Chemours Company (The)

Good morning, everybody. Welcome to the Chemours Company's first quarter 2024 earnings conference call. I'm joined today by Denise Dignam, Chemours President and Chief Executive Officer

and our Interim Chief Financial Officer, Matt Abbott. Before we start, I would 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, 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 are included in our press release issued yesterday. Also, we posted our earnings presentation to our website last evening. With that, I will turn the call over to Denise Dignam.

Thank you, Brandon, and good morning, everyone. I'm going to start this morning by talking about our overall performance and dive more deeply into TT. Then I'm going to turn the call over to Matt to cover our segment-level performance as well as our balance sheet and liquidity position. I'll then provide our outlook for the second quarter and spend some time on TSS because I received a lot of questions from many of you on this business during our recent meetings. We'll then close with your questions. Let's start with our first quarter performance. Our TT segment met our top line expectations for the quarter. Adjusted EBITDA for TT was better than expected for three primary reasons. First, our actions to allocate TIO2 volumes to higher yield regions. Second, more favorable than expected timing of lowest lower costs for consumption, which we anticipate will shift mostly to the second quarter. And third, our transformation plan continuing to produce strong results. Our APM and TSS segments both performed in line with our expectations for net sales and adjusted EBITDA for the first quarter. The economically sensitive end markets served by APM began to show some signs of a modest recovery during the quarter. TSS, in addition to benefiting from traditional seasonality across the refrigerant's product portfolio, continued to leverage its advantage in Option stationary blends to support the transition to low GWP solutions in connection with the recent incremental regulatory stepdowns in the U.S. and Europe. In these regions, TSS also experienced the continued trends in Option demand for aftermarket automotive solutions in line with our expectations. Now back to TT. We have not seen our order book velocity at these levels since the third quarter of 2022, and we are seeing early signs of restocking. However, we have not seen a market catalyst, such as a decrease in interest rates, improvement in residential building, or an increase in auto production. Digging into the first quarter, in the most basic terms, we made purposeful choices in terms of production and volume allocation. As we finished 2023, we did not see appreciable improvement in the market, and we remained appropriately conservative with our production plans. First, we made the decision to not chase volume in low-value markets. Instead, we allocated TIO2 volumes to higher-yield end markets. While our pricing through the end of the quarter is lower than the prior year, we've been able to retain stronger overall pricing relative to the market. As referenced, this pricing position helped us drive improved earnings as we exited the first quarter. Second, we consumed a higher concentration of lower-cost ore, including from our own mines, which contributed to our profitability. And third, as previously disclosed, we pulled forward previously planned second quarter maintenance to ensure we are well positioned for an eventual market recovery. Once we completed this maintenance, we brought the plant back online and its performance has never been better. Consistent with what I shared in our last earnings call, we have seen our order book velocity improve and have increased production across our manufacturing circuit. supports our expected growth in TT in the second quarter. Now let's take a step back and look at our transformation plan from a wider lens. The main objective of our plan is to secure our long-term leadership position by becoming one of the lowest cost TIO2 producers globally. Our initial focus was twofold. First, optimizing our manufacturing circuit to drive higher production efficiency. This started with the closing of Quan Yin and redistributing production across lower cost manufacturing sites in North America without sacrificing product quality or reliability. This has been a clear success. Second, driving improved productivity from our mining operations and better utilizing that feedstock in our TIO2 production. To date, our mining performance has shown significant improvement with the consumption of our own ore feedstock improving to nearly 15% from less than 10% in late 2023. The meaningful progress that we are making on cost savings is clearly evident in the first quarter results. Our actions more than offset the decline in local price year over year. Overall, since we announced the TT transformation plan in 2023, we have eliminated approximately $90 million of operating expenses. $50 million of this was in the latter half of 2023, and another $40 million in year-over-year cost-outs were realized in the first quarter of 2024. For the full year 2024, we are well on our way towards our cost-out targets of $125 million. Now I'll turn things over to Matt to dive more deeply into the results.