Chemours Company (The)

remind everyone that this conference call is being recorded. I would now like to hand the conference call over to Brandon Onchess, Vice President of Investor Relations for Chemours. You may begin the conference.

Good morning, everybody. Welcome to the Chemours Company's second quarter 2024 earnings conference call. I'm joined today by Denise Dignam, Chemours President and Chief Executive Officer, and our Chief Financial Officer, Shane Hostetter. 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 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 the call, we'll 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 thank you everyone for joining us. Before we get into our call this morning, I'd like to begin by welcoming a new member of our executive team. I'm excited to introduce Shane Hostetter as our new Senior Vice President and Chief Financial Officer. Shane brings over 20 years of experience to the leadership of our finance function, having previously served as a CFO of Quaker Helton. While Shane has only been with us for a month, he's already having a positive impact. We are happy to have Shane on board with the strong talent that he brings, solidifying our leadership team. During this transition, Matt Abbott, who served as our interim CFO, has been key in keeping stability and continuity within our finance team. Matt will continue in a leadership role within Chemours, returning to his previous position of Chief Enterprise Transformation Officer. I would like to express my sincere gratitude to Matt for his tremendous efforts and his leadership during a critical time for our company. In our discussion this morning, I will talk about our overall performance and some of the recent business challenges we faced and overcome. Then I'll hand the discussion over to Shane, who will go over our financial performance. I'll conclude by sharing our outlook for the third quarter. We will then close the call with a Q&A session to address your questions. In the first quarter, we faced many challenges and the second quarter continued along that course. Consistent with the demonstrated resiliency of our people, our team didn't shy away. putting forth tremendous collaboration and leadership in the face of uncertainties, controlling what we could control as we dedicated our focus to driving business performance. As the Comores leadership team faced these challenges, we did so with a renewed set of core values that were developed with inputs from across the organization. These values are the foundation of our culture, reflecting who we are as a company and what we believe. They are a key part of our formula for long-term success. They are simple, plain spoken, and are present in every aspect of how we work. Safety, integrity, partnership, ownership, and respect. As you are aware, we recently faced a disruption in our titanium dioxide production at our Altamira, Mexico site due to a severe drought in the region. While the drought had pronounced business implications, it was also very personal to our team. This was a sudden, extreme shift in basic needs for our people and the communities where they live. In response, we worked quickly to provide substantial support for those in need. I was amazed at how quickly our people organized and partnered to promptly supply potable water, food, and other essential needs to those impacted. We formed a cross-functional team that conducted an ongoing assessment of business impacts through scenario planning. Together, we determined the best way to meet customer demand. The duration of the downtime at our site was uncertain, and the team met regularly to ensure we upheld our commitment to our customers by optimizing our TIO2 production circuit. These plans required collaboration and agility with our TT employees working diligently around the clock with a deep sense of ownership. We take pride in our reputation as a highly reliable TIO2 supplier, and we believe our actions are a clear reflection of this. It was through these efforts that we were able to exceed our previous volume expectations with a 16% volume increase from the first quarter. This simply was not possible without the fast action, hard work, and excellent collaboration of our TT employees, our customers, and our partners in the community and region. For this, I thank our team. Because of this unexpected production outage during the second quarter, we incurred about $8 million of one-time cost. We anticipate this disruption will also affect our results for TT in the third quarter. which I will explain more when we talk about our outlook later. Even with these difficulties, our TT team continues to prioritize our strategic relationships with customers and to execute our TT transformation plan, targeting $125 million in cost savings in 2024. By the end of the second quarter, we have reached approximately $100 million in savings compared to the prior year. offsetting price declines. For the rest of the year, we anticipate continuing to make strong progress against our plan with year-over-year comparative savings slightly less than the first half, considering that we commenced our transformation plan in the middle of the third quarter last year. Now let's talk about TSS. In TSS, we continue to experience a seasonal demand pattern Although there was a slower start to the cooling season in the northern hemispheres, it has quickly warmed up. However, even with this elevated summer season, the market is still affected by excess HFC inventory. As we discuss our results for TSS's refrigerants, we have updated our sales reporting this quarter to break our refrigerant sales into two separate product categories, Option refrigerants, reflecting our low global warming potential offering, and Freon refrigerants. For the second quarter, Option refrigerants continue to see strong adoption, reflecting double-digit quarterly sales growth, both sequentially and year-over-year, while approaching 60% of our total refrigerant sales. This growth shows the effects of the U.S. AIM Act and EUF gas regulations that have progressively lowered the production and importation of high global warming potential refrigerants since they have gone into effect. Our Freon refrigerant sales for the second quarter were generally flat from the first quarter with year-over-year double-digit declines driven by lower volumes under those regulatory step-downs. Weaker volumes in Freon refrigerants were further compounded by softer HFC pricing, primarily due to elevated market HFC inventory levels and a slower start to the cooling season. We attribute these HFC inventory levels to higher than expected pre-AIM inventory builds in the U.S., and we continue to believe that these market inventory levels will remain elevated through the rest of the year. To further underscore, as the U.S. AIM Act enacts its regulatory phase down, we are observing strict adherence and enforcement concerning the regulation. These efforts are evidenced through the U.S. Department of Commerce's ongoing work to mitigate circumvention of duties, and the U.S. Customs and Border Patrol's continued activities to restrict illegal importation of refrigerants. At APM, we see the continued macro recovery across APM's portfolios, with sequential double-digit top-line growth in both the Advanced Materials and Performance Solutions portfolio, in line with expectations. Our corporate expenses were generally in line with expectations as well. While the second quarter provided us with various complex business dynamics, the team has remained focused on business performance while remaining grounded in our core values. Before I hand the call over to Shane, I want to recognize our team by highlighting a couple recent business accomplishments. First, we recently received our permit to expand production of Teflon PFA resin at our Washington Works manufacturing site in West Virginia. This was a significant undertaking for the Chemours team. Our ability to secure a permit was critical as our customers rely on us as the only US-based supplier of this material, which is essential for the fabrication of semiconductor chips. I will speak more to the opportunities we see with Teflon PFA later. And second, in June, we released our seventh annual sustainability report, Partnering for Progress, which outlines Camorra's progress towards meeting our 2030 corporate responsibility commitment goals. Our commitment to sustainability as well as responsible manufacturing is unwavering and is reflected in the significant progress that we continue to make in meeting and exceeding our commitments to reducing emissions, innovating, to achieve more sustainable products and investing in the communities where we operate. Specific to our sustainability initiatives, I'm proud to highlight the approval by SPTI, the science-based targets initiative of our near-term target to cut our scope one and two greenhouse gas emissions by 60%. In addition to a new scope three emissions target to reduce emissions by 25% per ton, of production by 2030. This rigorous 22-month long process required close engagement between Chemours and SBTI, including a thorough review of our underlying plans, calculations, and methodologies. The approval by SBTI reflects our commitment to let science inform and guide our actions as we continue to make a meaningful impact in the global fight against climate change. I'd now like to hand it over to Shane to walk through our financial results.