The Chemours Company (Chemours) (NYSE: CC), a global chemistry company with leading market positions in Fluoroproducts, Chemical Solutions and Titanium Technologies, yesterday announced its financial results for the second quarter 2020.
Second Quarter 2020 Highlights
- Net Sales of $1.1 billion
- Net Income of $24 million, with EPS of $0.15
- Adjusted Net Income of $30 million, with Adjusted EPS of $0.18
- Adjusted EBITDA of $166 million
- Free Cash Flow of $50 million, a $167 million improvement from prior year
- On July 29th, the company’s board of directors approved a Q3 dividend of $0.25 per share, consistent with the prior quarter
Update on COVID-19 Response Plan
- All Chemours sites remain operational
- Maintaining health and safety measures across our sites
- On target to reduce FY 2020 costs by $160 million
- On target to reduce FY 2020 CAPEX by ~$125 million, from approx. $400 million to approx. $275 million
- Preserving strong balance sheet, ample liquidity of $1.4 billion with no near-term senior debt maturities
“Our results in the second quarter reflect disciplined execution of our cash generation strategy in spite of the significant impact of COVID-19 on global demand,” said Chemours President and CEO Mark Vergnano. “We remain focused on both our employees’ safety and fully supporting our customers’ needs. At the same time, the team has reduced costs and improved operating efficiency through this difficult period. These efforts combined with our strong liquidity position give us tremendous confidence that we will be in a strong position to respond when market conditions improve.”
Second quarter 2020 net sales were $1.1 billion in comparison to $1.4 billion in the prior-year second quarter. Results were driven primarily by lower volume across all segments. Second quarter net income was $24 million, resulting in EPS of $0.15. Adjusted Net Income was $30 million, resulting in Adjusted EPS of $0.18, down $0.54 from the prior year, inclusive of a $13 million charge related to our Fayetteville facility. Adjusted EBITDA for the second quarter 2020 was $166 million in comparison to $283 million in the previous year second quarter, a result of lower volumes and prices, idle production charges, lower fixed cost absorption and limited F-Gas quota sales, partially offset by stronger operational performance and lower cost, driven by FY2020 cost reduction plan in response to COVID-19, on year-over-year basis.
Fluoroproducts
Fluoroproducts segment net sales in the second quarter were $523 million in comparison to $711 million in the prior year. Volume and price declined 22 percent and 3 percent, respectively, on a year-over-year basis. Lower volumes were primarily driven by the impact of COVID-19 on global automotive OEMs and industrial end-markets. Segment Adjusted EBITDA of $97 million decreased 46 percent versus the prior-year quarter, negatively impacted by higher costs driven by idle production and minimal F-gas quota sales due to illegal imports of HFC refrigerants into the EU. This was partially offset by cost reductions across the business and improved operational performance.
Chemical Solutions
Chemical Solutions segment net sales were $82 million, a 37 percent decrease versus the prior-year second quarter. Volumes were down 16 percent year-over-year primarily driven by COVID-19 related mine closures. Portfolio was down 18 percent year-over-year primarily driven by the Methylamines and Methylamides business divestiture in the fourth quarter of 2019. Lower average prices were primarily driven by regional customer mix. Adjusted EBITDA of $19 million was 19 percent higher in comparison to the prior-year quarter, reflecting a 1100 bps improvement in margins to 23 percent from 12 percent in the prior-year primarily due to portfolio management actions and lower costs.
Titanium Technologies
Titanium Technologies segment net sales in the second quarter were $488 million in comparison to $567 million in the prior-year quarter. Volumes were down 9 percent versus the prior-year second quarter, a result of softer demand primarily in Europe, Latin America and Asia. North America was relatively flat, as the DIY trends helped support the end-market demand in the region. Global average selling prices were flat sequentially and down 5 percent on a year-over-year basis. Segment Adjusted EBITDA decreased by 26 percent to $94 million, in comparison to $127 million in last year’s second quarter, negatively impacted by fixed cost under-absorption.
Corporate and Other
Corporate and Other in the second quarter 2020 represented a $44 million offset to Adjusted EBITDA, versus a $40 million offset in the prior-year quarter. This increase was attributable to higher costs associated with environmental remediation matters partially offset by reductions in compensation expense and lower external spend.
Liquidity
As of June 30, 2020, consolidated gross debt was $4.4 billion. Debt, net of $1 billion cash, was $3.3 billion, resulting in a net leverage ratio of approximately 3.7 times on a trailing twelve-month Adjusted EBITDA basis. Total liquidity was $1.4 billion, comprised of $1 billion of cash and $399 million of revolver capacity.
Cash provided by operating activities for the second quarter of 2020 was $111 million, up $104 million from $7 million in the prior-year quarter. Capital expenditures for the second quarter 2020 were $61 million, versus $124 million in last year’s second quarter. Free Cash Flow for the second quarter 2020 was a $50 million inflow versus the prior-year quarter of a $117 million outflow, an improvement of $167 million.
Outlook
Vergnano concluded: “The first half of 2020 has been one of the most difficult periods in our short history. I am proud of the way Chemours has responded and our ability to focus and execute through these uncertain times. The outlook for the second half, while improving, remains unclear. Looking ahead, as we navigate this uncertain time, we remain focused on the execution of our short-term response plan and long-term strategy. The Chemours Team will continue to work in strong partnership with our customers to deliver the full potential of our value proposition, because we win only if our customers win.”
Conference Call
As previously announced, Chemours will hold a conference call and webcast on Friday, July 31, 2020 at 8:30 AM EDT. The webcast and additional presentation materials can be accessed by visiting the Events & Presentations page of Chemours’ investor website, investors.chemours.com. A webcast replay of the conference call will be available on the Chemours investor website.
The Chemours Company (NYSE: CC) is a global leader in titanium technologies, fluoroproducts, and chemical solutions, providing its customers with solutions in a wide range of industries with market-defining products, application expertise and chemistry-based innovations. Chemours ingredients are found in plastics and coatings, refrigeration and air conditioning, mining, and general industrial manufacturing. Our flagship products include prominent brands such as Teflon™, Ti-Pure™, Krytox™, Viton™, Opteon™, Freon™ and Nafion™. In 2019, Chemours was named to Newsweek’s list of America’s Most Responsible Companies. The company has approximately 7,000 employees and 30 manufacturing sites serving approximately 3,700 customers in over 120 countries. Chemours is headquartered in Wilmington, Delaware and is listed on the NYSE under the symbol CC.
Source: Chemours