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01.05.2017 18:17
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The Chemours Company Reports First Quarter 2017 Results; Significant Earnings Improvements in All Segments
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PR Newswire
WILMINGTON, Del., May 1, 2017
WILMINGTON, Del., May 1, 2017 /PRNewswire/ --
First Quarter 2017 Highlights
- Net Sales of $1.4 billion, up 11%, including impacts from divestitures
- Net Income of $150 million, up $99 million with EPS of $0.79, up $0.51 per diluted share
- Adjusted EBITDA of $285 million, up 123%, demonstrating margin improvement across all segments
- Adjusted Net Income of $142 million, up $131 million with Adjusted EPS of $0.75, up $0.69 per diluted share
- Achieved net leverage of 2.7 times, below transformation plan target
- Increased full-year 2017 outlook
The Chemours Company (Chemours) (NYSE: CC), a global chemistry company with leading market positions in titanium technologies, fluoroproducts and chemical solutions, announced financial results for the first quarter 2017.
Chemours President and CEO Mark Vergnano said, "We began 2017 with great business performance across all three segments, bolstered by growth of Opteon™ refrigerants and improved pricing and demand for Ti-Pure™ titanium dioxide. Our transformation plan initiatives remain a key part of our strategy, as evidenced in the improvements of the Chemical Solutions segment. These results demonstrate that we are getting the full benefit of both market momentum and the strength that is embedded in our businesses and employees. As a result, Adjusted EBITDA margin doubled versus last year's first quarter."
First quarter net sales were $1.4 billion, an increase of 11 percent from $1.3 billion in the prior-year quarter. Volume growth in Titanium Technologies and Fluoroproducts drove a 15 percent increase in revenue and higher prices in Titanium Technologies added another 5 percent. These results were reduced by 8 percent due to the portfolio effects of divestitures within Chemical Solutions and approximately 1 percent related to negative currency translation year-over-year. First quarter net income was $150 million, or $0.79 per diluted share, versus net income of $51 million, or $0.28 per diluted share in last year's first quarter. Adjusted EBITDA for the first quarter 2017 improved by $157 million to $285 million versus $128 million in the first quarter of 2016. This improvement was primarily driven by increased volume and pricing despite the impact of the portfolio changes in Chemical Solutions.
Titanium Technologies
In the first quarter, Titanium Technologies segment sales were $646 million, a 24 percent increase versus the prior-year quarter. Global average selling prices and demand for Ti-Pure™ products both increased year-over-year. Segment Adjusted EBITDA was $159 million, a 194 percent year-over-year increase. Results were driven by improved pricing, increased Ti-Pure™ TiO2 volumes and production efficiencies.
Fluoroproducts
Fluoroproducts segment sales in the first quarter were $652 million, an increase of 23 percent versus the prior-year quarter. Opteon™ refrigerants sales growth and solid demand for fluoropolymers drove the volume increase compared to the prior-year quarter. Price declined versus last year's first quarter primarily driven by unfavorable mix. Segment Adjusted EBITDA was $155 million, an 82 percent increase versus the prior-year quarter, a result of the increased volume partially offset by lower price.
Chemical Solutions
In the first quarter, Chemical Solutions segment sales were $139 million, a 43 percent decline versus the prior-year quarter, primarily due to the impact of divestitures and the Niagara plant shutdown. Volume of chemicals & intermediate products increased, while price and currency effects were negligible in the quarter. Segment Adjusted EBITDA was $12 million, $2 million above the prior-year quarter, reflecting increased volume of performance chemicals & intermediates products and lower operating costs year-over-year, somewhat offset by the impacts of portfolio changes.
Corporate and Other
Corporate and Other represented a negative $41 million of Adjusted EBITDA. Expenses in the first quarter of 2017 increased $20 million versus the prior-year quarter. These increases were primarily related to higher legal and performance-related compensation expenses.
The company realized a cash tax rate of approximately 13 percent in the quarter. The company expects its cash tax rate to be in the high-teens for the full-year 2017, reflecting the company's anticipated geographic mix of earnings.
Liquidity
As of March 31, 2017, gross consolidated debt was $3.6 billion. Debt, net of $898 million cash, was $2.7 billion, resulting in a net debt-to-EBITDA ratio of approximately 2.7 times on a trailing twelve-month basis- below the company's transformation plan target of 3.0 times.
On April 3, 2017, Chemours repriced its existing Term Loan B. As part of that transaction, the company shifted a portion of the US Dollar Term Loan B into a new class of Euro Term Loan B. The Euro portion was issued with an aggregate principal amount of €400 million and the remaining US Dollar portion was issued in dollars with an aggregate principal amount of $940 million. The lower pricing associated with these Term Loan B tranches is expected to reduce interest expense by approximately $8 million annually. In addition, the company amended certain terms and conditions of its credit agreement to allow more operational flexibility.
Operating cash flow for the first quarter was $41 million, versus $36 million including the $166 million benefit of the prepayment received from DuPont in the previous year quarter. Free Cash Flow for the first quarter was a negative $28 million, a $25 million improvement versus the previous-year quarter of negative $53 million. Excluding the DuPont prepayment from 2016 comparisons, operating cash flow and Free Cash Flow improved $171 million and $191 million, respectively. Working capital for the quarter was a use of $176 million of cash, consistent with normal seasonal patterns.
Outlook
Vergnano commented, "Coming off our strong first quarter results, we now expect our 2017 Adjusted EBITDA to be in a range of $1.15 billion to $1.25 billion. We continue to anticipate that performance will remain strong for both Ti-Pure™ titanium dioxide and Opteon™ refrigerants. We have seen earlier than anticipated demand for some of these products, and as a result, expect first half and second half profitability to be more balanced than we saw in 2016. Guided by our transformation plan, we believe we are well positioned for the remainder of 2017, as we continue to strengthen our businesses and benefit from positive market conditions."
Conference Call
As previously announced, Chemours will hold a conference call and webcast on Tuesday, May 2, 2017 at 8:00 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.
About The Chemours Company
The Chemours Company (NYSE: CC) helps create a colorful, capable and cleaner world through the power of chemistry. Chemours 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™. Chemours has approximately 7,000 employees and 26 manufacturing sites serving approximately 4,000 customers in North America, Latin America, Asia-Pacific and Europe. Chemours is headquartered in Wilmington, Delaware and is listed on the NYSE under the symbol CC. For more information please visit chemours.com.
Non-GAAP Financial Measures
We prepare our financial statements in accordance with Generally Accepted Accounting Principles ("GAAP"). Within this press release, we make reference to Adjusted Net Income (Loss), Adjusted Diluted Income (Loss) per share and Adjusted EBITDA and Free Cash Flow, which are non-GAAP financial measures. Free Cash Flow is defined as Cash from Operations minus cash used for PP&E purchases. The company includes these non-GAAP financial measures because management believes they are useful to investors in that they provide for greater transparency with respect to supplemental information used by management in its financial and operational decision making.
Management uses Adjusted Net Income (Loss), Adjusted Diluted Income (Loss) per share, Adjusted EBITDA and Free Cash Flow to evaluate the company's performance excluding the impact of certain non-cash charges and other special items which we expect to be infrequent in occurrence in order to have comparable financial results to analyze changes in our underlying business from quarter to quarter.
Accordingly, the company believes the presentation of these non-GAAP financial measures, when used in conjunction with GAAP financial measures, is a useful financial analysis tool that can assist investors in assessing the company's operating performance and underlying prospects. This analysis should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. This analysis, as well as the other information in this press release, should be read in conjunction with the company's financial statements and footnotes contained in the documents that the company files with the U.S. Securities and Exchange Commission. The non-GAAP financial measures used by the company in this press release may be different from the methods used by other companies. For more information on the non-GAAP financial measures, please refer to the attached schedules or the table, "Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures" and materials posted to the website at investors.chemours.com.
Forward-Looking Statements
This press release contains forward-looking statements, within the meaning of the federal securities laws, that involve risks and uncertainties. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. The words "believe," "expect," "anticipate," "plan," "estimate," "target," "project" and similar expressions, among others, generally identify "forward-looking statements," which speak only as of the date the statements were made. These forward-looking statements address, among other things, our agreement with DuPont relating to the Settlement, resolution of environmental liabilities, litigation and other contingencies, anticipated future operating and financial performance, business plans and prospects, transformation plans, cost savings targets, plans to increase profitability and our outlook for Adjusted EBITDA, free cash flow and target net leverage that are subject to substantial risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Forward-looking statements are based on certain assumptions and expectations of future events which may not be accurate or realized. Forward-looking statements also involve risks and uncertainties, many of which are beyond Chemours' control. Additionally, there may be other risks and uncertainties that Chemours is unable to identify at this time or that Chemours does not currently expect to have a material impact on its business. Factors that could cause or contribute to these differences include: whether the Settlement becomes effective; the outcome of any pending or future litigation related to PFOA; the performance by DuPont of its obligations under the Settlement; the terms of any final agreement between Chemours and DuPont relating to the Settlement; and other risks, uncertainties and other factors discussed in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2016. Chemours assumes no obligation to revise or update any forward-looking statement for any reason, except as required by law.
CONTACT
MEDIA
Alvenia Scarborough
Director, Brand Marketing and Corporate Communications
+1.302.773.4507
media@chemours.com
INVESTORS
Alisha Bellezza
Treasurer and Director of Investor Relations
+1.302.773.2263
investor@chemours.com
| The Chemours Company Interim Consolidated Statements of Operations (Unaudited) (Dollars in millions, except per share amounts) | ||||||
| | ||||||
| | Three months ended March 31, | |||||
| | 2017 | | | 2016 | ||
| Net sales | $ | 1,437 | | | $ | 1,297 |
| Cost of goods sold | 1,079 | | | 1,095 | ||
| Gross profit | 358 | | | 202 | ||
| Selling, general and administrative expense | 144 | | | 133 | ||
| Research and development expense | 19 | | | 23 | ||
| Restructuring and asset related charges, net | 12 | | | 17 | ||
| Total expenses | 175 | | | 173 | ||
| Equity in earnings of affiliates | 7 | | | 5 | ||
| Interest expense, net | (51) | | | (57) | ||
| Other income, net | 34 | | | 93 | ||
| Income before income taxes | 173 | | | 70 | ||
| Provision for income taxes | 22 | | | 19 | ||
| Net income | 151 | | | 51 | ||
| Less: Net income attributable to noncontrolling interests | 1 | | | — | ||
| Net income attributable to Chemours | $ | 150 | | | $ | 51 |
| Per share data | | | | | ||
| Basic earnings per share of common stock | $ | 0.82 | | | $ | 0.28 |
| Diluted earnings per share of common stock | $ | 0.79 | | | $ | 0.28 |
| Dividends per share of common stock | $ | 0.03 | | | $ | 0.03 |
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