Chemours Company (The)

Good morning. My name is Rob and I will be your conference operator today. At this time, I would like to welcome everyone to the Chemours Company fourth quarter and full year 2022 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star one. Thank you, Jonathan Locke, Senior Vice President and Chief Development Officer. You may begin your conference.

Hi, good morning, everybody, and welcome to the Chemours Company's fourth quarter and full year 2022 earnings conference call. I'm joined today by Mark Newman, President and Chief Executive Officer, and Sameel Raohan, 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 in the supplemental information provided in our presentation and on our website, contain forward-looking statements that 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 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 our presentation. As a reminder, our prepared remarks, a full transcript and an audio recording, plus our earnings deck have been posted to our website alongside our earnings release. This morning's call will focus purely on Q&A. With that, I'll turn the call over to our CEO, Mark Newman. Mark?

Thank you, Jonathan, and thank you all for joining us this morning. I'd like to start this morning by first thanking our Chemours employees, the entire 6,600 strong team Chemours for another great year, a year of improved results in revenue and earnings and high free cash flow conversion. a year in which we set several records, especially as we think of our TSS and APM businesses. But as you saw in the results we posted last night, we had a difficult fourth quarter, and the results in the quarter were driven primarily by rising raw material costs, also with higher energy and logistics costs, which were further compounded by weaker than expected demand mainly in our TT segment, which also feeds into our unit rate costs in the quarter. Clearly, the strong US dollar and the winter storm at the very end didn't help, but clearly it was a weaker quarter. With that, we have stepped back and we looked at the year. We had a great year. And with that in mind, as we look at how we set the 2023 guide, I'd like to make a few comments. Our guide, in my mind, reflects our confidence in the work that's already on the way in CT to improve margins from where we left off in Q4 throughout the year, to deliver margins that will be essentially in line with fiscal year 2022. We have a great foundation with TBS. And we're adding to that work that we're doing on input costs and plant efficiency. In TSS, the growth thesis is intact, you know, with mid to high single digit top line growth and comfort in getting back to greater than 30% margins for the full year based on mix and volumes. And especially as we bear in mind the step down in quotas starting in early 2024. In APM, the growth thesis in our advanced electronics and clean energy applications, which provide very high value in use, is also intact. From a bottom line perspective, clearly there will be some fade on less strategic businesses. Clearly that will be impacted depending on the strength of global macro. and also our sense that we are very much involved in driving growth and investing in growth in our APM business, which has an impact on the margins. Nevertheless, with all these ingredients, we're confident in delivering margins, again, consistent with last year in the low 20s. And then finally, the team continues to work on a number of legacy issues, both on legal and environmental areas as we continue to resolve legacy issues. And with that, we expect higher corporate and other spend in the year. So overall, we're starting the year on a weaker note with a lot of global macro uncertainty. But the team's very focused on all of these points in delivering another good year for Chemours in 2023. With that, Rob, I'll turn it over to you to open up for Q&A.