Good morning. My name is Dan and I will be your conference operator today. At this time, I would like to welcome everyone to The Chemours Company First Quarter Earnings Call. [Operator Instructions] Thank you. I would now like to turn the call over to Ms. Alisha Bellezza. Please go ahead.

Thank you and good morning everyone. Welcome to The Chemours Company 2017 first quarter earnings conference call. I am joined today by Mark Vergnano, President and Chief Executive Officer, who will begin the call with the highlights of our first quarter and Mark Newman, Senior Vice President and Chief Financial Officer, who will review our financial performance and liquidity position. Mark Vergnano will then review our business result and conclude the call with our updated outlook. Before we begin, let me remind you that comments 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, included those described in the documents Chemours has filed with the SEC. 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 the presentation that accompanies our remarks. I will now turn the call over to Mark Vergnano.

Thanks, Alisha and good morning everyone. Thank you for joining us today. As you saw in our release yesterday, 2017 is off to a great start, with all segments reporting increased profitability from 1 year ago. In fact, year-over-year, we reported meaningful improvements in all key financial metrics: sales, net income, adjusted EBITDA, EPS and free cash flow. These results would not be possible without the diligence of our workforce. Our employees are the backbone of our company and their commitment to the execution of our transformation plan has made a huge impact on our businesses. Over the last year, our Titanium Technologies team ahs worked with our customers to implement announced price increases towards levels that we believe will be more sustainable, resulting in improved year-over-year pricing in the quarter. The segment also benefited from earlier than anticipated demand for Ti-Pure titanium dioxide. In Fluoroproducts, European and North American adoption of lower global warming products is driving demand for our Opteon refrigerants. We are encouraged by the growth in the quarter and expect to see it continue as adoption picks up in other geographies. Our base refrigerant business also performed well in the quarter on improved pricing and earlier than normal demand. Additionally, our fluoropolymer business appears to be stabilizing with less price degradation than in previous quarters. Lastly, I am pleased to announce that we have achieved our target net leverage of at or below 3x, a key commitment we made in announcing the transformation plan in August of 2015. Our trailing 12-month net leverage now stands at approximately 2.7x as of March 31. I will now turn the call over to our CFO, Mark Newman.

Thanks Mark. Turning to Slide 3, we generated over $1.4 billion of revenue, an 11% year-over-year increase. We reported GAAP net income of $150 million and adjusted net income of $142 million or $0.75 per diluted share. Adjusted EBITDA in the first quarter was $285 million, up $157 million from the prior year quarter, transmitting to a doubling of our adjusted EBITDA margin to 20%. These results were primarily from demand growth in our Titanium Technologies and Fluoroproducts segments as well as price increases in the Titanium Technologies segment. We experienced the normal seasonal use of cash for working capital during the quarter, although more muted than in previous years, given our secular reduction in working capital to-date. As a result, free cash flow was a use of $28 million, which was about $25 million better than the prior year quarter. However, excluding the benefit of the DuPont prepayment from last year’s first quarter, free cash flow improved over $190 million. As we continue our transformation journey, we have seen notable improvements on our returns. In fact, from last year’s first quarter to today, our pre-tax return on invested capital has increased from 7% to 21%. We will continue to focus on improving profitability of existing assets, while investing in high-return projects to enhance ROIC. Turning to Slide 4. As I said, adjusted EBITDA improved $157 million on a year-over-year basis. We experienced minimal currency headwinds in the quarter, which were more than offset by meaningful price and volume improvement. Higher average selling prices in Titanium Technologies and prices of our base refrigerants increased adjusted EBITDA by over $80 million in the quarter. This was partially offset by a 3% price decline in prices in fluoropolymer products. Adoption of Opteon refrigerants and demand for TiO2 was stronger and earlier than…

Thanks Mark. On Slide 6, you can see that we generated $646 million in revenue and $159 million in adjusted EBITDA from the Titanium Technologies segment in the first quarter, a considerable improvement versus last year. Both price and volume were up low double-digits year-over-year. As you may recall, we announced several regional price increases over the last year and versus a year ago, prices in every region improved. Our global average TiO2 price was up 12% and sequentially up 2%. We are working with our customers to reach a more sustainable price for Ti-Pure, especially in this period of increased demand. Coupled with the increased TiO2 prices, overall volume strength from last quarter has continued, which is somewhat atypical for the first quarter and resulted in a volume increase of 11% over the prior year. We believe this was related to customer specific demand pull and tighter supply conditions. As a result of this continued volume strength, our lead order times remain extended. Customers view Chemours as a committed, high quality TiO2 producer. We are seeing strong demand globally and are utilizing all our TiO2 plants at their full capability. We anticipate that longer lead times will remain with us throughout the first half. In more recent news, some of you may be aware that we declared a Force Majeure in April in the Europe and Middle East Africa region. This was due to shipping delays resulting from severe weather in the Atlantic and a labor disruption at the Port of Antwerp. While the strike is over, we are navigating through a backlog of approximately three weeks from the date of Force Majeure declaration and working closely with affected customers to manage supply to them with minimal disruption. As of now, we do not expect these delays to have…

[Operator Instructions] And your first question comes from the line of Duffy Fischer with Barclays. Please go ahead.

Yes, good morning fellows.

Hey, Duffy.

Question first on the fluoro segment, there maybe two questions. One, the anti-dumping ruling that you got, roughly how impactful do you think that will be to your business?

So there is an impact on it, Duffy. I mean, obviously, as that part of our business phases down, it’s probably not as big as it would have been in the past with the quota system, but I would say it’s going to be – it will be meaningful.

Okay. And then on the PFOA settlement, do you get a tax benefit from the 335 you have to pay? And then is that settlement fully agreed or do we have to get kind of the sign off of certain levels of judges and stuff like that before that will take effect?

Yes. So question number one, the settlement will be tax deductible. It will be structured that way. You recall we are indemnifying DuPont, so that payment will be tax deductible against our U.S. taxes. On the second, DuPont has reached an agreement with the plaintiffs as of the end of March. We are still going through a process to gain acceptance of the settlement with the actual plaintiffs. Once that process is run, there will be a period after which the payment will need to be made. Just based on where we stand today, Duffy, our expectation is that will take us into late Q2 or early Q3.

Great. Thanks, fellows.

Your next question comes from the line of Robert Koort with Goldman Sachs. Please go ahead.

Thanks. Couple of quick ones if I could. First, the pull forward of the heavier order activity in the first half, is that a function of customers getting ahead of pricing or why wouldn’t that flow through the second half? And then could you talk a little bit about what’s going on in the feedstock side? I guess we thought maybe be a little bigger margin bump with the pricing in the first quarter in TiO2. So there is some of period expenses there that have been increasing as well?

So Bob, I assume the first part of your question was on TiO2 as well. I would say our volume is a little bit surprisingly strong. So, we saw strong volume from most of our customers across the board. I’d say in regions of the world, Asia was the strongest for us from a volume perspective. Again, some of that anticipated, some of that’s just demand pull that we are seeing just stronger demand in those areas. We are not seeing a whole bunch of change on the feedstock side. I would say it’s fairly flat, from our perspective, at least on the chloride side of things. And as you look at our margin, I would say that, if you remember, we had our price increases, lot of our price increases go into effect the beginning of March. So you will see a lot of that flow into the second quarter. You didn’t see the full impact in the first quarter because of that, probably the biggest impact to margin.

Great. Thanks very much.

Your next question comes from the line of Don Carson with Susquehanna Financial. Please go ahead.

Just wanted to follow-up on two things. One on the pre-buy, you said customers are pre-buying and some people out there thinking that maybe there is inventory accumulation by customers and that could affect second half demand. Just want to get your feeling for that? And then secondly you talked about Chinese environmental impact on fluoropolymers. Are you seeing that continue on the TiO2 side as well, specifically your restrictions on sulfate pigment production over there?

Yes. So, Don, we are really not seeing significant pre-buy. So if I alluded to that, it was a mistake by me. We are not seeing significant pre-buy. We are seeing a tiny bit. But I would say for the most part, there is not a lot of inventory in the system, whether that’s at the pigment producer side or at our customers. So, we don’t believe there is significant pre-buy going on. We really think its pure demand that’s driving things. In terms of the – what we are seeing in China, I would say on the fluoro side, we are seeing some restrictions coming out of a lot of our competitors. I’d say these are mostly the smaller to midsized competitors that are being halted or shutdown for environmental purposes. We continue to see some of that on the TiO2 side as well. Maybe not as much as we saw earlier last or the end of last year, but we think that’s still continuing from that standpoint as well. So, there is definitely more regulation policing, if you will, from an environmental standpoint in China and we are seeing it on both of our business segments.

Thank you.

Your next question comes from the line of Laurence Alexander with Jefferies. Please go ahead.

Good morning. Just a few odds and ends. Can you – given the settlement, can you update your thinking around where your tax rates will settle over the next call it, 3, 4 years? Secondly, on the TiO2 comments about volumes being slightly above GDP given how strong Q1 is, do you think your volumes will actually be negative year-over-year in the back half? And third, can you speak a little bit to sort of the – your current thinking on working capital and your ability to shave days over the next couple of years?

So Laurence, I will start first on the tax question. Our guidance for this year is cash taxes in the mid to high-teens. Our expectation is we will be around that level for a couple of years at least. Obviously, we are going to benefit from the deduction related to the PFOA settlement, as I had mentioned earlier. But I would say today, our expectation is if we kept rolling the clock forward we probably get ourselves to the mid 20s over time, but – so below U.S. statutory tax rates. So, we are starting today in the mid-teens, mid to high-teens. And then I would say it will evolve over time to the low 20s. On the working capital, I think as we said earlier in the year, we think there is slightly more to be had here. Obviously, if you look at our first quarter performance going back over the last 3 years, while we had a slight use of cash this quarter, significant improvement in the last 2 years in terms of the Q1 cash usage. So I would say our expectation as we go through the year is that we will have a small working capital benefit. Obviously, that will be affected by seasonal demand patterns as we move through the year.

And Laurence, to your point about the volumes on TiO2, for sure we had a very strong first quarter on TiO2 volume. As we look at the whole year, we still think we will be slightly above GDP rates for the whole year. So, the second half will still be positive. We don’t think it will be negative to GDP. But we do think that you are going to see a difference in the year for us that normally we have a – you see the difference quarter-to-quarter significantly. We think that we are going to see more of a balance first and second half when all said and done for the whole company. And then TiO2 will sort of play into that as well. But just to maybe connect your question with something Bob asked before, one of the things we continue to work hard at and we are committed to is working through on the TiO2 side, working very closely with our customers for announced and any future price increases just to ensure with them that they can get these price increases through that. That is something we have been working very hard at. I think it’s something that our customers have respected from how we have been dealing with them and it’s very important for us to have this go very smoothly. So again, we think volumes overall for us will be above GDP by the end of the year.

And then just to clarify when you say that each that the quarters will be positive to GDP, you mean that each quarter the volume will be above GDP, not just the full year?

I would say for the halves, for sure, right? So if we look at the second half, absolutely.

Okay, thank you.

Your next question comes from the line of P.J. Juvekar with Citi. Please go ahead.

Hi, good morning. This is Eric Petrie on for P.J. Mark, what are your expectations on the mix of Opteon and base refrigerants? And does that mean that EBITDA margins are sustainable kind of in this mid 20% range?

Yes, definitely Eric, we see that Opteon is the driver for growth for sure on the fluorochemical side, no question about that. We do see some uplift on margins on the base refrigerants, primarily in North America based on the – one, based on the antidumping ruling, but also as you see phase-outs occur, you will see that. But yes, I think we are talking about sustainable 20% level margins, primarily driven by Opteon.

Okay. Thanks. And then you noted earlier that volume growth was attributed to stronger Asia export. So I am guessing that’s due to China [indiscernible] prices and TiO2 pigment prices increasing, if iron ore production increases and you see a decline in feedstocks and TiO2 prices decline, would you expect demand to also follow to?

No. I guess the comment I made was our TiO2 business seems to be stronger in Asia. I would say that that’s – again, remember that’s primarily driven by the quality products that are being made there at that times of both China and Asia Pacific in general, we have seen an increasing quality of the products being produced there, which sort of pull our products through, our pigment through from that standpoint. So I would say it’s more of that happening, you are seeing some recovery in those markets. But you are also seeing a move to higher quality in those markets through our segmentation work that we have done. We are one of the largest players in China from a multinational point of view. And so as China grows, we are just benefiting from that at the same time.

Great. Thank you.

Your next question comes from the line of Jeff Zekauskas with JPMorgan. Please go ahead.

Hi, good morning. I see that your cost of goods sold was 10.79 in the quarter and last year it was 10.95, so you were down, I don’t know, $16 million and your revenues are up, I don’t know, $140 million, so how did you do that, how did cost of goods sold go down and revenues go up so much and your volumes were stronger?

You are right. So Jeff, its Mark Newman. There is a combination here of factors. The first obviously is the significant portion of the fixed cost reduction that we have achieved since then. The $300 million or so is coming through plant fixed costs, so that’s our biggest single source of cost other than corporate overhead or SG&A cost. So a significant piece of the year-over-year cost reduction is coming through those initiatives. As part of our transformation plan, we are also focused on the variable cost side of the equation. So as you know, when we brought Altamira on, that really helped to drive rationalization of our ore blend as opposed to producing higher volume. And then obviously, we have variable cost initiatives in place across the board on a whole range of issues, including logistics. So I would say it’s a combination of significant plant fixed cost as well as other initiatives around our variable spend as well.

So it’s not that exactly that your raw materials went down, it’s that your sort of the kind of raw materials you bought went down?

Correct.

And don’t underestimate Jeff, the work we have done on our plant fixed cost, because that was significant. As Mark said, that was a key part of our transformation plan. We want to be the low cost player. And to do that, we have got to work hard at all our sites to make sure that we are the most efficient possible. So for sure, the fixed cost side of things I would say were significant in that reduction of – that you are seeing in terms of cost of goods sold.

And in Opteon, you obviously sold a tremendous amount of product versus last year, can you produce any more than you are producing now or I guess this is the maximum you can ship in a quarter or what’s your utilization rate in Opteon, sort of where do we stand in terms of how much you are actually able to produce and sell?

Yes. So we have more capability and more capacity than what we have shipped. One of the beauties, I will put it that way, one of the beauties of working with large OEMs is very clear forecasting that we get from them. So we can plan out extremely well when you are working with these folks by plant, by location, by timing. That’s a challenge on one side because you have to be exact when you are working with large car OEMs, but on the other side, it helps you on your planning perspective. So from that standpoint, we can plan our capacity extremely well. We know when we have the inventory a little bit more in advance to be able to meet those peaks when they happen. So we feel very confident that we have the capacity as this product line grows. And as you have seen, obviously significantly in Europe, but also in the U.S. And we are also seeing a mix of vehicles change this a little bit as well. So that’s something that is putting our forecasting as well. Obviously, larger vehicles are going to be using more refrigerant. And so as that mix changes, we try to keep very, very close with our OEM customers to ensure that we have the right capacity, but really, the right inventory and volumes to be able to meet their needs. So long way of saying that, we have more capacity available to us Jeff and we have work very closely with our customers to make sure they get what they need.

Kept 25% more capacity or 30% more capacity, can you ballpark it?

Yes. So we really aren’t going to ballpark it for you, but I will say that we have more capacity. We have enough capacity that we foresee in the next year to be able to handle everything that we can see coming at us.

Okay, great. Thank you so much.

Your next question comes from the line of John Roberts with UBS. Please go ahead.

Thanks and congrats on a good quarter.

Thanks John.

In fluoroproducts, I assume that you had significant mix change effects between Opteon, the older refrigerants and fluoroproducts – fluoropolymers, I am surprised price only moved a little, I think mix would have been a bigger effect here, so could you talk about the relative price levels between those three areas, are they all about the same so that we don’t get much mix effect on price?

Yes. if you look at it purely as a fluorochemical versus fluoropolymers side, you would see more of the mix effect on the fluorochemical side. Fluoropolymers pulled that down a bit, so what you are seeing in the total price piece is that you are still seeing a little bit of a drag from the fluoropolymers side in the total mix. We have talked about it being – the drop being abated. We are seeing less of that drop than we had seen in the previous four quarters. A lot of that has to do with the work the team’s done, one. Two, we are seeing some demand pull in some of our higher end polymers. And three, the team has gone out with price increases effective March 1 that they are implementing segment-by-segment. So I think you are going to see that improve from a pricing perspective as we go over the next couple of quarters. But all-in-all, the polymers side in the mix scenario is what’s affecting that price. If you look at it purely on fluorochemicals, you would see Opteon pulling that up.

And then your earlier comment about the March 1 implementation of TiO2 price increases, would you expect the 2% sequential improvement that we saw this quarter to accelerate because of the March 1 implementation period or do we decelerate because the comps become a little bit more challenging on price from a higher level or do we stay about the same?

No, we should see an acceleration in the second quarter.

Okay. Thank you.

Your next question comes from the line of Roger Spitz with Bank of America/Merrill Lynch. Please go ahead.

Thank you. Good morning. I don’t know if you would want to do this, but would it be possible to bridge the fluoroproducts year-over-year EBITDA increase of $85 million, looking at price volume clusters clearly a lot of interest in how that all worked out?

Yes. We are not going to separately bridge it, but what I would say is as we said on the call, most of the volume in the quarter is coming from fluoro. And I would say, the great majority of the $100 million. And then as we said, most of the price is really coming from TiO2 in the quarter.

But Roger, to your point, I would say that I think you are saying do we want to drill down inside the fluoro, was that what you are asking?

I was requesting it, yes?

Yes. So, again as Mark said, I think we are not going to give you the bridge that deeply, but I will say that to Mark’s point, Opteon is a big driver there and that’s good news for us. But it also is – you will see the fluoropolymers side improving over time as the team is implementing their strategies on that piece. So right now, I think that it’s a heavy Opteon story. And I think you are going to see, it’s going to be more active in that story as we are going forward.

And just on the fluoropolymers, the volumes were higher year-over-year, the prices were down 3%, but did you take prices down 3% to gain share or prices were down because other people were bringing prices down and now you are just trying to get prices back up?

That’s correct. So as you may recall, last year, we made a strategic move to improve volumes through more industrial applications. We expect in this area some more competitive pressure, which we saw in the quarter. I think as we announced the price increase on March 1, our expectation is we will see improvements from this point. Net-net, revenues are up on fluoropolymers with higher volumes and slightly lower price. So we did see an improved revenue year-over-year. And so part of the fluoro story is higher volume and slightly lower price, as Mark said earlier, when you include the mix effect of fluoropolymers, that’s what’s driving slightly negative price for the segment overall.

So, Roger, for sure there weren’t drop in price as Mark said and just want to remind everyone, when we were driving more volume in that fluoropolymer segment, as Mark said, we went to the industrial side to pull that, that just inherently has low price points, lower price points than where we were before. So, it’s not that we dropped price to go in there, that’s just where the market is. The other thing you have to remember is a lot of our competition is European or Japanese-based. So, from that standpoint, that puts a little bit of pressure on price as well.

Thank you very much.

Your next question comes from the line of Laurence Alexander with Jefferies. Please go ahead.

Hi, there. Sorry, just one quick clarification, the $34 million of other income, can you provide some detail as to what that is and how you think that line will be for the rest of the year?

We are thinking through that, one moment. Sorry. I am trying to what the largest piece of that was.

So we had some licensing revenue in the quarter in Chem Solutions. And obviously, we have some joint venture come as well coming from our joint venture with MDF in the quarter. So I would say those two probably speak to most of the delta. We also have an entity in China where we do have some other income as well associated with higher volumes that we saw there. But I will work with Alisha to get you a better break out of that.

Yes. And Laurence to your point, I think we will see a stronger – first quarter was strong because of the licensing side of things. The royalty side plays out as the JV operates throughout the year, but the licensing piece was probably more front-end loaded than normal.

Okay, thank you.

Your next question comes from the line of Robert Koort with Goldman Sachs. Please go ahead.

Good morning, everyone. This is Chris Evans on for Bob. You guys hit your leverage targets and have a pretty strong cash balance in a weak – seasonally weak working capital quarter. Can you talk about strategically what you plan to do with your cash reserves that you have right now? And should we expect buybacks, bolt-ons? How should we expect you guys to deploy that cash in the future?

So I’d say today, Chris, our view is we want to stay – we want to keep balance sheet flexibility, especially as we go through the next 2 years of fairly high elevated levels of CapEx. As we said on the call, our U.S. cash, our total cash balance is around $900 million, but greater than two-thirds of that is overseas. And so I think our view today is we want to keep as much flexibility on our balance sheet as possible. And as we move through the year and certainly as we get through the transformation plan, we will continue to work with the board on our capital allocation plan. I think as of today, there is really no plan to do more than what we are currently doing in terms of return of capital to shareholders, but that’s certainly something that we have committed to once we get to our leverage target and once we get beyond funding or paying for the PFOA settlement. So I think this is something that we will work on with our board more diligently as we go into the second half and certainly as we get beyond the PFOA settlement.

And Chris, to add to Mark’s point, we do have a gating period here where we want to get through this PFOA payment, that’s very important to us. So that’s one. And so that we don’t want to spook anyone out there at all around the fact that as we look at opportunities, they would have to be incredibly accretive, very strategic for us to think about bolt-on opportunities at this point. We don’t put that, as I know. We would just have to – we have a high bar in terms of what those would have to be for us.

Great. And just maybe could you just remind me, I now talking about this a bit on the call just I think I might have missed it, but again your comment about the 1H strength for Fluoroproducts versus the second half. Could you just go through that again maybe a little bit more detail what’s actually driving that? I thought Opteon was going to contribute maybe around $100 million or so incremental year-over-year in ‘17. Just kind of want to know where we are related to the first quarter here?

Yes. So, I would say, Opteon has been very strong. I would say it’s a little bit stronger than our expectations in the first half primarily because we are seeing a different mix of vehicles, larger vehicles being sold versus what we had in the original plan and that’s just data coming right from our OEM customers. That – so Opteon a little bit stronger than what we had anticipated. The base refrigerants have been stronger in the first half. I’d say that’s probably twofold. One is – and that’s mostly North America driven. That’s coming from we are having a warmer season, so you see that normally happen as you see a warmer season in the spring heading to the summer. And I think there are some folks who are getting in front of some of these antidumping rulings as well. So that’s why I think we are seeing a little bit more push in the first half than in the second. Polymers, is strong right now from a volume perspective. I am not sure that’s going to be that different first half to second half, because the pull we are seeing there is primarily in the electronics industry where people really need these high-power dielectric properties that the fluoro – our melt products really deliver. So I’d say it’s primarily driven off of the fluorochemical side, strong Opteon because of vehicle mix and base refrigerants because of seasonality as well as the antidumping rule.

Okay. Thanks, guys.

And we have no further questions in the queue at this time. I would now like to turn the call back over to Mark Vergnano for closing remarks.

Well, thanks Dan. In closing, I just want to say we are very encouraged by the progress that we are making. Obviously, that’s very evident in our first quarter results and we expect 2017 to be a great year for Chemours. Our focus continues to be on our transformation plan initiatives to really drive our earnings growth and that’s what our team continually focuses on for the rest of this year. So, again thanks for your time this morning and thank you for your continued interest in Chemours. Have a great day.

Thank you to everyone. This will conclude today’s conference call and you may now disconnect.