The Chemours Company (Chemours), a global chemistry company with leading market positions in Fluoroproducts, Chemical Solutions and Titanium Technologies, announced its financial results for the third quarter 2020.
Third Quarter 2020 Results & Highlights
- Net Sales of $1.2 billion
- Net Income of $76 million, with EPS of $0.46
- Adjusted Net Income of $78 million, with Adjusted EPS of $0.47
- Adjusted EBITDA of $210 million
- Free Cash Flow of $252 million, a $92 million improvement from prior year
- Repaid the $300 million outstanding revolving credit facility balance
- On October 28, 2020, the company’s Board of Directors approved a Q4 dividend of $0.25 per share, consistent with the prior quarter
- Advanced our Corporate Responsibility Commitments (CRC) with publication of our third CRC report
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 approx. $125 million, from approx. $400 million to approx. $275 million
- Preserving strong balance sheet, ample liquidity of $1.7 billion with no near-term senior debt maturities
“Our results in the third quarter demonstrate the progress we have made in executing our business plan and the steady recovery of the auto, architectural coatings and construction markets”, said Chemours President and CEO Mark Vergnano. “Despite the COVID-19 headwinds, we continue to deliver on our cash generation strategy which supports our strong balance sheet and liquidity position. We also released our third annual CRC Report – renewing our commitment to leading the industry and our peers on a broad spectrum of ESG targets. This document remains foundational for the company, and a key component of our long-term strategy.”
Third quarter 2020 net sales were $1.2 billion in comparison to $1.4 billion in the prior-year third quarter. Results were driven by lower volumes in Fluoroproducts and Chemical Solutions and lower global average prices, partially offset by higher volumes in Titanium Technologies. Third quarter net income was $76 million, resulting in EPS of $0.46, equal to the prior year. Adjusted Net Income was $78 million, resulting in Adjusted EPS of $0.47, down $0.12 from the prior year, inclusive of a $10 million charge related to our Fayetteville facility. Adjusted EBITDA for the third quarter 2020 was $210 million in comparison to $248 million in the previous year third quarter, a result of lower volumes and prices, partially offset by stronger operational performance and lower cost on a year-over-year basis.
Fluoroproducts segment net sales in the third quarter were $533 million in comparison to $636 million in the prior year. Volume and price declined 11 percent and 5 percent, respectively, on a year-over-year basis. Volumes declined primarily due to demand weakness in fluoropolymer products, partially offset by nascent signs of market recovery led by increased customer demand for refrigerants, particularly in the automotive sector as original equipment manufacturers (OEMs) continued to improve production following shutdowns in the first and second quarters of 2020. Segment Adjusted EBITDA of $112 million decreased 8 percent versus the prior-year quarter, primarily due to lower net sales partially offset by better operational performance and cost reduction actions. Fluoroproducts segment net sales and Adjusted EBITDA in the third quarter were up 2 percent and 15 percent, respectively, on a sequential basis, primarily driven by early stages of recovery with sequential demand improvement and relative strength of demand from automotive OEMs.
Chemical Solutions segment net sales were $88 million, a 37 percent decrease versus the prior-year third quarter. Prices and volumes were negatively impacted primarily by mine closures in Latin America, related to COVID-19. The divesture of our Methylamines and Methylamides business in the fourth quarter of 2019 resulted in a 19% negative impact on a year-over-year basis. Adjusted EBITDA was $12 million in comparison to $23 million the prior-year quarter, driven by lower volumes and lower licensing income.
Titanium Technologies segment net sales in the third quarter were $612 million in comparison to $614 million in the prior-year quarter. Volumes were up 4 percent versus the prior-year third quarter, a result of demand recovery in the architectural coatings, laminates and plastics markets. Global average selling prices were down 5 percent on a year-over-year basis. Segment Adjusted EBITDA decreased by 6 percent to $129 million, in comparison to $137 million in last year’s third quarter. Titanium Technologies segment net sales increased 25 percent on a sequential basis, with Adjusted EBITDA up 37 percent on a sequential basis. Sequential strength in volume was driven by early signs of demand recovery across most geographic regions and end-markets.
Corporate and Other
Corporate and Other in the third quarter 2020 represented a $43 million offset to Adjusted EBITDA, versus a $34 million offset in the prior-year quarter. This increase was attributable to higher costs associated with environmental remediation matters partially offset by lower external spend.
As of September 30, 2020, consolidated gross debt was $4.1 billion. Debt, net of $956 million cash, was $3.2 billion, resulting in a net leverage ratio of approximately 3.7 times on a trailing twelve-month Adjusted EBITDA basis. Total liquidity was $1.7 billion, comprised of $956 million of cash and $702 million of revolving credit facility capacity.
Cash provided by operating activities for the third quarter of 2020 was $299 million, up $11 million from $288 million in the prior-year quarter. Capital expenditures for the third quarter 2020 were $47 million, versus $128 million in last year’s third quarter. Free Cash Flow for the third quarter 2020 was a $252 million inflow versus the prior-year quarter of $160 million, an improvement of $92 million.
As previously announced, the company repaid the $300 million outstanding balance on its revolving credit facility during the quarter.
Mr. Vergnano concluded: “I am proud of the resilience our business has shown over the first three quarters of 2020. Our results are a testament to the hard work of the people of Chemours, our dedication to the success of our customers, and our ability to execute in the face of uncertainty. Looking ahead, I am confident that we are well positioned to create sustained value through the economic recovery and remain committed to achieving our full potential as Chemours.”
Source: The Chemours Company
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