Chemours Company (The)

Ladies and gentlemen, thank you for standing by and welcome to the Chemours Company's third quarter earnings conference 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 the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Jonathan Locke, Vice President, Corporate Development and Investor Relations. Thank you. Please go ahead, sir.

Good morning, and welcome to the Chemours Company's third quarter 2020 earnings conference call. I'm joined today by Mark Fregnano, President and Chief Executive Officer, Mark Newman, 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 Comoros 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. With that, I'll turn the call over to our CEO, Mark Ferdinando, who will review the highlights from the third quarter. Mark?

Thank you, Jonathan, and thank you, everyone, for joining us this morning. As I can imagine, many of you were up late last night monitoring the presidential election here in the United States. In spite of continued global macroeconomic weakness and uncertainty, we continue to deliver solid financial results on the back of strong execution in the third quarter. I am proud of this company's continued resilience and determination through this unprecedented period of economic and social disruption. The tough measures we took earlier in the year to address the COVID-19 pandemic have paid dividends across the business. As we move into the early stages of a recovery, we feel well positioned in all of our end markets. Our true north remains the health of our people and support of our customers and communities. It has served us well through the beginning of the pandemic and will continue to be our guide as we forge ahead. Looking now to the results. The global economy continued to stabilize in the third quarter, and in many sectors, we began to find some footing for recovery. It has certainly not been a synchronized bounce off the bottom, but demand has started to pick up in a way which suggests some momentum ahead into 2021. This will obviously be impacted by the course of the COVID-19 pandemic, and we continue to actively monitor regional and national actions taken in response to increasing cases in different parts of the world. I'm happy to report that we delivered $210 million of adjusted EBITDA in the quarter, up from $166 million in Q2 and slightly down from $248 million in in the prior year. More importantly, we continue to see the benefits of our cash-focused strategy and delivered $252 million of free cash flow in the quarter. This represents an increase of $92 million from the same period in 2019. Our continued strong cash generation was driven by CapEx tightening, cost discipline, and improved operating performance across the portfolio. We remain on track to deliver on our $160 million cost savings target and $125 million reduction in CapEx for the full year. As we move into the early phases of the recovery, we continue to maintain flexibility across the supply chain. This gives us the ability to find growth where demand has returned while managing inventory levels for the total enterprise. The strength of our balance sheet continues to shine through. with liquidity of $1.7 billion at the end of Q3. We also repaid the cautionary $300 million draw on our revolver in the third quarter. Finally, we published our third annual corporate responsibility commitment or CRC report in September. I'm extremely proud of this year's report. If you haven't had a chance to review our report in detail, please see the investor relations section of our website. Let's turn to the next chart, and I will take you through our CRC and our goals in more detail. Our CRC represents our commitment to responsible chemistry. It's our collective promise to the world and lays out 10 goals. We call these our 10 by 30 goals, and they cover three distinct pillars, inspired people, shared planet, and evolved portfolios. Each goal speaks to a specific area where Comores will make an impact on the world and contain specific benchmarks we are working toward. We have mapped each commitment to specific UN sustainable development goals to help our stakeholders understand our contribution to the ideals of the global community. Make no mistake, we have set the bar high relative to our peers, and we are committed to transparency. As you read these goals, I hope that you share my sense of optimism and purpose in our CRC. I also hope you agree that these goals are the hallmark of responsible chemistry and something that everyone in our industry should aspire to. Turning to the next chart, so what progress did we make in 2019? I'd like to share six of our achievements here across our three pillars, which I think speak to the type of change we're trying to drive over time. starting with our Inspired People Pillar. In 2019, Chemours US and Mexico were both certified for the second consecutive year by Great Places to Work, with Chemours Mexico ranking in the top 50. In addition, 12 Chemours facilities were recognized by the American Chemistry Council for outstanding achievements in safety, a testament to those teams who are living our holistic safety value. Ensuring that we have a strong culture and are a magnet for talent in the chemical sector is a very high priority for me as I think about the long-term vision for Chemours. The inspired people pillar is critical to ensuring that we continue to attract and retain the best talent we can as a company. Moving to our shared planet pillar, Chemours developed Option to reduce global warming potential of refrigerants. In 2019, Appian adoption helped avoid the equivalent of 27 million metric tons of CO2 emissions, about the same as taking 5.8 million cars off the road. I'm also proud to say that 48% of our products were sold in recyclable packaging, an achievement both our customers and supply chain partners have been excited to partner on. Our commitment to responsible chemistry is a promise to not only reduce our overall environmental footprint and impact, but to invent products which can contribute to a healthier world. Finally, our evolved portfolio pillar. In 2019, the Society of the Chemical Industry, America's group, or SCI, presented Chemours with the Moore Medal, named for the founder of Intel, Gordon Moore. The award was presented to John Swarren, one of our technical fellows, for his work on Teflon EcoElite, a plant-based durable water repellent finish. We also made significant progress in 2019, baselining our supply chain's sustainability performance, increasing by ninefold our coverage to about 40% of suppliers by spend. Our progress here helps us to ensure that one day we can stand behind not just the sustainability of our products, but the ingredients and supply chains that are used to create them. I am proud of the progress we are making. We are proving that big challenges can be solved by creativity, teamwork, and overall hard work. It's still early in our journey, but we're off to a solid start. During our next few earnings calls, I will share specific projects we have in the works to help us deliver on our 10 by 30 promise. Before turning things over to Samir, I'd like to close my introductory remarks with a quick recap of our COVID-19 response plan that we outlined earlier in the year. The core elements of this plan are, one, putting our employees, customers, and communities first. two, maintaining a strong balance sheet and liquidity position, and three, focusing on cash generation in 2020. As a company, we have been focused on executing against all the elements of this plan, and as you can see, we remain on track headed into the fourth quarter. The success of this plan has required difficult choices, hard work, and shared sacrifice from all corners of Chemours, So I would like to acknowledge all our team members for their contributions thus far in the year. With that, I'll turn things over to Sameer to go over the results from the third quarter. Sameer?