a new kind of chemistry company. a company that is working to inspire our 7,000 employees to create a better world that is better for all of us. I would like to invite those interested in learning more about our commitments and programs to visit our website for more information. Moving on to the results. The COVID-19-driven weakness which started in the first quarter extended well into the second and impacted nearly every end market which we served. While the global macro was severely impacted by COVID-19, our second quarter cash flow proved resilient, reflecting the solid execution of our COVID-19 response plan. COVID-19 related headwinds resulted in a sharp drop in second quarter revenue with adjusted EBITDA of $166 million. Margins were impacted by low production rates as we managed working capital by idling several facilities across the company. As I said on the first quarter call, we are focused on maximizing cash generation through this demand trough. In the second quarter, our team jumped into action with swift cost cutting and cash conservation actions and helped offset some of the headwinds in the quarter. As a result, we were able to generate $50 million of free cash flow in the second quarter. This was an improvement of $167 million versus the second quarter of 2019. We still have significant work ahead of us as we turn our focus to revenue growth, but I'd like to applaud each of our team members around the world for their contribution to this excellent result. Our balance sheet remains solid with ample .4 billion dollars. At the end of the second quarter, we maintained a cautionary $300 million draw on our revolving credit facility. Looking ahead, we remain limited in our ability to forecast beyond the coming weeks. And while we're hopeful of an ongoing recovery, the view from our customers is not consistently clear. Barring a large second wave of the virus, we believe the global economy bottomed in mid-May. Since then, order patterns have begun to stabilize with improvements each week in June and into July. While a positive sign, we do not yet have enough data to project the shape and trajectory of the recovery. As a result, and consistent with our first quarter practice, we do not believe it is prudent to provide quantitative guidance for the second half. Before I turn things over to Samir to review the financial results in detail, I'd like to quickly cover the commitments we made last quarter and our proactive response to COVID-19. We covered some of these items earlier, but I wanted to use this chart to reinforce to all our investors that we have acted quickly and with purpose to create significant financial and strategic flexibility for the company. It starts with putting our employees and our customers first. We have not backed down on our PPE and health requirements at our sites and continue to use procedures, social distancing, and masks to help limit the spread of the disease. We have been fortunate to be in a position to help our customers and supply chain partners with advice, PPE, and other supplies during this pandemic, and we'll continue to help those in need across the communities in which we operate. We took early proactive measures to bolster our balance sheet by eliminating discretionary spending, temporarily reducing salaries, and scaling down CapEx to conserve cash. These programs remain on track. As we move cautiously off the bottom, we will continue to be vigilant from a cost perspective, mindful of the need to invest into the recovery and maintain momentum in key markets. Finally, on our first quarter call, I spoke about the resilience of Chemours, the grit and determination which has defined our short history. That resilience was on full display here in the second quarter, and I have no doubt we are well prepared for whatever else comes our way. I want to recognize the entire Comores team for their effort this past quarter, the shared sacrifice, long hours, and late nights. I know we will get through this together. With that, I'll hand things over to Sameer to review the financial results. Thanks, Mark.