Good morning. My name is Michelle, and I will be your conference operator today. I would like to welcome everyone to The Chemours Company First Quarter and Full Year 2025 Results Conference Call. [Operator Instructions] I would like to remind everyone that this conference call is being recorded. I would now like to hand the conference over to Brandon Ontjes, Vice President, Head of Strategy and Investor Relations for Chemours. You may begin your call.

Good morning, everybody. Welcome to The Chemours Company's First Quarter 2025 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 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 is included in our press release issued yesterday evening. Also, we posted our earnings presentation to our website yesterday as well. With that, I will turn the call over to Denise Dignam.

Thank you, Brandon, and thank you, everyone, for joining us. And starting off our call today, I want to highlight an announcement that was released concurrent with our earnings release yesterday evening regarding our strategic agreement with Navin Fluorine to produce our Opteon 2-phase emergent cooling fluid. This manufacturing partnership leverages Navin's manufacturing expertise and Chemours' innovation in this space to address the data cooling center needs created by AI and next-generation chips. We will share more about the development of Chemours' participation in this market later in the call, but I want to highlight this exciting development with you as we remain focused on executing our pathway to drive enabling growth pillar and serving the market. During today's call, I will begin by discussing our first quarter performance, followed by Shane, who will provide details around our financial results and outlook. Finally, I will address the positive progress we've made on our Pathway to Thrive strategy before taking your questions. Beginning with our results for the quarter. For our TSS business, we exceeded our overall expectations, delivering another strong quarter with a 40% year-over-year net sales increase in Opteon refrigerants from increased demand for blend. Opteon refrigerant blend demand has been even higher than expected as stationary OEMs build inventories and experience increased sell-through demand in connection with the 2025 transition mandate under the U.S. AMAX. The stronger-than-anticipated demand is also putting pressure on various areas of the supply chain, noticeably around cylinders used to ship and transport the R454B blends for stationary aftermarket sales. While we understand that there is tightness in the supply of cylinders used, we are increasing our line fill capacity in order to quickly fill cylinders as they arrive from our sources. We believe this situation will correct itself quickly and will not be…

Thank you, Denise, and good morning, everyone. Before I get into the details of our results, I want to highlight that we have made certain revisions to our previously issued annual 2023 financials, as well as our quarterly and annual 2024 financials. These updates are included in our earnings disclosures and reconciliations of such can be found in our Form 10-Q. We will use these revised financials as points of comparison for our discussions today and going forward. Now let's take a closer look at our financial results, beginning with our quarterly performance. Our consolidated net sales for the first quarter were approximately $1.4 billion, which were consistent with the prior year, as a 5% increase in volume was partially offset by a 4% price decline and a slight 1% currency headwind. For the first quarter, adjusted EBITDA was $166 million, down from $191 million in the prior year. This decrease was primarily driven by lower pricing across all businesses, primarily due to free on weakness in TSS and regional pricing dynamics in TT as well as unfavorable currency movements and lower volumes in APM. These headwinds were partially offset by higher TSS volumes in our Opteon refrigerant blends as well as lower cost in APM. For the first quarter, Chemours reported a net loss of $4 million or $0.03 per diluted share compared to net income of $54 million or $0.36 per diluted share in the prior year. The current quarter net loss and lower earnings were driven by the performance headwinds I just mentioned as well as restructuring charges associated with the announced shutdown of APM's SBS Capstone business. Without these restructuring and other charges, our consolidated adjusted net income was $19 million this quarter or $0.13 per diluted share, which was down from $47 million of adjusted…

Thank you, Shane. Continuing from Shane's update on cash, I wanted to take a moment to highlight an additional topic, which will provide a benefit for our cash flows in the coming years. With our new leadership team in place, we have been relentless in going through every single contractual commitment and point of spend across the enterprise. Nothing has been left untouched and I appreciate our team's patience as we rigorously exhaust every aspect of key spend. With these efforts ongoing and now infused in our DNA, 1 set of longer-term commitments has stood out relating to the ongoing purchase of certain high-grade ore. More specifically, 2 high-grade ore feedstock contracts were signed prior to the Quanmin closure and have represented a significant spend over that time, approaching $200 million per year. Our primary purpose of purchasing nodes or feedstock was for usage at our Quanmin site up until its closure in Q3 2023. Now to our innovation and operational capabilities, we are materially less reliant on this type of feedstock as ore represents 1 of the highest input costs at our company, the reduction of high-grade ore as part of our feedstock is a significant opportunity for Chemours. Looking ahead over the next 2 years, these contracts are set to expire, 1 at the beginning of 26 and the second at the beginning of 2027. As these contracts roll off, we derive significant longer-term benefits. The first providing us with the ability to purchase high-grade ore at our discretion and the second, providing us with an opportunity to continue the access that sits in inventory today. Based on this adjustment to our contractual commitments with the opportunity to shift our purchases to more cost-effective ore grade, we anticipate that this net cash flow benefit will approximate $100 million…

[Operator Instructions] And our first question comes from John McNulty with BMO.

So I guess I had a question on the strategic venture that you announced yesterday on the Navin Fluorine, I think that's how you pronounce it. Can you help us to think about how much capacity they can provide you. I also know you were targeting commercialization and being able to deliver some product in 2026. I guess, can you help us to kind of frame that and how this fits into that as well as if you have any orders at this point or expect to have any orders starting in 2026.

John, thanks for the question. Yes, we're super excited about the work we're doing with Navin. This is really a critical step in our commercialization as you saw in the deck, we kind of laid out the different steps for the commercialization. As we move into more field trials, this is going to be really important. We're investing about $14 million in the asset, and we've aligned the size of the asset really in 2 components. One is the stage of commercialization we're in, but also understanding that we want to refine the process technology for future scale up. When you think about a field trial, think about 2 to 5 tons would be needed. We've announced a field trial with NTT so we have the opportunity to do dozens of field trials, and we're positioned to add additional volume as we get those customer commitments after the field trials.

Got it. Okay. And then on TiO2, I guess a couple of questions on that. One, did I hear right that you guys are expecting 2025 EBITDA to be up versus 2024. I thought that was what Shane said, but just wanted to clarify. And then maybe more importantly, on the ore savings that you're talking about, I think you said $100 million to $150 million. Is that working capital savings? Or is that actual cost that will hit the bottom line? And I guess in terms of the phasing in of that it sounds like there are 2 contracts that you're dealing with, 1 comes to an end in '26, 1 in '27. Do they -- does that saving phase in evenly? Or is it lumpy from 1 year to the next? I guess, how should we think about that?

John, thanks for the question. I'm going to kick it off and I'll turn it over to Shane. But I think this is an example of the new management team and how we are leaving no stone unturned aligned with our operational excellence pillar. So I'm going to Shane.

Thanks, John. There was a couple of questions there. The 1 specific item that you mentioned on TT, we did state that 2025 will be better than '24 in TT from that side from an earnings perspective. Going into the high-grade ore in those contracts, I think I've been pretty transparent on optimizing cash conversion and really thinking through how to do such. And this is really just an area we've honed in on as we continue to look at inventory spend. As you think about phasing of such, it really is a cash flow-oriented item. As we think about the back end of '26 is where you'll see some of that come in. And really, certainly, as you enter into '27 given that's when the last contract is up. And the range of it's about $100 million to $150 million in cash flow.

And our next question will come from John Roberts with Mizuho.

Could you discuss maybe the timing on the dividend cut? Why now? And why not just eliminate the dividend completely here?

Sure. Thanks, John. Yes, I've been pretty transparent through the last 9 months about having a balanced and disciplined capital allocation policy on that side. And then those priorities, we really started with focused growth investments and prioritizing improving liquidity as well as finally, fiscally and responsibly settling liabilities, we really believe the resizing of the dividend allows us the flexibility of the balance sheet to really execute on these priorities and really strategically grow the company through Pathway to Strive. As it relates to sizing and related to that, obviously, you can think about -- there was a lot of discussion and deliberation analysis to get to where we felt was a comfortable reduction of the dividend. Notably, I think this really aligns us with an appropriate payout that are still attractive to the chems and industrial space while providing us a decent amount for flexibility in the balance sheet.

And then your Opteon competitor here in the U.S. has announced a pretty hefty surcharge related to the tariffs. What are your pricing expectations for Opteon here near term?

We don't really talk about pricing, competitive pricing but you can see the proof is in our results. We're a really strong performer with our franchise. We're really focused on the transition and supporting our customers.

And the next question comes from Pete Osterland with Truist.

First, I just wanted to ask on TiO2 pricing. How have TiO2 prices been trending in the more regulated markets where you're seeing stronger volume growth. Was any of the sequential decline for pricing in the first quarter in those markets? And what are you expecting from pricing in those markets in the second quarter and beyond.

So thanks, Pete, for the question. We really don't want to talk about forward pricing. What I can tell you is that we see stabilization in the what we call the fair trade markets. We see stabilization in price and we see actually we've had volume increases in those markets as well.

Great. And then I just wanted to ask on segment margins in will there be any lingering impact from the weather-related outages that would roll into the second quarter? Do you have any higher cost inventories to work through? And if so, could you size the impact?

Yes. Thanks, Pete. Notably, we did have some onetime costs come through related to those weather items in Q1 that we talked about this being kind of a 1 quarter item whereby we will see some tailwinds, and that really contributes to the guide that we're seeing in growth in earnings from Q1 to Q2. Outside of that, we don't see impacts at this time related to any other operational issues.

And the next question comes from Laurence Alexander with Research Analyst.

So 2 quick ones. First, on the TiO2 side, what are you seeing in terms of effective capacity shutdowns in Asia? And can you just give a benchmark for how much you expect to come out of the market and how quickly. And then secondly, can you touch on deregulation and how -- and just regulatory trends and how you're thinking about positioning for the next iteration of the Opteon life cycle?

Sure. Thanks, Laurence. Relative to TiO2, our intelligence is that we see a couple of hundred thousand tons coming out of the market. But I think that it's evolving, right? As there's more fair trade zones established as we think about the finalization in Brazil and India, I think that will change. There's been a recognition by the industry in China themselves that there's an issue with supply. And just looking at trends with other markets where when you see this happening, you have seen China pull back on capacity increases as well as shuttering. So we see more to come in that area. When it comes to deregulation, if you're referring to in the U.S. the AMAT, we don't see any change there. Actually, the Trump administration signed the first AMAT and as we move forward, we're continuing our innovation and continuing to work on next-generation refrigerants that are going to be driving down global warming potential even more.

And the next question comes from Arun Viswanathan with RBC Capital.

Congrats on the results there. So just on TSS, first of all, I just wanted to understand your comments a little bit more on the supply tightness in both the content -- refrigerant content as well as cylinders. So when do you expect some of this tightness to be alleviated? And what measures are you taking to address that? It sounds like it's kind of short-lived. But why do you believe that? And again, on the cylinder side, is there anything else you can do to source other cylinders? And then similarly on R32, what can you do there to maybe broaden your supply base?

Thanks for the question, Arun. Relative to the cylinder shortage, I first want to say this is not a Chemours issue. We're meeting all of our OEM commitments and servicing the aftermarket. One thing I just want to mention, outlooks aren't perfect. The last transition occurred 30 years ago. So we're learning as we go, but we are pulling out all the stops. We've added additional shifts. We put in third-party operations, and we see this normalizing in the next couple of months.

And then just quickly on the updated capital allocation approach. So maybe you can describe some of the opportunities from a CapEx perspective that you're pursuing that you thought that it would be better use of your capital than the dividend. Maybe just quantify it from a CapEx perspective and maybe some kind of return metrics or anything like that, we could use to see how you kind of came to that decision or how the Board did at least.

Thanks for the question. We're going to be spending our capital completely aligned with our pathway to thrive. We have high priority investments in our next-generation refrigerants, immersion cooling under our enabling growth and I'm going to turn it over to Shane for maybe some more color.

Yes. Sure. Arun, thank you. I think there's a mixture of 2 things, right? I emphasized strategic growth but also balance sheet flexibility when we talk about reasons for that dividend reduction. As we think about the growth initiatives, Denise just talked about some main items related to next-generation refrigerants as well as immersion cooling, really excited about those type of capabilities as we think about emerging markets. We don't get into specific return hurdles on these calls, but I just really want to make sure that we have obviously looking as such from a payback and IRR perspective that is comfortably over our weighted average cost of capital. And also, Arun, you had asked earlier about kind of the dynamics of R32. I think it's important as we think about the supply dynamics that we emphasize, we've a pretty good network outside of the U.S. as it relates to gaining R32 as well as we do a significant amount of blending in areas outside of the U.S., namely in Mexico. And finally, we're working very well with our customers to think through those costs and thinking through the associated price to make sure that we return appropriate value from that to the market.

And our next question comes from Josh Spector with UBS.

First, I wanted to follow up on the agreement on the immersion cooling capacity. Just to be clear, it sounds like your answer to John, that's kind of small scale to get you out into field trials. I was curious, longer term, is that more of a manufacturing partnership where you can potentially get total agreements to scale that up in a capital-light way for Chemours or would you still require Chemours to make a larger owned facility investment to scale that up?

Josh, thanks for the question. Your read of what the purpose of this capacity in the size is right on. As we move forward into commercialization, we're always looking at how to best use our capital, what's the most prudent way. And we haven't decided yet on what the structure is going to be, but certainly, we'll be looking for partnerships with customers as we go forward.

Okay. That makes sense. And just on TSS at a high level, if tariffs stay where they are today, is that a positive or a negative for Chemours, just considering your production base and purchases versus the market at large, how would you characterize it?

I would say that it's really not a negative or a positive. I mean we basically have, over the years, developed great flexibility in our supply chain. We have lots of options. So it's really not something that stands out.

Well, I guess what I'm trying to figure out is, does the market ex Chemours have more of a negative impact because there's more imports, maybe more of a U.S. base. Does that benefit Chemours or would you say the same thing of the market at whole.

I think that I don't really have a strong opinion on that. I think our main focus is really around transitioning to Opteon and that portfolio. So I guess I would say I don't think from a competitive standpoint, it's really -- I think it's more neutral.

And our next question comes from Duffy Fischer with Goldman Sachs.

A couple of questions around TSS. So First, on the pricing embedded in your Freon numbers from Q1, if you compare that to the Chinese pricing today just to say how much further could you fall to a floor, what's the delta between your realized pricing and, let's say, commodity pricing in China today in Freon or HFC products.

This is Shane. So as we think about the pricing, we talk about stability in pricing in the U.S. on that side. we really have not gotten into kind of where the floor might be compared to a China pricing. But the most important thing to think about as it relates to the dynamics here is we're really focusing on the HFO side with Opteon and transferring that. That's really where our quota allocation is being distributed. We're in the aftermarket still on the HFCs and we'll continue to be diligent around that side. But at the same point is we're really excited about the transition and really the profitability and margin analysis on the HFO side under Opteon.

Okay. And then can you explain the dynamics? It seems like what you're doing is you're bringing product into Mexico that might be from countries with higher tariffs in Mexico would have and then you're changing the product enough through blending that it would carry basically the Mexico equivalent coming into the U.S. and not the origin country. Is that generally what the strategy is here with both HFO and HFC products?

No, the answer to that is, yes, we are doing a lot of lending in areas like Mexico. I don't think the strategy is to Mexico to blend and bring it over to the U.S., so as to do anything from the circumvention side or any of that side. It's really that our focus is the OEMs that are local to Mexico and other areas in that side, and that's where those products are going.

And the next question comes from Vincent Andrews with Morgan Stanley.

This is Justin on for Vincent. I was just hoping you could help us understand the assumptions within the low end, 60% and the high end, 80% cash flow conversion for how much of that range is just dependent on stronger or weaker EBITDA in the back half? And are there any working capital assumptions that changed from the low end to the high end of that guidance?

Yes. Thank you. Great question on that side. I think the influence to the range is 2 factors. One is obviously just the unwind of the working capital and our execution upon the initiatives I talked about to really generate and emphasize cash flow -- cash conversion. The other side of that is definitely dynamics between earnings on this lower versus higher range and the impacts to where working capital would go related to higher or lower sales on that side.

Understood. And then you cited lower investments in 2H within that cash flow framework. Is that incrementally lower investment? Or were those projects pushed out or canceled? Or is that kind of the same level that you were expecting going into the year?

Yes, thanks. I mean this is really just final fine-tuning the estimates as it relates to investments. I think there's 2 points there. On the script, I mentioned lower working capital investments I think we talked about coming into the year in the first half, having committed working capital investments from the prior year that you see coming through inventory in the back half, there's going to be lower investments given just our considered effort to really make sure that we're spending on only critical and essential items and strategic items on that side. In the capital area, you'll notice I brought it down roughly about $25 million from a year-to-date range. And that's really, again, making sure that we're just focused on what's essential from a capital perspective as well.

And the next question comes from Mike Leithead with Barclays.

First, I just wanted to poke on the TiO2 ore side of things. as you think bigger picture about your strategy, given or seems to have been a headwind, how do you think about potentially back integrating more into the ore operations going forward?

Mike, thanks for the question. As you know, we have mind. We are about 15% backward integrated today. We're very focused on the productivity of those mines, but really, our strategy and our core strength is really the diversity of ores that we can process. So our work and our investments are really more on innovating being able to process even cheaper ore, so that's really our strategy versus more backward integration.

Got it. That makes sense. And then second, on the liquid cooling front, if everything goes to plan from here today, on your 4-step pathway to serve the market, when would be the earliest adoption in sales we should see into data centers occur?

Yes. I mean what we've said is that really, it's really the back end of the decade where we would start to see sales.

We have reached the end of our question-and-answer session. Thank you for joining The Chemours Company First Quarter and Full Year 2025 Results Conference Call. You may now disconnect.