Good morning. My name is Michelle, and I will be your conference operator today. I would like to welcome everyone to The Chemours Company Fourth Quarter 2024 Results Conference Call. Currently, all participants are in a listen-only mode. A question-and-answer session will follow the conclusion of the prepared remarks. I would like to remind everyone that this conference call is being recorded. I would now like to hand the conference call over to Brandon Ontjes, Vice President of Investor Relations for Chemours. You may begin your conference.

Good morning, everybody. Welcome to The Chemours Company's fourth quarter and full year 2024 earnings conference call. I'm joined today by Denise Dignam, Chemours' President and Chief Executive Officer; and our Senior Vice President and 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 this 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 is included in our press release issued this morning. Also, we have posted our earnings presentation to our website earlier today. With that, I will turn the call over to Denise Dignam.

Thank you, Brandon, and thank you, everyone, for joining us. Over the past few months, we've been focused on executing against the refreshed corporate strategy that we outlined on our last earnings call, which we call Pathway to Thrive. Today, we are excited to share our results from the fourth quarter and full year 2024 as well as the significant progress we've made against our strategic pillars in just a few short months. Shane and I will begin by discussing our fourth quarter and full year performance. We will then provide a view of the first quarter and share some thoughts around the outlook for the full year 2025. Next, we will discuss the progress we've made on our strategy in more detail and take your questions. Beginning with our results, we delivered another quarter of strong performance, building on our momentum from the last quarter. Across all our businesses, we exceeded our adjusted EBITDA expectations for the quarter, demonstrating our continued focus on operational excellence and fulfilling our shareholder commitments. For our TSS business, we again achieved a quarterly sales record, driven by 23% year-over-year growth in Opteon Refrigerants driven by the US AIM Act and EU F-gas regulatory transitions underway. Our TSS earnings came in above our expectations, driven by this continued Opteon adoption and supported by a favorable product mix and lower costs in the fourth quarter. In light of strong adoption, I'm pleased to share that we recently completed the expansion at our Corpus Christi site, where we produce our new Opteon Refrigerant and are in the process of ramping this added capacity to support market demand. In TT, our team remains focused on driving strong commercial performance and advancing cost reduction efforts under the TT Transformation Plan. As we had guided, we saw a sequential…

Thank you, Denise, and good morning, everyone. Let's take a closer look at our financial results, beginning with our quarterly performance. Our consolidated net sales for the fourth quarter were approximately $1.4 billion, down 1% compared to the prior year quarter. This decrease was driven by a 3% decline in pricing, partially offset by a 2% increase in volume with currency impacts remaining flat. Turning to adjusted EBITDA for the fourth quarter, we saw an increase from $176 million in the prior year to $179 million this quarter. This increase was primarily driven by cost savings realized through the TT Transformation Plan, favorable inventory adjustments and true-ups in APM and increased volumes in TSS, partially offset by lower pricing across all our businesses. For the fourth quarter, Chemours reported a net loss of $8 million or $0.05 per diluted share compared to a net loss of $18 million or $0.12 per diluted share in the prior year. Our consolidated adjusted net income came in at $16 million this quarter or $0.11 per diluted share, which was down from $46 million of adjusted net income in the prior year quarter or $0.31 per diluted share, largely due to favorable tax impacts due to a lower effective tax rate in the prior year. Now, let's turn to our full year results. Our consolidated net sales for the full year 2024 were approximately $5.8 billion, down 5% compared to the prior year. This decrease was driven by a 4% pricing decrease and a 1% decrease due to portfolio changes made during 2023, which reflects the sale of our Glycolic Acid business in 2023. Currency impacts were flat year-over-year as well as our volumes as solid increases in TSS and TT were offset by weaker volumes in APM. Adjusted EBITDA for the full year…

Thank you, Shane. Last quarter, we shared our refreshed strategy for Chemours Pathway to Thrive. This strategy is intended to capitalize on our business' fundamental strengths, our incredible talent, and our competitive differentiators to enhance shareholder value creation. Chemours' strategy is focused on four pillars, operational excellence, enabling growth, portfolio management, and strengthening the long-term, all rooted in a foundation of balanced and disciplined capital allocation. Efforts to execute our strategy were underway when we shared it in our Q3 call, and we've continued to take steps to structure the organization around its pillars to meet shareholder expectations. In addition to appointing Damian as TT Business President and Diane as Chief Enterprise Enablement Officer, we've also established a transformation office that is fully dedicated to driving results within each pillar of our strategy. Starting with operational excellence. We continue to target incremental run rate cost savings of greater than $250 million across the company starting this year and building through 2027. As a reminder, this overall cost savings plan comprises an additional $125 million in cost savings under our TT Transformation Plan and $125 million in targeted cost savings spread evenly across the other businesses and corporate. Of our total $250 million cost target, we remain on track to deliver half of these run rate cost savings by the end of 2025. As we progress further into the year, we'll look to provide regular updates on those savings, which remain focused on optimizing our asset footprint and reducing overhead cost. These efforts tie into our portfolio management pillar, which I will speak to shortly. Our ability to execute a broader cost-out program, which has been a focus of mine since moving into the CEO role is rooted in our transformational expertise as exemplified in our success through our TT Transformation…

[Operator Instructions] And our first question will come from Arun Viswanathan with RBC Capital Markets. Your line is now open.

Great. Thanks for taking my question. I hope you guys are well. So, I guess, first off, I wanted to understand maybe the bridge from '24 to '25 EBITDA guidance. If I remember correctly, there were about $80 million or so of one-timers in '24. So, if we add that back, it seems like there's about $40 million or $50 million of extra growth to the midpoint of your new range for '25, am I right in that assessment? And then if so, how would you kind of characterize that additional growth? Thanks.

Thanks, Arun. Appreciate the question. So first of all, I just want to start with talking about this year and what we're excited about. I mean, when we look at this year, the transition to the low GWP technology in the stationary aftermarket -- in the stationary market is really exciting for us. We also see green shoots in our TT business and we're really laser focused on delivering on Pathway to Thrive. As you say, there's some things to explain relative to the bridge from '24 to '25 and I'm going to turn it over to Shane to give you a little bit more color on that.

Yeah. Thanks, Arun. You mentioned a number of one-time costs, which we don't anticipate recurring next year. However, you probably saw the Q1 guidance, we are anticipating some operational headwinds in Q1 related to, in TSS, a site-specific forced outage, some weather-related items in TT, especially in January here in the elongated plant shutdown in APM. That's about $15 million to $20 million going in Q1. But as I think ahead, we don't anticipate these to recur. We anticipate seasonality in TSS and TT in Q2 and Q3. And as Denise mentioned, very excited about the Opteon adoption especially in commercial and stationary refrigerants. And then further, we're going to control what we can control, continue to align Pathway to Thrive and continue to reduce costs and manage that accordingly.

Okay. Thanks for that. And then just as a follow-up to that. So, it looks like your second half, I think you mentioned, should be a little bit stronger than the first half. So, it sounds like you could be exiting second half at a $500 million or so plus run rate of EBITDA. If you annualize that, you get to $1 billion-plus for '26. Am I thinking about that the right way? And what would that require? Is that kind of maybe a better Freon pricing environment or maybe capitalizing on the capacity growth that you've had in TSS or would it also require some better TT markets? Thanks.

Thanks, Arun. I mean, I think it's early to give anything related to 2026 at this point. But as I think about kind of your math in '25 and items that we believe are going to help us with that guidance that we talked about for the full year, certainly, the additional capacity at Corpus Christi from Nafion perspective is contributing to that. We brought a PFA line on as well, which is going to help, continuing that cost-out program as we've talked about as well. And then also we are seeing, as Denise talked about, some green shoots in TT as it relates to share, but also thinking through a back-half weighted some market recovery as we look at the underlying KPIs.

All right. Thanks a lot.

And the next question will come from Josh Spector with UBS. Your line is open.

Yeah, hi, good morning. I wanted to follow up on TT. So you mentioned a couple of times green shoots in that business that you're seeing, but volumes aren't improving in your forecast sequentially and you talked about some regional mix headwinds. So I think from the outside in, it looks like your TT business is maybe getting worse, but you're calling out green shoots. Can you help us understand kind of what's going on within that? Thanks.

Sure, yeah, thanks. Thanks, Josh. Appreciate the question. Going into -- so first of all, we delivered a very strong fourth quarter. Coming into the first quarter, there's really a regional mix impact. When we talk about some of the green shoots we're seeing, it's really around some share gain that we're seeing in Europe. I would say it's still early days as you think about the anti-dumping impact. But if you look at the exports from China as they go into Europe or even into Brazil, you see that there's quite a decline and not just a decline in overall volume, but a decline in the high-purity, high-quality, TiO2. So there's a lot of inventory that had to be worked out, but you can see that decline occurring, which we're well positioned where we have a great value proposition, a great franchise around reliability, security of supply. The other thing that -- first of all, we're going into -- the second quarter is generally a better season for the coatings market. And some of the macros that we look at and the housing market index has increased again in January, it's the highest level it's been at in nine months. And historically, that correlates to coatings demand. So that's what we mean when we say green shoots. And we absolutely are not saying that feeling like we're weak. As I said, the first quarter has a lot more to do with regional mix and we're committed to our Pathway to Thrive and continuing to drive cost out in TT.

Thanks. Just a follow-up, just the regional mix to be specific, is that selling more into Europe and less into North America or what's the change? And is that temporary for first quarter or does that reverse or is that a permanent shift?

Yeah, I would say that that's accurate. And then I would definitely expect it to shift as we enter the seasonal coatings market in the US.

Okay. Thank you.

And our next question will come from Hassan Ahmed with Alembic Global Advisors. Your line is now open.

Morning, Denise and Shane. I just wanted to dig a bit deeper into the prior questions about TT and guidance, 2025 guidance in particular. I mean, from the sounds of it, it seems obviously, we haven't really seen much of an impact from the anti-dumping side of it. I'm just trying to get a more granular view with regards to what you're baking in, in your 2025 guidance, in terms of TT pricing, volumes and a potential boost from any sort of anti-dumping related market share gains?

Yeah. Thanks, Hassan. I mean, from a -- what we're baking in, we're not baking in any large macro change. What we're saying is that we are seeing signs and these things take time. There's inventory that has to work down. If you look at the China exports into the EU '27 and into Brazil, you can see that they are declining, which creates opportunity for us.

Understood. Understood. And as a follow-up, I mean, as I sort of talked to industry consultants -- TiO2 consultants, there seem to be pretty large divergences in what they're baking in, in terms of supply additions globally, right, particularly as they relate to China, be it some of the supply additions that happened in 2024, be it some of the supply additions they're baking in for 2025 and beyond. I mean, can you sort of give us a view or a Chemours view of what the supply picture looks like? Whether there is sort of forecasted tightness in utilization rates on a going-forward basis?

Thanks, Hassan. Yeah. I mean, I would say that we're not anticipating any significant increase in supply and it really depends on -- the utilization is going to depend on what happens with demand, which as we're saying, right now, we are cautiously optimistic, I would say, but we would need some more macro signs to see utilization pick-up.

So, I mean just to get -- sorry to follow up, but just to get a bit more specific, I mean, some people have numbers north of sort of 0.5 million tons baked in for 2025 supply additions, while others have the number at 150,000 tons to 200,000 tons. I mean those are major swings. Which camp are you guys in?

I'm not exactly sure I understand your question.

In terms of net capacity additions for 2025 in TiO2.

Yeah, I mean, it would definitely be on the low side.

Thank you so much.

And our next question will come from John McNulty with BMO. Your line is open.

Yeah, thanks for taking my question. So, I guess first one would just be around your CapEx. You're looking for $250 million to $300 million, so down a reasonable amount from 2024. Is it fair to assume that your CapEx budget doesn't include any CapEx for the data center opportunity that you've been talking about? And can you give us a little bit of color or thought on the timing for FID on that and any other updates around the two-phase immersion cooling platform that you've been building out?

Yeah, John, thanks. I'll take care of the CapEx and then Denise can go into the immersion cooling update. As far as the CapEx go, as you mentioned, $250 million to $300 million is what we guided. We continue to think about how to continue our growth initiatives and maintain asset-light where possible. So if you think about, Denise talked a little bit about the PCC and agreement in TT and the unique way we did that. So as we think about just going forward, we're laser focused on our liquidity and CapEx is one of those as well. And then Denise, do you want to go on?

Sure. Relative to how we're doing with immersion cooling, we're really still very excited about the space. We have significant value chain engagement and we think this is still going to be a large part of -- a big part of the overall liquid cooling demand. And I know you know this, but it's really going to be kicking in more towards the end of the decade because there will be requirement for new data centers. So relative to our asset plan, we've talked about that before that we're going to be giving updates. We remain focused on achieving commercialization by next year. We -- our underlying -- we have an underlying plan. Right now, there's some confidentiality around our process and intellectual property. And so there's some things that we're not really ready to disclose around the molecule, but we look forward very soon to be giving an update on that.

Great. Thanks very much for the color on that. And then just maybe on the TSS side, it sounds like there's a pretty wide range of outcomes as you're looking out to 2025, both on Opteon and it sounds like there's some pretty solid volume growth there. I guess, can you help us to think about that? As well as where you think we may be in the Freon inventory kind of destocking? When do you think we may be getting through that where we might see price starting to inflect since it seems like that's a big part of the range of outcomes that you've got for the year?

Thanks, John. First, I'm going to start with Freon. Last year was a unique year for us, for Freon, because there was a delay that was very unexpected. With the technology transition where things were pushed out a year, sell-through was pushed out. So we were really impacted by Freon. Coming into this year, right, we're trying to use our quota really for the low GWP Refrigerants. So, our -- as we've said in our strategy, we are much less dependent on Freon this year. And as a matter of fact, by the end of the year, we are really -- all Freon sales are going to be outside of the US and Europe. So -- but if you turn to the Opteon side, you saw 23% growth in the fourth quarter. You can expect at least that kind of growth this year. But one thing -- and we're committed to 30% margin in this space. One thing to keep in mind and kind of going back to when things transitioned to load -- to the HFO technology for the auto OEMs, this is a year where the -- where -- it's the OEM year, where the aftermarket space where you have more, I'll say, pricing flexibility is lower. So it's about 10%. Really what we're doing with the OEMs is securing our share for the long-term. With that said, we still do have opportunity to pass through raw material price increases even to the OEM part of the market.

Got it. Okay. No, that's very helpful. Thanks for the color.

And our next question will come from Vincent Andrews with Morgan Stanley. Your line is open.

Hi. Can I ask, in the fourth quarter, you mentioned that you had some non-recurring benefits from inventory true-ups in APM as well as, I guess, some non-recurring cost benefits in TSS. Could you tell us what those were? And in particular, to the inventory, can you talk about what triggered that or how that happened and what discretion you had related to it?

Yeah, sure, Vincent. Yeah, as I think about some of the benefits we saw, they were kind of one-time in nature. I mentioned the items in APM and TSS. I mean, these are really around inventory valuation items that happened in the fourth quarter and some reserve changes. They're in the range of about $5 million to $10 million as I think about kind of sizing them up. But I would say, I mean, those were benefits, but we also had some items in our corporate costs that were one-time in nature related to asbestos reserves as well. As you can think about the additional corporate costs, I mean, that was in the range of $10 million to $15 million as well. So just trying to give some -- a little bit of color on the positives and negatives we saw from one-time items in Q4.

Okay. And then if I could just ask on TT, point taken on what's happening so far in Europe and Brazil in terms of the direction of Chinese exports. But if we're a year from now, where do you envision those Chinese exports that don't go to Brazil or Europe anymore? Where do you think they wind up? Do you envision China cutting production or do you envision those going into other markets? And if they go into other markets, what happens to the TiO2 that was previously servicing those other markets?

What you can see in the data is it's going to Asia and the Middle East. I think time will tell based on how prolonged the recurrence of the [upswitch] (ph) in the market when that happens I think there is some concern of customers around the profitability of some of these -- the Chinese producers and how long they can withstand the narrower margins.

And our next question will come from John Roberts with Mizuho. Your line is open.

Thank you. I guess we have now an ex-DuPonter back at the EPA in a key position here. Do you think that changes any of the complexion around the PFAS activity over the next few years? And maybe give us an update on the upcoming New Jersey trial?

Sure. Relative to the EPA, we're really -- as you know that the rule came out relative to the maximum concentration limits around specific molecules that were really not science based. We're really glad that the Trump administration, the EPA has come up and put those in abeyance for 60 days. So we're really hopeful for a good dialogue on science based targets. Relative to the New Jersey trial, that is set for May and we continue to prepare. And as always, there's -- you're getting ready for trial. There's also opportunity for settlement as well.

Okay. And then what's happening in the existing small fluorochemical based immersion cooling market? 3M is exiting. So, what are their existing customers doing? And is there anyone stepping into that space here as they exit?

Yeah. For the chemistry that 3M produced, there are Chinese producers. There are, I would say, some pretty a significant corrosion issues with that product. So, while it's in the market, there is definitely big room for improvement.

Thank you.

And the next question will come from Laurence Alexander with Jefferies. Your line is open.

So, good morning, would just like to flesh out the regulatory comments about the downside risks for 2025 for APM. Can you just flesh out what -- if there's any particular timeline or events you're looking for or decisions that would -- and then how much of a swing in your forecast that would have -- that scenario would entail. And also, can you put that in context in terms of what is APM facing over, say, the next three to five years?

Yeah, Laurence, thanks. I mentioned that, as I think about the range provided within the low-end to the high-end. From a low-end, the $125 million I put, the -- when I mentioned regulatory pressures in APM, that's really making sure just from an operational perspective, Denise just talked about some of the science-based items we were discussing with the EPA. We are excited about kind of developing that and having further conversations. But if there is some other conversations that go the other way, that's really what we were getting at is potential regulatory pressure there. As I think about your latter question around the next several years in APM, we're really committed to taking a look at just overall portfolio in line with Pathway to Thrive and APM is certainly part of that and making sure that the product lines we're operating are optimized from a return basis and thinking through the next steps, whether that be changes in portfolio like we just talked about with SPS or putting hydrogen on the long-term hold. We're really committed to making sure that, that business is optimized from a return portfolio.

Thank you.

And our next question will come from Jeff Zekauskas with JPMorgan. Your line is open.

Thanks very much. Your inventories were $1.47 billion in the quarter, which, I think, it's up 12% sequentially and about 10% year-over-year. Your sales are down. What's going on with that number? Why is it so high?

Yeah, thanks, Jeff. I think there's a confluence of a couple of events here. I would say, one is, we did have a lot of planned maintenance activities at the end of the year. So we did build up inventories through that side that we'll continue to work down as we look into 2025. I think other aspects of this is really some related items in TSS around our quota and -- which we'll continue to work down in '25. And then outside of that was some select purchases within TT to think through where their inventory balances are. I will say this, as we think about the path ahead of us from a liquidity, we are focused on making sure that we optimize our working capital going forward and thinking about days conversion. And I think there's opportunities within that inventory balance.

So, you've talked about your possible cash flows for 2025 and you said you should cover your dividend of $150 million, CapEx is roughly $275 million. So if you total it up, that's $425 million. Is that your expectation with your EBITDA between $825 million and over $900 million or is there something that would lead you to have that would put pressure on your cash flows or that's kind of what you're expecting? Do you have an aspiration for 2025 cash flow?

Yeah, thanks, Jeff. Certainly, we have an aspiration. As we think about cash flow, we did not provide that externally, as we talked about transparency, very happy with providing annual guidance on EBITDA. As I think about what we talked about from cash flow was we expect to -- from that perspective to at least cover the CapEx and dividends on that side, just making sure that we give confidence on balancing strategic growth and debt paydown with other priorities of the company, i.e., making sure that we fund the organic CapEx as well as providing returns to shareholders.

Great. Thanks.

And our last question will come from Pete Osterland with Truist. Your line is now open.

Hey, good morning. Thanks for taking the questions. First, on the cost savings realized from the TT Transformation Plan in 2024, what drove the upside versus your original target? And as you've begun working on optimizing your cost structure through the new cost savings plan, are you finding any areas of the business where you think there may be upside to this target as well? Thank you.

Yeah. Thanks, Pete. As I think about just the TT Transformation Plan in total, very proud of the team just executing above the target. We saw some positives as it relates to just overall manufacturing related costs and thinking through mainly around those fixed cash costs in the operation side. We're not -- as we think about the Pathway to Thrive targets of $250 million, we're still very focused on achieving those. As we continue on this path and if we see any upsides, commit to being transparent around that and thinking through if there is that side. We are at the first part of this and we're very excited about the organization we put around the Pathway to Thrive, whether it be the committed transformation teams or the other areas from our pillars that are leading such and I'm confident that they can meet those targets and exceed in certain circumstances.

Great. Thanks. And then just a quick follow-up on free cash flow. It looks like you're guiding for free cash flow to be positive this year. Is that the assumption at the middle of the EBITDA guidance range or do you expect to be free cash flow positive even at the low end?

Yeah, I mean, it's a great question, Pete. I mean I think from a positive free cash flow, I indicated such given that with the overall guidance was that we can fund our CapEx as well as the dividends go. I think that if it is at the lower range, we can take other actions to think through working capital and making sure that we're balancing such. So committed to positive free cash flow and making sure that we're going forward very focused on balancing spend to get it to there.

Thank you very much.

We have reached the end of our question-and-answer session. Thank you for joining Chemours Company's fourth quarter 2024 earnings call. You may now disconnect.