Q2 2024 The Chemours Co Earnings Call

and Ned Huffman. This has been an interesting conversation. It has been a pleasure to talk to all of you.

Operator: Good morning. My name is Regina, and I will be your conference operator today. I would like to welcome everyone to the Chemours Company's second quarter 2024 results conference call. Currently, all participants are in listen-only mode.

Regina: Good morning. My name is Regina and I will be your conference operator today. I would like to welcome everyone to the Chemours Company's second quarter 2024 results conference call.

Speaker Change: Currently, all participants are in listen-only mode. A question-and-answer session will follow the conclusion of the prepared remarks.

Operator: 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 the conference. Good morning, everybody.

Brandon Ontjes: 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 the conference.

Brandon Ontjes: Welcome to the Chemours Company's second quarter 2024 earnings conference call. I'm joined today by Denise Dignam, Chemours President and Chief Executive Officer, and our 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 filing. 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.

Speaker Change: Good morning, everybody. Welcome to the Chemours Company's second quarter 2024 earnings conference call. I'm joined today by Denise Dignam, Chemours President and Chief Executive Officer, and our Chief Financial Officer, Shane Hostetter.

Speaker Change: 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.

Speaker Change: 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.

Speaker Change: Actual results may differ and Chemours undertakes no duty to update any forward-looking statements as a result of future developments or new information.

Brandon Ontjes: During the course of the 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 yesterday. Also, we posted our earnings presentation to our website last evening. With that, I will turn the call over to Denise Dignam. Thank you, Brandon.

Speaker Change: During the course of the call, we'll refer to certain non-GAAP financial measures that we believe are useful to investors evaluating the company's performance.

Speaker Change: A reconciliation of non-GAAP terms and adjustments are included in our press release issued yesterday. Also, we posted our earnings presentation to our website last evening. With that, I will turn the call over to Denise Dignam.

Denise Dignam: And thank you everyone for joining us this morning. Before we get into our call this morning, I'd like to begin by welcoming a new member of our executive team. I'm excited to introduce Shane Hostetter as our new Senior Vice President and Chief Financial Officer. Shane brings over 20 years of experience to the leadership of our finance function, having previously served as the CFO of Quaker Health. While Shane has only been with us for a month, he's already having a positive impact.

Denise Dignam: Thank you, Brandon, and thank you, everyone, for joining us.

Speaker Change: Before we get into our call this morning, I'd like to begin by welcoming a new member of our executive team. I'm excited to introduce Shane Hostetter as our new Senior Vice President and Chief Financial Officer.

Speaker Change: Shane brings over 20 years of experience to the leadership of our finance function, having previously served as a CFO of Quaker Pelton.

Speaker Change: While Shane has only been with us for a month, he's already having a positive impact. We are happy to have Shane on board with the strong talent that he brings, solidifying our leadership team.

Denise Dignam: We are happy to have Shane on board with the strong talent that he brings, solidifying our leadership. During this transition, Matt Abbott, who served as our interim CFO, has been key in keeping stability and continuity within our finances. Matt will continue in a leadership role within Chemours, returning to his previous position of Chief Enterprise Transformation Officer. I would like to express my sincere gratitude to Matt for his tremendous efforts and his leadership during a critical time for our company. In our discussion this morning, I will talk about our overall performance and some of the recent business challenges we have faced and overcome.

Speaker Change: During this transition, Matt Abbott, who served as our interim CFO , has been key in keeping stability and continuity within our finance team.

Speaker Change: Matt will continue in a leadership role within Chemours, returning to his previous position of Chief Enterprise Transformation Officer.

Speaker Change: I would like to express my sincere gratitude to Matt for his tremendous efforts and his leadership during a critical time for our company.

Speaker Change: In our discussion this morning, I will talk about our overall performance and some of the recent business challenges we faced and overcome.

Denise Dignam: Then I'll hand the discussion over to Shane, who will go over our financial performance. And I'll conclude by sharing our outlook for the third quarter. We will then close the call with a Q&A session to address your questions. In the first quarter, we faced many challenges, and the second quarter continued along that. Consistent with the demonstrated resiliency of our people, our team didn't shy away, putting forth tremendous collaboration and leadership in the face of uncertainty, controlling what we could control as we dedicated our focus to driving business performance.

Speaker Change: Then I'll hand the discussion over to Shane, who will go over our financial performance. I'll conclude by sharing our outlook for the third quarter. We will then close the call with a Q&A session to address your questions.

Shane Hostetter: In the first quarter, we faced many challenges, and the second quarter continued along that course.

Shane Hostetter: Consistent with the demonstrated resiliency of our people, our team didn't shy away, putting forth tremendous collaboration and leadership in the face of uncertainties, controlling what we could control as we dedicated our focus to driving business performance.

Denise Dignam: As the Chemours leadership team faces challenges, we did so with a renewed set of core values that were developed with inputs from across the organization. These values are the foundation of our culture, reflecting who we are as a company and what we believe.

Speaker Change: As the Chemours leadership team faced these challenges, we did so with a renewed set of core values that were developed with inputs from across the organization.

Speaker Change: These values are the foundation of our culture, reflecting who we are as a company and what we believe.

Denise Dignam: They are a key part of our formula for long-term success. They are simple, plain spoken, and are present in every aspect of how we work. Safety, integrity, partnership, ownership, and As you are aware, we recently faced a disruption in our titanium dioxide production at our Altamira, Mexico site due to a severe drought in the region. While the drought had pronounced business implications, it was also very personal to us. This was a sudden extreme shift in basic needs for our people and the communities where they live. In response, we worked quickly to provide substantial support for those in need. I was amazed at how quickly our people organized and partnered to promptly supply potable water, food, and other essential needs to those impacted.

Speaker Change: They are a key part of our formula for long-term success.

Speaker Change: They are simple, plain spoken, and are present in every aspect of how we work.

Speaker Change: Safety, Integrity, Partnership, Ownership, and Respect.

Speaker Change: As you are aware, we recently faced a disruption in our titanium dioxide production at our Altamira, Mexico site due to a severe drought in the region.

Speaker Change: While the drought had pronounced business implications, it was also very personal to our team.

Speaker Change: This was a sudden, extreme shift in basic needs for our people and the communities where they live.

Speaker Change: In response, we worked quickly to provide substantial support for those in need. I was amazed at how quickly our people organized and partnered to promptly supply potable water, food, and other essential needs to those impacted.

Denise Dignam: We formed a cross-functional team that conducted an ongoing assessment of business impact through scenarios. Together, we determined the best way to meet customer demand. The duration of the downtime at our site was uncertain, and the team met regularly to ensure we upheld our commitment to our customers by optimizing our TIO2 production. These plans require collaboration and agility with our TT employees working diligently around the clock with a deep sense of ownership. We take pride in our reputation as a highly reliable TIO2 supplier, and we believe our actions are a clear reflection of that.

Speaker Change: We formed a cross-functional team that conducted an ongoing assessment of business impacts through scenario planning.

Speaker Change: Together, we determined the best way to meet customer demand.

Speaker Change: The duration of the downtime at our site was uncertain, and the team met regularly to ensure we upheld our commitment to our customers by optimizing our TIO2 production circuit.

Speaker Change: These plans required collaboration and agility with our TT employees working diligently around the clock with a deep sense of ownership.

Speaker Change: We take pride in our reputation as a highly reliable TiO2 supplier, and we believe our actions are a clear reflection of this.

Denise Dignam: It was through these efforts that we were able to exceed our previous volume expectations with a 16% volume increase from the first quarter. This simply would not have been possible without the fast action, hard work, and excellent collaboration of our TT employees, our customers, and our partners in the community and region. For this, I thank our. Because of this unexpected production outage during the second quarter, we incurred about $8 million in one-time costs.

Speaker Change: It was through these efforts that we were able to exceed our previous volume expectations with a 16% volume increase from the first quarter.

Speaker Change: This simply was not possible without the fast action, hard work, and excellent collaboration of our TT employees, our customers, and our partners in the community and region.

Speaker Change: For this, I thank our team.

Speaker Change: Because of this unexpected production outage during the second quarter, we incurred about $8 million of one-time cost. We anticipate this disruption will also affect our results for TT in the third quarter, which I will explain more when we talk about our outlook later.

Denise Dignam: We anticipate this disruption will also affect our results for TT in the third quarter, which I will explain more when we talk about our outlook. Even with these difficulties, our TT team continues to prioritize our strategic relationships with customers and to execute our TT transformation, targeting $125 million in cost savings in 2020. By the end of the second quarter, we had reached approximately $100 million in savings compared to the prior, offsetting price decline.

Speaker Change: Even with these difficulties, our TT team continues to prioritize our strategic relationships with customers and to execute our TT transformation plan, targeting $125 million in cost savings in 2024.

Speaker Change: By the end of the second quarter, we have reached approximately $100 million in savings compared to the prior year, offsetting price declines.

Denise Dignam: For the rest of the year, we anticipate continuing to make strong progress against our plan with year-over-year comparative savings slightly less than the first half, considering that we commenced our transformation plan in the middle of the third quarter last year. Now, let's talk about TSS. In TSS, we continue to experience a seasonal demand pattern. Although there was a slower start to the cooling season in the northern hemisphere, it has quickly warmed up.

Speaker Change: For the rest of the year, we anticipate continuing to make strong progress against our plan with year-over-year comparative savings slightly less than the first half, considering that we commenced our transformation plan in the middle of the third quarter last year.

Speaker Change: Now let's talk about TSS.

Speaker Change: In TSS, we continue to experience a seasonal demand pattern.

Speaker Change: Although there was a slower start to the cooling season in the northern hemispheres, it has quickly warmed up.

Denise Dignam: However, even with this elevated summer season, the market is still affected by excess HFC inventory. As we discuss our results for TSS's refrigerants, we have updated our sales reporting this quarter to break our refrigerant sales into two separate product categories, Option refrigerants, reflecting our low global warming potential offering, and Freon refrigerants. For the second quarter, Opteon refrigerants continued to see strong adoption, reflecting double-digit quarterly sales growth both sequentially and year-over-year while approaching 60 percent of our total refrigerant sales. This growth shows the effects of the U.S. AIM Act and E.U.S.

Speaker Change: However, even with this elevated summer season, the market is still affected by excess HFC inventory.

Speaker Change: As we discuss our results for TSS's refrigerants, we have updated our sales reporting this quarter to break our refrigerant sales into two separate product categories, Option Refrigerants, reflecting our low global warming potential offering, and Freon Refrigerants.

Speaker Change: For the second quarter, Opteon refrigerants continue to see strong adoption, reflecting double-digit quarterly sales growth both sequentially and year-over-year, while approaching 60% of our total refrigerant sales.

Speaker Change: This growth shows the effects of the U.S. AIM Act and EU FGAS regulations that have progressively lowered the production and importation of high global warming potential refrigerants since they have gone into effect.

Denise Dignam: Gas regulations that have progressively lowered the production and importation of high global warming potential refrigerants since they have gone into effect. Our Freon refrigerant sales for the second quarter were generally flat from the first quarter, with year-over-year double-digit declines driven by lower volumes under the regulatory step-down. Weaker volumes of Freon refrigerants were further compounded by softer HFC pricing, primarily due to elevated market HFC inventory levels and a slower start to the cooling cycle.

Speaker Change: Our Freon refrigerant sales for the second quarter were generally flat from the first quarter, with year-over-year double-digit declines driven by lower volumes under those regulatory step-downs.

Speaker Change: Weaker volumes in Freon refrigerants were further compounded by softer HFC pricing, primarily due to elevated market HFC inventory levels and a slower start to the cooling season.

Denise Dignam: We attribute these HFC inventory levels to higher-than-expected pre-AIM inventory builds in the U.S., and we continue to believe that these market inventory levels will remain elevated through the rest of the year. To further underscore, as the U.S.

Speaker Change: We attribute these HFC inventory levels to higher than expected pre-AIM inventory bills in the U.S., and we continue to believe that these market inventory levels will remain elevated through the rest of the year.

Denise Dignam: As the AIM Act enacts its regulatory phase-down, we are observing strict adherence and enforcement concerning the regulation. These efforts are evidence of the U.S. Department of Commerce's ongoing work to mitigate circumvention of duties and the U.S. Customs and Border Patrol's continued activities to restrict illegal importation of. In APM, we see continued macro-recovery across APM's portfolios, with sequential double-digit top-line growth in both the advanced materials and performance solutions portfolio, in line with expectations.

Speaker Change: To further underscore, as the U.S. AIM Act enacted its regulatory phase-down, we are observing strict adherence and enforcement concerning the regulation.

Speaker Change: These efforts are evidenced through the U.S. Department of Commerce's ongoing work to mitigate circumvention of duties and the U.S. Customs and Border Patrol's continued activities to restrict illegal importation of refrigerants.

Speaker Change: At APM, we see the continued macro-recovery across APM's portfolios with sequential double-digit top-line growth in both the Advanced Materials and Performance Solutions portfolio, in line with expectations.

Denise Dignam: Our corporate expenses were generally in line with expectations as well. While the second quarter provided us with various complex business dynamics, the team has remained focused on business performance while remaining grounded in our core values. Before I hand the call over to Shane, I want to recognize our team by highlighting a couple recent business accomplishments. First, we recently received our permit to expand production of Teflon PFA resin at our Washington Works manufacturing site in West Virginia. This was a significant undertaking for the Chemours.

Speaker Change: Our corporate expenses were generally in line with expectations as well.

Speaker Change: While the second quarter provided us with various complex business dynamics, the team has remained focused on business performance while remaining grounded in our core values.

Speaker Change: Before I hand the call over to Shane, I want to recognize our team by highlighting a couple recent business accomplishments.

Shane Hostetter: First, we recently received our permit to expand production of Teflon PFA resin at our Washington Works manufacturing site in West Virginia. This was a significant undertaking for the Chemours team.

Denise Dignam: Our ability to secure a permit was critical as our customers rely on us as the only U.S.-based supplier of this material, which is essential for the fabrication of semiconductor chips. I will speak more to the opportunities we see with Teflon PFA later. And second, in June, we released our 7th Annual Sustainability Report, Partnering for Progress, which outlines Chemours' progress towards meeting our 2030 Corporate Responsibility Commitment Goal. Our commitment to sustainability as well as responsible manufacturing is unwavering, and it's reflected in the significant progress that we continue to make in meeting and exceeding our commitment to Reducing Emissions, Innovating to Achieve More Sustainable Products, and Investing in the Communities Where We Operate.

Shane Hostetter: Our ability to secure a permit was critical, as our customers rely on us as the only U.S.-based supplier of this material, which is essential for the fabrication of semiconductor chips.

Shane Hostetter: I will speak more to the opportunities we see with Teflon PFA later.

Shane Hostetter: And second, in June , we released our 7th Annual Sustainability Report, Partnering for Progress, which outlines Chemours' progress towards meeting our 2030 Corporate Responsibility Commitment Goals.

Shane Hostetter: Our commitment to sustainability, as well as responsible manufacturing, is unwavering and is reflected in the significant progress that we continue to make in meeting and exceeding our commitments.

Shane Hostetter: to reducing emissions, innovating to achieve more sustainable products, and investing in the communities where we operate.

Denise Dignam: Specific to our sustainability initiative, I'm proud to highlight the approval by SPTI, the science-based targets initiative, of our near-term target to cut our scope 1 and 2 greenhouse gas emissions by 60%, in addition to a new scope 3 emissions target to reduce emissions by 25% per ton of production by 2030. This rigorous 22-month-long process required close engagement between Chemours and SBTI, including a thorough review of our underlying plans, calculations, and methodology.

Shane Hostetter: Specific to our sustainability initiative, I'm proud to highlight the approval by SPTI

Shane Hostetter: The science-based targets initiative of our near-term target to cut our scope 1 and 2 greenhouse gas emissions by 60%, in addition to a new scope 3 emissions target to reduce emissions by 25% per ton of production by 2030.

Shane Hostetter: This rigorous, 22-month-long process required close engagement between Chemours and SBTI, including a thorough review of our underlying plans, calculations, and methodologies.

Operator: The approval by SBTI reflects our commitment to let science inform and guide our actions as we continue to make a meaningful impact in the global fight against climate change. I'd now like to hand it over to Shane to walk through our financial results. Thank you, Denise, and good morning.

Shane Hostetter: The approval by SBTI reflects our commitment to let science inform and guide our actions as we continue to make a meaningful impact in the global fight against climate change.

Shane Hostetter: I'd now like to hand it over to Shane to walk through our financial results.

Operator: First and foremost, I'm very excited to join Chemours as our new CFO. In my early time with Chemours, I've been impressed with the unified direction and the commitment to success of all our people. And I'm eager to help move our strategic goals forward to create more value for our shareholders. I joined Chemours because of its industry-leading portfolio, its operational expertise, and its Resilient Co. I'm proud to say that my expectations are aligned with what is being delivered. I'm confident that the drive of our people, along with our vast portfolio of industry-leading performance chemicals, will ensure the successful delivery of our long-term growth initiative. Moving into our financial results. Our consolidated net sales for the second quarter were approximately 1.5 million, which was down 6% year-over-year.

Shane Hostetter: Thank you, Denise, and good morning, everyone.

Shane Hostetter: First and foremost, I'm very excited to join Chemours as our new CFO .

Shane Hostetter: In my early time with Chemours, I have been impressed with the unified direction and the commitment to success of all our people, and I am eager to help move our strategic goals forward to create more value for our shareholders.

Shane Hostetter: I joined Chemours because of its industry-leading portfolio, its operational expertise, and its resilient culture.

Shane Hostetter: I'm proud to say that my expectations are aligned with what is being executed.

Shane Hostetter: I am confident that the drive of our people, along with our vast portfolio of industry-leading performance chemicals, will ensure the successful delivery of our long-term growth initiatives.

Operator: This sales decline was largely driven by lower pricing of 6% and portfolio impacts of 1%, which were partially offset by a 1% increase in volume. consolidated adjusted, decreased from $324 million in the prior year to $206 million for the current quarter. Cost Absorption, Free Arm Production, and Currency. These headwinds were partially offset by ongoing TTE transformation plan benefits, which strategically align with our focus on enhancing TT earnings and Mitigating Psychical Impact.

Operator: Second Quarter Adjusted EBITDA also includes a $6 million unallocated item related to third-party costs associated with the TT Transformation Plan. We anticipate this amount to approximate the same amount in the third quarter. Our consolidated adjusted net income was $57 million in the current quarter, compared to $167 million in the prior year. And our adjusted net income per diluted share was $0.38 in the current quarter, compared to $1.10 in the prior quarter

Speaker Change: Moving into our financial results, our consolidated net sales for the second quarter were approximately $1.5 billion, which were down 6% year-over-year.

Speaker Change: This sales decline was largely driven by lower pricing of 6% and portfolio impacts of 1%, which were partially offset by a 1% increase in volumes.

Speaker Change: Our consolidated adjusted EBITDA decreased from $324 million in the prior year to $206 million for the current quarter.

Speaker Change: This decline was driven by lower pricing, cost absorption in free-on production, and currency impacts.

Speaker Change: These headwinds were partially offset by ongoing TT transformation plan benefits, which strategically align with our focus on enhancing TT earnings and mitigating cyclical impacts.

Speaker Change: Second Quarter Adjusted EBITDA also includes a $6 million unallocated item related to third-party costs associated with the TT Transformation Plan.

Speaker Change: We anticipate this amount to approximate the same amount in the third quarter.

Speaker Change: Our consolidated adjusted net income was $57 million in the current quarter, compared to $167 million in the prior year. And our adjusted net income per diluted share was $0.38 in the current quarter, compared to $1.10 in the prior year.

Operator: Our corporate expenses were $77 million in the second quarter, which aligned with our expectations. This $14 million increase in corporate expenses compared to the prior year was primarily due to costs associated with addressing our material weaknesses in internal controls over financial reporting and the implementation of recommendations from the Audit Committee's internal review. In total, these costs approximated $11 million in the quarter, with the remaining increase in corporate expenses largely driven by additional litigation costs.

Speaker Change: Our corporate expenses were $77 million in the second quarter, which aligned with our expectations.

Speaker Change: This $14 million increase in corporate expenses compared to the prior year was primarily due to costs associated with addressing our material weaknesses in internal controls over financial reporting and the implementation of recommendations from the Audit Committee's internal review.

Speaker Change: In total, these costs approximated $11 million in the quarter, with the remaining increase in corporate expenses largely driven by additional litigation costs.

Operator: Turning to our business segment performance, starting with, In the second quarter, TT's net sales decreased 5% year over year to $673 million. This decline was primarily driven by a 7% decrease in price and a 1% impact from foreign exchange, which were partially offset by a 3% increase in volume. Despite the unplanned downtime at our Altamira, Mexico manufacturing site due to the extreme drought in the region, our volumes still grew ahead of expectations. This was largely due to robust demand in Asia-Pacific and North America compared to the prior year. While TT's second quarter adjusted EBITDA decreased 8% to $80 million compared to the prior year, the segment's adjusted EBITDA margin remained flat at 12%.

Speaker Change: Turning to our business segment performance, starting with TT.

Speaker Change: In the second quarter, TT's net sales decreased 5% year-over-year to $673 million.

Speaker Change: This decline was primarily driven by a 7% decrease in price and a 1% impact from foreign exchange, which were partially offset by a 3% increase in volumes.

Speaker Change: Despite the unplanned downtime at our Altamira, Mexico manufacturing site due to the extreme drought in the region, our volumes still grew ahead of expectations.

Speaker Change: This was largely due to robust demand in Asia-Pacific and North America compared to the prior year.

Speaker Change: While TT's second quarter adjusted EBITDA decreased 8% to $80 million compared to the prior year, the segment's adjusted EBITDA margin remained flat at 12%.

Operator: TT's experienced the local pricing declines that I mentioned earlier, as well as currently, but this was partially offset by reduced costs from the TT transformation, which continues its strong execution and is outpacing expectations, on a sequential basis. TT's net sales increased by 14%, which was driven by a 16% rise in our volumes, a strong result given the headwinds we faced due to the Altamira downturn. TT's pricing and foreign exchange impacts each posed a 1% headwind.

Speaker Change: TT's experienced the local pricing declines that I mentioned earlier, as well as currency impacts, but this was partially offset by reduced costs from the TT transformation plan, which continues its strong execution and is outpacing expectations.

Speaker Change: On a sequential basis, TT's net sales increased by 14%, which was driven by a 16% rise in our volumes, a strong result given the headwinds we faced due to the Altamira downtime I mentioned before.

Speaker Change: TT's pricing and foreign exchange impacts each posed a 1% headwind sequentially.

Operator: Moving now to our TSS site. For the second quarter, TSS's net sales were approximately 513 million, a 2% decrease from the prior year. This decline in net sales was driven by lower pricing by 4%, which was partially offset by a 2% increase in volume.

Speaker Change: Moving now to our TSS segment.

Speaker Change: For the second quarter, TSS's net sales were approximately 513 million, a 2% decrease from the prior year. This decline in net sales was driven by lower pricing of 4%, which was partially offset by a 2% increase in volumes.

Operator: As shared earlier, TSS's decrease in pricing was driven by our Freon refrigerants portfolio, which was influenced by elevated HFC inventory levels from excess pre-AIM inventory bills prior to 2020, as well as a slower start to the cooling season. And, to a lesser extent, we did experience lower pricing in our foam, propellants, and other portfolios. TSS's volume growth was driven by our Option Refrigerants portfolio, which was fueled by continued adoption in stationary as well as transition in the automotive era for mobile.

Speaker Change: As shared earlier, TSS's decrease in pricing was driven by our Freon refrigerants portfolio, which was influenced by elevated HFC inventory levels from excess pre-AIM inventory bills prior to 2022, as well as a slower start to the cooling season.

Speaker Change: And, to a lesser extent, we did experience lower pricing in our foam, propellants, and other portfolio.

Speaker Change: TSS's volume growth was driven by our Option refrigerants portfolio, which was fueled by continued adoption in stationery, as well as transition in the automotive airfare market.

Operator: Also, our option on volume growth was complemented by robust propellant demand in our foam, propellant, and other portfolios. In the second quarter, TSS's adjusted EBITDA decreased 25% year-over-year to $161 million, resulting in a lower adjusted EBITDA margin of 31%. This decline was primarily driven by lower prices.

Speaker Change: Also, our option volume growth was complemented by robust propellant demand in our foam, propellants, and other portfolios.

Speaker Change: In the second quarter, TSS's adjusted EBITDA decreased 25% year-over-year to $161 million, resulting in a lower adjusted EBITDA margin of 31%.

Operator: Increased costs to secure additional near-term quota allowances in connection with the U.S. EPA's Technology Transitions, and reduced Fixed Cost Absorption in our Freon refrigerants production in connection with lower HFC demand due to regulatory step-downs in the United States and the EU. On a sequential basis, TSS's net sales rose by 14%, which was driven by a 17% increase in volume, partially offset by The increase in volumes reflects seasonal trends in refrigerants, as well as stronger propellant demand in the foam, propellants, and other portfolios sequentially.

Speaker Change: This decline was primarily driven by lower pricing.

Speaker Change: Increased costs to secure additional near-term quota allowances in connection with the U.S. EPA's Technology Transitions Ruling.

Speaker Change: and Reduced Fixed Cost Absorption in our Freon refrigerants production in connection with lower HFC demand due to regulatory step-downs in the United States and the EU.

Speaker Change: On a sequential basis, TSS's net sales rose by 14%, which was driven by a 17% increase in volumes, partially offset by a 3% decline in pricing.

Speaker Change: The increase in volumes reflects seasonal trends in refrigerants, as well as stronger propellant demand in the foam, propellants, and other portfolio, sequentially.

Operator: Now, turning to APN. Net sales for APM were $339 million in the current quarter, which was down 12% compared to the prior year. This decline was due to decreases in price, volume, and currency of 7%, 4%, and 1%, respectively.

Speaker Change: Now, turning to APM. Net sales for APM were $339 million in the current quarter. This was down 12% compared to the prior year.

Speaker Change: This decline was due to decreases in price, volume, and currency of 7%, 4%, and 1%, respectively.

Operator: The price decline was primarily influenced by soft market dynamics across the advanced materials portfolio, as well as shifts in product mix within the performance solutions portfolio compared to the prior year. APM's volume decline was concentrated in the Advanced Materials Portfolio, which reflected weaker demand in economically sensitive end markets. APM achieved adjusted EBITDA of $45 million in the second quarter, which marks a significant decline compared to the prior year. The decrease was primarily driven by lower pricing, currency, and impacts from other increases. These additional items also impacted APMs adjusted to EBITDA models, which decreased 8 percentage points to 13.

Speaker Change: The price decline was primarily influenced by soft market dynamics across the advanced materials portfolio as well as shifts in product mix within the performance solutions portfolio compared to the prior year.

Speaker Change: APM's volume decline was concentrated in the Advanced Materials Portfolio, which reflected weaker demand in economically sensitive end markets.

Speaker Change: APM achieved adjusted EBITDA of $45 million in the second quarter, which marks a significant decline compared to the prior year.

Speaker Change: The decrease was primarily driven by lower pricing, currency, and impacts from other income.

Speaker Change: These additional items also impacted APM's adjusted EBITDA margin, which decreased 8 percentage points to 13%.

Operator: sequentially, ATM's debt sales increased by 13%, which was driven by a 16% rise in volumes, but tempered slightly by a 2% decline in pricing and a 1% currency impact. APM's higher volumes were largely driven by a modest recovery in economically sensitive end markets across the portfolio. Separately, the company's other segment had net sales and adjusted EBITDA of $13 million and $3 million, respectively, in the current Turning now to our balance sheet and liquidity.

Speaker Change: Sequentially, APM's debt sales increased by 13 percent, which was driven by a 16 percent rise in volumes, but tempered slightly by a 2 percent decline in pricing and a 1 percent currency headwind.

Speaker Change: APM's higher volumes were largely driven by a modest recovery

Speaker Change: Separately, the company's other segment had net sales and adjusted EBITDA of $13 million and $3 million, respectively, in the current quarter.

Operator: As of June 30th, 2024, our consolidated gross debt was $4 billion, and we had approximately $1.5 billion in liquidity, which includes $604 million in unrestricted cash and cash equivalents and 852 million in revolver. Our net leverage ratio increased to 4.4 times in the second quarter. While our net leverage ratio remains elevated due to the market cycle, we remain in compliance with our covenants, and we did not draw on our revolver during the quarter.

Speaker Change: Turning now to our balance sheet and liquidity.

Speaker Change: As of June 30, 2024, our consolidated gross debt was $4 billion, and we have approximately $1.5 billion in liquidity, which includes $604 million in unrestricted cash and cash equivalents and $852 million in revolver capacity.

Speaker Change: Our net leverage ratio increased to 4.4 times in the second quarter. While our net leverage ratio remains elevated due to the market cycle, we remain in compliance with our covenants and we did not draw on our revolver during the quarter.

Operator: The company used $620 million of operating cash flow in the second quarter of 2020, which was $687 million more than the same quarter last year. As we anticipated, this higher cash usage was due to the release of $606 million in restricted cash and cash equivalents, which was reflective of the company's 2023 contribution to the Water District Settlement Fund, including interest. The settlement became effective in May 2024, when the company no longer maintained its reversionary interest in the fund.

Speaker Change: The company used $620 million of operating cash flow in the second quarter of 2024, which was $687 million more than the same quarter last year.

Speaker Change: As we anticipated, this higher cash usage was due to the release of $606 million in restricted cash and cash equivalents, which was reflective of the company's 2023 contribution to the Water District Settlement Fund, including interest.

Speaker Change: The settlement became effective in May 2024, where the company no longer maintained its reversionary interest in the fund.

Operator: The company spent $73 million on capital projects in the second quarter of 2024, generally in line with expectations, compared to $58 million in the prior year, with the difference in spending being driven by overall payment time. Additionally, the company distributed $38 million in dividends to its shareholders in the quarter.

Speaker Change: The company spent $73 million on capital projects in the second quarter of 2024, generally in line with expectations, compared to $58 million in the prior year, with the difference in spending being driven by overall payment timing.

Speaker Change: Also, the company distributed $38 million in dividends to its shareholders in the quarter.

Operator: We anticipate our unrestricted cash and cash equivalents will remain at a similar level for the rest of the year. We project some working capital inflows in the second half, as we work to reduce inventory, and we focus on timely payments from our customers. Overall, we are confident in our current liquidity, as well as our future cash flow capabilities, which will assist with creating a further balance sheet. As we look ahead to the rest of 2024, we do not anticipate any liquidity concerns that would impact compliance with our bank.

Speaker Change: We anticipate our unrestricted cash and cash equivalents will remain at a similar level for the rest of the year.

Speaker Change: We project some working capital inflows in the second half as we work to reduce inventory and we focus on timely payments from our customers.

Speaker Change: Overall, we are confident in our current liquidity, as well as our future cash flow capabilities, which will assist with creating further balance sheet capacity.

Speaker Change: As we look ahead to the rest of 2024, we do not anticipate any liquidity concerns that would impact compliance with our banking covenants.

Operator: Related to capital allocation, consistent with our values and sustainability goals, I wanted to take a moment to highlight our key priorities as we remain focused on driving shareholder value. First, we will pursue focused investments in growth initiatives to enhance our portfolio. Second, we are committed to improving our leverage profile. Third, we will responsibly resolve contingent legal and or accrued environmental liabilities on terms and conditions deemed to be in the best interest of the company and our stakeholders.

Speaker Change: Related to capital allocation, consistent with our values and sustainability goals, I wanted to take a moment to highlight our key priorities, as we remain focused on driving shareholder value.

Speaker Change: First, we will pursue focused investments in growth initiatives to enhance our portfolio.

Speaker Change: Second, we are committed to improving our leverage profile.

Speaker Change: Third, we will responsibly resolve contingent legal and or accrued environmental liabilities on terms and basis deemed to be in the best interest of the company and our stakeholders. And finally, and equally important, we will provide cash to our shareholders through our quarterly dividends.

Operator: And finally, and equally important, we will provide cash to our shareholders through our quarterly. Additionally, as an update to the remediation of our material, we have provided disclosure in Item 4 of our Form 10-Q. Though I want to highlight a couple of things. During the second quarter, we completed the modification of processes and procedures with respect to managing ethics. Also, we implemented enhancements to our controls over the verification of Vendor Master File Changes to prevent unauthorized cash dispersion. These enhancements require a sufficient period of time to evaluate and test whether the controls are operating.

Speaker Change: Separately, as an update to the remediation of our material weaknesses, we have provided disclosure in Item 4 of our Form 10-Q .

Speaker Change: Though, I want to highlight a couple items. During the second quarter, we completed the modification of processes and procedures with respect to managing ethics complaints. Also, we implemented enhancements to our controls over the verification of vendor-master file changes to prevent unauthorized cash disbursements.

Speaker Change: These enhancements require a sufficient period of time to evaluate and test whether the controls are operating effectively.

Operator: Overall, we continue to dedicate significant resources towards these efforts and remain committed to their timely remediation. To conclude, while the quarter's results were not what we expected, I am encouraged by several aspects of our, T.T. had solid demand and continues to have strong execution against this transformation. TSS saw double-digit growth in Option, year-over-year, and Macro Recoveries and APM are providing solid business momentum, with this foundation on top of our focus on sustainability growth. I am confident that our approach is the right foundational strategy to create shareholder value. Denise, back over to you. Thank you, Shane.

Speaker Change: Overall, we continue to dedicate significant resources towards these efforts and remain committed to their timely remediation.

Speaker Change: To conclude, while the quarter's results were not what we wanted, I am encouraged by several aspects of our performance.

Speaker Change: T.T. had solid demand and continues to have strong execution against his transformation plan.

T.T.: TSS saw double-digit growth in Option, year over year.

T.T.: And, macro recoveries in APM are providing solid business momentum.

T.T.: With this foundation on top of our focus on sustainability growth initiatives, I am confident that our approach is the right foundational strategy to create shareholder value.

T.T.: Denise, back over to you.

Denise Dignam: Let's look ahead to the next quarter. Consistent with recent quarters, we are providing a view of the upcoming quarter. On a consolidated basis, we expect a sequential low- to mid-single-digit decline in net sales continuing into the third quarter, with a consolidated adjusted EBITDA anticipated to be down high single-digit. Our sales forecast reflects the impact of unplanned downtime at our TT site in Altamira, Mexico. Seasonality paired with week or free on refrigerant pricing in TSS and Partial Offsets from a Continued Modest Recovery in APD.

Denise Dignam: Thank you, Shane.

Denise Dignam: Let's look ahead to the next quarter.

Denise Dignam: Consistent with recent quarters, we are providing a view of the upcoming quarter.

Denise Dignam: On a consolidated basis, we expect a sequential low to mid-single-digit decline in net sales continuing into the third quarter, with a consolidated adjusted EBITDA anticipated to be down high single digits.

Denise Dignam: Our sales forecast reflects the impact of unplanned downtime at our TT site in Altamira, Mexico. Seasonality paired with weaker Freon refrigerant pricing in TSS and partial offsets from a continued modest recovery in APM.

Denise Dignam: For the third quarter, these sales assumptions anticipate the continued strong adoption of Option Refrigerants, projecting double-digit year-over-year growth, and APM's performance solutions portfolio showing strong year-over-year growth. In TT, while we haven't seen major catalysts indicating a broad TIO2 recovery, demand remains stable as we enter the third quarter. Had we not experienced the downtime in the second quarter due to the severe drought in Altamira, we believe our third quarter sales would be flat to the prior year.

Denise Dignam: For the third quarter, these sales assumptions anticipate the continued strong adoption of Option Refrigerants, projecting double-digit year-over-year growth, and APM's Performance Solutions portfolio showing strong year-over-year growth.

Denise Dignam: In TT, while we haven't seen major catalysts indicating a broad TIO2 recovery, demand remains stable as we enter the third quarter.

Denise Dignam: Had we not experienced the downtime in the second quarter due to the severe drought in Altamira, we believe our third quarter sales will be flat to the prior year.

Denise Dignam: Considering adjusted EBITDA for TT, we also anticipate that one-time costs associated with the production downtime are expected to range between 15 and $20 million in the third quarter. We do not expect the impact of the Altamira downtime to extend beyond the third quarter. We anticipate a sequential reduction in corporate expenses in the third quarter as we make thoughtful choices on spending and as we make demonstrable progress on the remediation of our material weaknesses and internal controls over financial reporting and the adoption of other recommendations from the Audit Committee's internal review.

Denise Dignam: Considering adjusted EBITDA per TT, we also anticipate that one-time costs associated with the production downtime are expected to range between 15 and 20 million dollars in the third quarter.

Denise Dignam: We do not expect the impact of the Altamira downtime to extend beyond the third quarter.

Denise Dignam: We anticipate a sequential reduction in corporate expenses in the third quarter as we make thoughtful choices on spending and as we make demonstrable progress on the remediation of our material weaknesses and internal controls over financial reporting and the adoption of other recommendations from the Audit Committee's internal review.

Denise Dignam: As we move into the second half of 2024, I want to reiterate my priorities to drive shareholder value, take costs out in APM, building on what we have done in T, as well as our functional and corporate overhead, and invest in our businesses where we have significant opportunities to grow. We believe that these priorities are essential for Chemours' future success, leveraging our operational expertise and innovation edge to our advantage across our business.

Denise Dignam: As we move into the second half of 2024, I want to reiterate my priorities to drive shareholder value. I want to reiterate my priorities to drive shareholder value.

Denise Dignam: Take costs out in APM, building on what we have done in TT, as well as our functional and corporate overheads, and two, invest in our businesses where we have significant opportunities to grow.

Denise Dignam: We believe that these priorities are essential for Chemours' future success, leveraging our operational expertise and innovation edge to our advantage across our businesses.

Denise Dignam: Leaning into our advantages in innovation, one of the key growth markets in front of us is supporting the advancement of artificial intelligence and high performance. Both our TSS Option Refrigerant and APM performance solution portfolios have opportunities in this, driving our focus investment in leases. Last quarter, in my prepared remarks, I mentioned the advantages of Option 2P50, a new fluid for use in two-phase immersion cooling. With liquid cooling being a more effective means to cool data center hardware than air cooling, we believe Option 2P50 is an innovative solution that outperforms both single phase and direct-to-chip alternative liquid cooling technology. Option 2P50 Immersion Cooling provides a clear benefit, the potential to reduce the space needed for data center facilities by approximately 60%, enabling cooling energy savings of up to 90% and nearly eliminating water consumption in most climates.

Denise Dignam: Leaning into our advantages in innovation, one of the key growth markets in front of us is in supporting the advancement in artificial intelligence and high-performance computing.

Denise Dignam: Both our TSS Option Refrigerant and APM Performance Solution Portfolios have opportunities in this space, which is driving our focused investment in these businesses.

Denise Dignam: Last quarter, in my prepared remarks, I mentioned the advantages of Option 2P50, a new fluid for use in two-phase immersion cooling.

Denise Dignam: With liquid cooling being a more effective means to cool data center hardware than air cooling, we believe Option 2P50 is an innovative solution that outperforms both single-phase and direct-to-chip alternative liquid cooling technologies.

Denise Dignam: Opteon 2P50 Immersion Cooling provides clear benefits.

Denise Dignam: The potential to reduce the space needed for data centers facilities by approximately 60%.

Denise Dignam: enabling cooling energy savings of up to 90% and nearly eliminating water consumption in most climates.

Denise Dignam: These benefits deliver tangible cost savings, which was evidenced in a recent study that we participated in with LiquidStack and Cisco Hennessy, which showed that Opteon 2P50 immersion cooling solution had the lowest total cost of ownership compared to the other cooling options. Opteon 2P50 had a cost advantage of up to 40% of the next best liquid cooling alternatives. We continue to plan the launch of Opteon 2P50 by mid-2026 and see this as an opportunity to meaningfully participate in the overall data center liquid cooling market.

Speaker Change: These benefits deliver tangible cost savings, which was evident in a recent study that we participated in with LiquidStack and Siska Hennessey, which showed that Opteon's 2P50 immersion cooling solution had the lowest total cost of ownership compared to the other cooling options.

Speaker Change: Opteon 2P50 had a cost advantage of up to 40% of the next best liquid cooling alternatives.

Speaker Change: We continue to plan the launch of Opteon 2P50 by mid-2026 and see this as an opportunity to meaningfully participate in the overall data center liquid cooling market.

Denise Dignam: As we progress towards commercialization, we remain focused on ensuring that our product is safe for use throughout its lifecycle and meets the appropriate regulatory registration requirements in the markets that we want. We are in the qualification process with key hyperscalers, server, and chip manufacturers who see Opteon 2P50 as an essential solution for efficiently and effectively cooling server chip hardware. Specifically, high-performance chips and GPU hardware that will be instrumental in supporting artificial intelligence computing sources, which are more energy-intensive in nature.

Speaker Change: As we progress towards commercialization, we remain focused on ensuring that our product is safe for use throughout its lifecycle and meets the appropriate regulatory registration requirements in the markets that we want to serve.

Speaker Change: We are in the qualification process with key hyperscalers, server, and chip manufacturers who see Opteon 2P50 as an essential solution for efficiently and effectively cooling server chip hardware.

Speaker Change: Specifically, high-performance chips and GPU hardware that will be instrumental in supporting artificial intelligence computing sources, which are more energy-intensive in nature.

Denise Dignam: These qualification periods take time to complete, and we look forward to providing updates as we progress in the future. Our performance solution portfolio in our APM segment is also enabling the high-performance computing market with our Teflon PFA resin, a critical material for semiconductor manufacturing, which has expanded opportunity in the U.S. enabled by the U.S. Chips and Science Act. As the only U.S.-based PFA resin manufacturer, a secure domestic semiconductor supply chain is not complete without our high-grain Teflon PFA resin.

Speaker Change: These qualification periods take time to complete. We look forward to providing updates as we progress in future periods.

Speaker Change: Our performance solutions portfolio in our APM segment is also enabling the high-performance computing market with our Teflon PFA resin, a critical material for semiconductor manufacturing, which has expanded opportunity in the U.S. enabled by the U.S. Chips and Science Act.

Speaker Change: As the only U.S.-based PFA resin manufacturer, a secure domestic semiconductor supply chain is not complete without our high-grain Teflon PFA resin.

Denise Dignam: Teflon PFA is an absolute requirement to avoid contamination in the chip manufacturing process. It's used throughout a fab's infrastructure, from fluid delivery and filtration systems to flow meters and wafer handling. In other words, it is a high-purity resin that enables the ultra-clean environment needed for advanced chip production.

Speaker Change: Teflon PFA is an absolute requirement to avoid contamination in the chip manufacturing process.

Speaker Change: It's used throughout a fab's infrastructure from fluid delivery and filtration systems to flow meters and wafer handling. In other words, it is a high purity resin that enables the ultra clean environment needed for advanced chip production.

Denise Dignam: Teflon PFA helps to ensure fab reliability and uptime, as well as the safe, high-yield production of semiconductor chips. To emphasize our focus on investing for growth in this area, as I mentioned earlier, we recently obtained our permit for our newly finished Teflon PFA production expansion at our Washington Works manufacturing site in West Virginia. This has been a key priority for the APM leadership team over the last few months, and I want to acknowledge those on the Chemours team who worked hard to complete this project and the strong support we received throughout the value. Our Teflon PFA product continues to be sold out, and we look forward to starting operations, which we anticipate will commence by early September.

Speaker Change: Teflon PFA helps to ensure fab reliability and uptime as well as the safe high-yield production of semiconductor chips.

Speaker Change: To emphasize our focus on investing for growth in this area, as I mentioned earlier, we recently obtained our permit for our newly finished Teflon PFA production expansion at our Washington Works manufacturing site in West Virginia.

Speaker Change: This has been a key priority for our APM leadership team over the last year, and I want to acknowledge those on the Chemours team who worked hard to complete this project and the strong support we received throughout the value chain.

Speaker Change: Our Teflon PFA product continues to be sold out, and we look forward to starting operations, which we anticipate will commence by early September .

Denise Dignam: We're excited about being able to serve our customers in this market and the long-term growth prospects for Teflon PFA. At Chemours, we are passionate about driving shareholder value through innovation, specifically contributing to advances in artificial intelligence and high performance computing. These innovative advances are just a few of the developments in TFS's Opteon refrigerants and APM's performance solutions portfolios that are driving growth. In closing, while we exit a challenging quarter, we continue to build upon strong business fundamentals by solidifying our management team and continuing to drive costs out of the business.

Speaker Change: We're excited about being able to serve our customers in this market and the long-term growth prospects for Teflon PFA.

Speaker Change: [inaudible]

Speaker Change: At Chemours, we are passionate about driving shareholder value through innovation, specifically contributing to advancements in artificial intelligence and high-performance computing.

Speaker Change: These innovative advances are just a few of the developments in TFS's Opteon refrigerants and APM's performance solutions portfolios that are driving growth.

Speaker Change: In closing, while we exit a challenging quarter, we continue to build upon strong business fundamentals by solidifying our management team, continuing to drive costs out of the business,

Denise Dignam: Investing for Growth, pursuing Disciplined Capital Allocation, and building upon a corporate culture that reflects the core values that I highlighted earlier. It is our people that make Chemours who we are, and I want to thank our dedicated global team of 6,100 employees for their commitment to our customers and Executing with Operation We will now open the lines to take calls. At this time, if you would like to ask a question, press star, then the number one on your telephone keypad.

Speaker Change: Investing for Growth

Speaker Change: Pursuing Disciplined Capital Allocation.

Speaker Change: and building upon a corporate culture that reflects the core values that I highlighted earlier. It is our people that make Chemours who we are, and I want to thank our dedicated global team of 6,100 employees for their commitment to our customers and executing with operational excellence.

Speaker Change: We will now open the lines to take your questions.

Speaker Change: At this time, if you would like to ask a question, press star, then the number one on your telephone keypad. We ask that you please limit your questions to one and one follow-up. Our first question will come from the line of John McNulty with BMO Capital Mortgage. Please go ahead.

Operator: We ask that you please limit your questions to one and one follow-up. Our first question will come from the line of John McNulty with BMO Capital Mortgage. Please go ahead.

John Mcnulty: Yeah, good morning. Thanks for taking my taking my question. And Shane, congratulations on the role.

John Mcnulty: Yeah, good morning. Thanks for taking my question and Shane, congratulations on the role. Look forward to working with you.

John Mcnulty: I look forward to working with you. Thanks, Jeff. I had a question on the TSS. Obviously, the freon drag in terms of pricing around some of the inventory, I don't know, I guess, pre-stocking ahead of, and now we're kind of dealing with the destock, clearly putting some real pressure on the profitability of the business. It sounds like you have some conviction that this is going to end at the end of the

Jeff: Thanks, Jeff.

Speaker Change: I had a question on the TSS business. Obviously the freon drag in terms of pricing around some of the inventory, I don't know, I guess pre-stocking ahead of, and now we're kind of dealing with the de-stock.

John Mcnulty: I guess, can you help us to understand that a little bit better and how to think about the inflection point coming? And then, I guess, in addition to that, maybe just a follow-up question would be, in the past, we've been pretty used to seeing Chemours sell your allocations, and yet this time around, you actually ended up having to buy extra allocations, and there was a cost to it for you. So, I guess, can you help us to understand that dynamic and what the magnitude of that actually was? Yeah, for sure.

Denise Dignam: Thanks, John, for the questions. First of all, yeah, we are seeing, you know, significantly depressed pricing on HFC inventories that are at a high level. And, you know, we are, you know, with the quota step-downs that are, you said, you asked, do we have confidence that this is going to end? You know, with the quota step-downs that are occurring, that will be occurring, we definitely see that happening. You know, we have experience with that, with R22, and we're also seeing it in Europe. You know, it's a smaller part of our market, so you don't see that as dramatically, but it's absolutely happening in Europe. It's really part of the mechanism; the phase-down is really working.

Denise Dignam: And I want to bring us back to, you know, what our strategy is. We're really about driving, you know, our option growth, and we had year-over-year double-digit growth and also sequential double-digit growth, and we've had no price deterioration.

Denise Dignam: So when you think about that, right, we've always said that we have step-downs in pricing when it comes to auto OEMs. So you can see the impact of other segments coming in, like stationary and the automotive aftermarket, which I think is, you know, a really big statement. So your other question was around just quota and why, you know, this year, and I would say this is a this-year issue. You know, we, quota's always a part, as you said, you know, we sell, but we also buy. We have bought in the past. This year is different, and it really is caused by the technology transition delay of a year.

So your other question was around just quote M y.

Speaker Change: This year.

Speaker Change: I would say this is a this year issue we.

Speaker Change: Quoted always apart as you said.

Speaker Change: We sell we also buy we have we have bought in the past. This year is different and it really is caused by the technology transition delay of a year. So.

Denise Dignam: So when you think about, you know, what our plan was coming into the year, that really flipped because, you know, while we're still seeing tremendous growth, the growth actually would have been stronger. But we're seeing that, you know, there is still a demand for HFCs. And for every, you know, for every unit of Option, you actually need to, you can, for every four units of Option, it's actually one unit of Freon. So it's a massive impact.

Speaker Change: So when you think about what our plan was coming into the year that really flipped because.

Speaker Change: While we are still seeing tremendous growth the growth actually would have been stronger, but we're seeing that there is still a demand for hfcs for every.

Speaker Change: For every unit of ASEAN, you actually need to you can own.

Speaker Change: For every four units of <unk>. It actually is one unit of freon. So it's a massive impact so in order to meet customer demand we're out in the market and we bought quota in the second quarter and we believe we will be doing that in.

Denise Dignam: So in order to meet customer demand, we're out in the market, and we bought quota in the second quarter. And we believe we'll be doing that, you know, in the future, this year. But again, it's really tied to this delay in the technology transition. Got it. Okay. No, that's helpful.

Speaker Change: In the future in this this year, but again, it's really tied to this delay in the technology transition.

John Mcnulty: And then maybe we can just shift over to the TIO2 platform. So, obviously, there is a lot of noise around Altamira, but it does seem like the overall TIO2 markets are actually, if you took Altamira out of the equation, you actually did a little bit better than maybe expected. So, I guess, can you speak to the markets that you're seeing right now and how you think they will progress over the next 12 months, just given, you know, what should be an improving coding market as we look out over the next 12 months, and the potential for tariffs in certain regions?

Speaker Change: Got it okay no.

Speaker Change: That's helpful and then.

Speaker Change: Maybe we can just shift over to the <unk> two platform. So.

Speaker Change: Obviously, a lot of noise around altamira, but it does seem like the the overall tier two markets are actually.

Speaker Change: If you took out to me or out of the equation.

Speaker Change: Get a little bit better than maybe expected. So I guess can you speak to the to the markets that youre seeing right now and how you think they progressed over the next 12 months, just given which should be in.

Speaker Change: An improving coatings market as we look out over the next 12 months potential tariffs in certain regions. I guess can you help us to think about how you see that market playing out over again, the next 12 months.

John Mcnulty: I guess, can you help us to think about how you see that market playing out over the next 12 months? Sure. Yeah, I mean, right now, I would, what I would say is we see stable demand and actually, you know, going into the third quarter, we could have sold more and we, we, believe we could have sold similar sales as we did in the third quarter of 23. We definitely see the bottom is, the bottom is, is here.

Speaker Change: Sure, Yes, I mean, right now, but I would say is we see stable demand and actually going into the third quarter. We could have sold more than we believe we could have sold similar sales as we did in the third quarter of 2003, we definitely see.

Denise Dignam: We have confidence in the potential for a Fed interest rate cut in September, and we think that's going to bring some real confidence to consumers as we end the year. We don't see a major catalyst right now, but as I said, the potential interest rate drop, also, the, the, the tariffs in Europe are also going to help us as well. There is a lot of inventory that was imported ahead of those, but we definitely see as we end the year, we're going to start seeing some momentum in Europe as well. Great, thanks very much for the call. Our next question comes from the line of Mike Leithead with Barclays. Please go ahead. Great, thanks. Good morning, team.

Speaker Change: The bottom is the bottom is is here.

Speaker Change: Have confidence with.

Speaker Change: The potential for a fed interest rate cut in September and we think that's going to bring some real confidence to consumers as we end the year.

Don't see a major catalysts right now, but as I said the potential interest rate drops also.

Speaker Change: The tariffs in Europe are also going to be going to going to help us as well. There is a lot of inventory that was imported ahead of those but we definitely see as we end the year, we're going to start seeing some momentum in Europe as well.

Speaker Change: Great. Thanks, very much for the color.

Mike <unk>: Our next question comes from the line of Mike <unk> with Barclays. Please go ahead.

Mike Leithead: And I just want to say I appreciate the increased disclosure around the TNSS product breakout starting this quarter. That's very helpful. First question, I want to follow up on the HFC market. Can you just help us better contextualize HFC pricing? It's obviously tracking lower than people thought, but just where are we in pricing? If you were to look over the past, I don't know, couple of years or so, where are we relative to the historical context, and how comfortable are you that this starts the bottom out here as we go into the back half of this year?

Mike <unk>: Great. Thanks, Good morning team I, just want to say I appreciate the increased disclosure.

Speaker Change: Around the TNF first product breakout starting this quarter.

Speaker Change: That's very helpful.

Speaker Change: First question I wanted to.

Speaker Change: Follow up on the HFC market.

Speaker Change: Can you just help us better contextualize HFC pricing, it's obviously tracking lower.

Speaker Change: Then where people thought so just where are we in pricing. If you were to look over the past.

Speaker Change: A couple of years or so where are we relative to the.

Speaker Change: Historical context, and how comfortable are you that this starts to bottom out here as we go into the back half of this year.

Denise Dignam: Yeah, I mean, pricing is elevated, I'll say, versus where it was in the prior year, but significantly lower than our expectations. You know, as I said, in the, you know, in response to John's questions, we definitely see that there's going to be a turnaround there. I mean, the whole philosophy around the quota reduction is going to drive more scarcity when the quotas are reduced.

Speaker Change: Yes, I mean pricing is elevated I'll say versus where it's been in prior year, but significantly lower than our expectations.

Speaker Change: As I said in.

Speaker Change: In response to John's questions, we definitely see that there's going to be a turnaround there I mean the whole.

Speaker Change: Philosophy around the quota of reduction is going to drive more scarcity. When the quote is reduced so we definitely see that turning around it's been a pattern. We saw at our 'twenty two we're seeing in Europe, now where Europe is more advanced.

Speaker Change: In the in the phase down.

Denise Dignam: So we definitely see that turning around. It's been a pattern, you know, we saw at R22, and we're seeing in Europe now, where Europe is more advanced in the phase down. Great, that's helpful. And then, on debt and leverage, maybe for Shane, can you speak to the cash you expect to generate in the back half of this year? And just where do you, in the big picture, want to get with leverage before utilizing cash for, say, some more discretionary areas?

Speaker Change: Great. That's helpful. And then I just wanted to ask on debt leverage maybe for Sharon.

Speaker Change: Can you speak to the cash you expect to generate in the back half of this year.

Speaker Change: Where do you Big picture wanted to get was leverage before utilizing cash for say some more discretionary areas.

Operator: Yeah, thanks, Mike. As I indicated in the script, we see cash balances being stable in the latter half, similar to that side, indicating some cash inflows from working capital as we work to improve collections as well as work down some of the inventory on that side. Yeah, as a long-term target, we are targeting to get below three times sustainable, but that will take some time as we improve our earnings coming out of, you know, where I would say is, you know, near trough levels, and hopefully, the markets improve here in the near future. Great, thank you. Our next question comes from the line of John Roberts with Mizzouho. Please go ahead. Thanks, and congrats on getting the Teflon environmental permit here.

Sharon: Yes, Thanks, Mike.

Speaker Change: As indicated in the script, we see cash balances being stable in the latter half similar to that side, indicating some cash inflows from working capital as we work to improve collections as well as working down some inventory on that side as a long term target we are targeting to get below three times sustainably, but such.

Speaker Change: We will take some time as we improve our earnings coming out.

Speaker Change: Sages.

Speaker Change: Trough levels and hopefully the markets improve here in the near future.

Speaker Change: Yes.

Speaker Change: Great. Thank you.

Speaker Change: Our next question comes from the line of John Roberts with Mizuho. Please go ahead.

John Roberts: Thanks, Congrats on getting the teflon permit.

Speaker Change: Governmental permit here.

John Roberts: Before you launch Opteon P250 in, I guess, mid-2026, are you going to need a similar permit? Are we going to go through a similar type process for that? Yeah, hey, thank you for the congratulations on the PFA permit. It's definitely really exciting for us. Related to the Option P250. Clearly, we're going to need permits, you know, wherever, wherever we want to sell them. We're going to need to get product registration and a permit.

Speaker Change: Before you launch <unk> and.

John Roberts: I guess mid 2026 are you going to need a similar permit are we going to go through a similar type process for that.

Speaker Change: Yes, hey, thank you for the congrats on the PFA permitted definitely really exciting for us.

Speaker Change: Related to.

Speaker Change: <unk> clearly, we're going to need permits.

Speaker Change: Ever wherever we want to sell and we're going to need to get product registration and permit. So there are things that we're working on in all the countries, where we want to sell.

John Roberts: So, you know, there are things that we're working on in, you know, all the countries where we want to sell them. And then Altamira is a pretty important asset. Is there anything you can do to make that plant more resistant to further drought?

Speaker Change: And then Altamira is a pretty important asset is there anything you can do to make that plant more resistant to further droughts.

Speaker Change: Yeah.

Denise Dignam: Yeah, good question. I mean, hey, we never take a good crisis to miss a great opportunity to improve. So, you know, we actually did substantial work as we entered this crisis to look at how we could reduce our need and our water usage. So it's a really, you know, great effort by our engineering team. So, you know, that's one thing, and we are continuing to work on that. The other thing is we have some other engineering solutions that we're pursuing locally ourselves and also with the local government.

Speaker Change: Yeah. Good question I mean.

Speaker Change: We never take a good crisis to a miss of great crisis to improve so we actually did substantial work as we entered this crisis too.

Speaker Change: To look at how we can reduce our need and our water usage. So it's a really great efforts by our engineering team. So that's one thing and we are continuing to work on that.

Denise Dignam: And then, you know, thirdly, we do have options relative to the supply chain, you know, what kind of inventory we keep, you know, during those periods. So we're going to be deploying all those strategies. It's certainly a key focus for us to never have that situation.

Speaker Change: The other thing is we have some other engineering solutions that we're pursuing locally ourselves and also with the local government.

Speaker Change: And then thirdly, we do have options relative to supply chain, what kind of inventory would keep.

Speaker Change: During those periods, so we're going to be.

Speaker Change: Deploying all of those strategies is certainly a key focus for us and to never have that situation again.

Denise Dignam: Again, our next question comes from the line of Josh Spector with UBS. Please go ahead. Hi, good morning.

Speaker Change: Alright, thank you.

Speaker Change: Okay.

Speaker Change: Our next question comes from the line of Josh Spector with UBS.

Speaker Change: Please go ahead.

Josh Spector: Good morning.

Josh Spector: I had a couple questions to follow up on TSS. I guess I'm somewhat confused with the commentary around fixed cost absorption being a headwind for Freon. Basically, you're saying demand is slightly higher than you expected, and you're buying quota. On the other hand, inventories are higher. And I guess your comments seem to indicate that you're saying it's down because of the step down. But wouldn't that have been a planned impact that you could try to mitigate or work through?

Josh Spector: Yeah, Hi, good morning.

Speaker Change: A couple of questions a follow up on TSS I guess.

Speaker Change: Got confused with the commentary around fixed cost absorption being a headwind in free on.

Speaker Change: Basically you are saying demand is slightly higher than you expected and you are buying quota on the other hand inventories are higher.

Speaker Change: And I guess your comments seem to indicate that you are saying, it's down because of the step down I guess wanted to have been a planned impact that you could try to mitigate or worked through so can you talk through what's going on there and maybe help size what that impact is two Q3 Q.

Josh Spector: So, can you talk through what's going on there and maybe help size what that impact is to Q3Q? Fixed-cost absorption for Freon MY is a headwind. That's correct.

Speaker Change: The fixed cost absorption for freon and why that is a headwind.

Denise Dignam: Yeah, I mean, just because when we say that demand for freon is year over year, it's actually down, right, as you think about the quota step down, it's actually down. So, you know, that's really what's driving the fixed cost absorption issue in that product line. Okay, yeah, my expectation would be that, I guess maybe we should have expected it, and I don't know if my line is breaking up or yours, but maybe you're not able to hear me completely, but I'll try again at a high level and just ask around TSS. Within 2Q, 3Q, there's a number of unique things going on this year.

Speaker Change: That correct, yes, I mean, just because when we say that demand demand for.

Speaker Change: Free on is.

Speaker Change: It's year over year, it's actually down right as you think about the quota step down.

Speaker Change: It's actually down so.

Speaker Change: That's really what's driving the fixed cost absorption issue in that product line.

Speaker Change: Yeah.

Speaker Change: Okay, Yeah, I guess my expectation would be that was spec.

Speaker Change: Expected and I guess, maybe we should have expected it and I don't know if my line is breaking up or yours, but maybe youre not able to hear me completely.

Speaker Change: I'll try again at a high level and just ask around TSS.

Speaker Change: Within <unk> the number of unique things going on this year Sterling pricing aside I guess what are the issues you called out in terms of onetime cost impacting you guys. You said the quota by I don't know if its fixed cost absorption thing is more of a 2024 or a longer term issue you have some.

Josh Spector: Throwing pricing aside, I guess, what are the issues you would call out in terms of one-time costs impacting you guys? You said the quota by, I don't know if it's the fixed cost absorption thing is more of a 2024 or a longer-term issue. You have some higher-cost material you're buying on Option to fill the gap until you get Corpus.

Higher cost material youre buying on op beyond to fill the gap until you get corpus. So no demand improvement may go from 24 to 25.

Denise Dignam: So, no demand improvement to go from 2024 to 2025. How much is EBITDA helped from some of these things abating, or is that not the right way to think about this? Yeah, I mean, as we've talked about before, there are a number of things that are impacting our cost in TSS; some of them are one-time, some of them will be ongoing. So, you know, from a corpus expansion perspective, we are, you know, we have additional costs associated with capital that we're incurring this year.

Speaker Change: As EBITDA helped from some of these things abated or is that not the right way to think about this.

Speaker Change: Yes, I mean, there are a number as we've talked about before there's a number of things that are impacting our cost in TSS. Some of them are one time.

Speaker Change: Some of them will be ongoing so no from a corpus expansion perspective.

Speaker Change: We are.

Speaker Change: We have additional costs associated with capital that we're incurring this year.

Denise Dignam: We also have additional volume that we're buying from our JV partner in China, which when we have this, you know, product online, you'll see that drop in price, I'm sorry, cost going into 2025. We expect a two-year ramp up of that plant, and we're adding 40% capacity. The, you know, the fixed cost absorption, depending on what happens. I mean, we have inventory of our freon product, and depending on what happens with demand, it's either going to be a tailwind, or it'll remain a headwind.

Speaker Change: We also have.

Speaker Change: Additional volume that we're buying from our JV partner in China, which when we have this.

Speaker Change: Product online youll see that drop in in price I'm, sorry cost going into 2025, we expect a two year ramp of that plan, we're adding 40% capacity.

Speaker Change: The.

Speaker Change: The fixed cost absorption.

Speaker Change: Depending on what happens I mean, we had and then we have inventory of our <unk> product and depending on what happens with demand, it's either going to be.

Speaker Change: Tailwind or it will remain.

Denise Dignam: But as you know, I'm trying to think of the other one. The other one is quota. We believe that that is going to be more opportunistic going into 2025 versus, you know, this year. It was a headwind. And that was specifically related to the technology transition. Does that answer your question, Josh?

Speaker Change: A headwind, but as you.

Speaker Change: And I'm trying to think of the other the other one is quota we believe that that is going to be more opportunistic going into 2025 versus <unk>.

Speaker Change: This year it was a headwind and that was specifically related to the technology transition.

Speaker Change: Does that answer your question Josh.

Josh Spector: Yes, except the quantitative side of it but I'll follow up offline. Thank you.

Josh Spector: Yeah, except the quantitative side of it, but I'll follow up offline. Thank you. Our next question comes from the line of Hassan Ahmed with Olympic Global Advisors. Please go ahead. Morning, Denise, and congratulations, Sean, on the new role.

Speaker Change: Our next question comes from the line of Hassan Ahmed with Alembic Global Advisors. Please go ahead.

Hassan Ahmed: Good morning, Denise and congratulations Sean on the new role.

Hassan Ahmed: You know, my first question is on the TT side of things. You know, I was pleasantly surprised to see the sequential uptake in volumes around 16 percent, particularly with what transpired in Aljamira. Can you just talk a bit about, maybe potentially, what you saw across the regions, were you gaining market share, you know, despite, you know, the outage that you guys saw. Thanks for the question, Hassan. You know, the way I would characterize it is that we have, we see our, our share is stable. And we kind of see across the regions, we saw a little bit of uplift in North America and, you know, Asia, ex, ex China.

Hassan Ahmed: My first question is on the <unk> side of things.

Speaker Change: I was pleasantly surprised seeing the sequential uptick in volumes around 16%, particularly with.

Speaker Change: What transpired in Altamira.

Speaker Change: Can you just talk a bit about.

Speaker Change: Maybe potentially what you saw across the regions, where you're gaining market share despite.

Speaker Change: The outages that you guys saw.

Speaker Change: Thanks for the question John.

Speaker Change: The way I would characterize it is that we have we see our share is stable.

Speaker Change: And we kind of see across the regions we saw.

Speaker Change: A little bit of uplift in North America, and Asia ex China.

Speaker Change: I would characterize it as as as stable demand and stable stable share.

Denise Dignam: But you know, I would characterize it as, as, stable demand and stable, stable share. Just continuing with the TT side of things, obviously, the whole anti-dumping side of things in the European Union recently popped up. We all know that, historically, 15,000 to 20,000 tons a month of product are transported from China to the EU. It just seems that, regionally, some of these anti-dumping measures are actually expanding.

Speaker Change: Fair enough and just just just continuing with the sort of the GT side of things I mean, obviously the whole anti dumping side of things in the European Union.

Speaker Change: <unk>.

Speaker Change: Recently popped up and we.

Speaker Change: You all know that.

Speaker Change: Historically 15 to 20000 tons a month of product is.

Speaker Change: Transported from China to to the EU.

Speaker Change: And it just seems that regionally some of these anti dumping measures are actually expanding so I mean, how should we think about that.

Hassan Ahmed: So I mean, how should we think about... the profitability impact, maybe the EBITDA impact for you guys. I agree with you.

The profitability impact maybe the EBITDA impact for you guys.

Speaker Change: Okay.

Denise Dignam: You know, the EU anti-dumping is definitely an opportunity for us. It's an opportunity for us to gain share, and there are, you know, these things are increasing, and you probably are aware of the Brazilian action that is currently happening, and I probably wouldn't stop it at that. You know, I would just say that, you know, we have really, I don't know, I would quantify it per se, but, you know, you know the impact of volume on our EBITDA, and it definitely will accelerate our EBITDA growth. Very helpful, thank you so much.

Speaker Change: I agree with you.

Speaker Change: The EU anti dumping is is definitely an opportunity for us it's an opportunity for us to gain share and there are these things are increasing and you probably are aware of.

Speaker Change: No action that is currently happening and I probably wouldn't.

Speaker Change: Stop it at that.

Speaker Change: I would just say that we have really.

Speaker Change: I don't know I would quantify it per se, but you.

Speaker Change: You know the impact of volume with that has on our EBITDA and it definitely will accelerate our EBITDA growth.

Speaker Change: Very helpful. Thank you so much.

Hassan Ahmed: Our next question will come from the line of Lawrence Alexander with Jeffreys. Please go ahead. Good morning, two questions. I guess Shane would love to hear your thoughts on differences in culture or how you see, sort of, how Chemours is operating from a working capital perspective, or any other observations you'd like to share. And I guess separately on the data center opportunity given how fast that industry appears to be scaling up.

Speaker Change: Our next question will come from the line of Laurence Alexander with Jefferies. Please go ahead.

Laurence Alexander: Good morning, two questions I guess, Shane just would love to hear your thoughts on differences in culture, or how you see sort of how <unk> is operating from a working capital perspective.

Speaker Change: Or any other observations you'd like to share.

Speaker Change: And I guess separately on the data center opportunity.

Speaker Change #100: Given how fast that industry appears to be scaling up.

Hassan Ahmed: You have these long-term targets for TSS in the high single digits. Would we be looking at through being higher than that in the early 2030s if your products get approved and adopted? Thanks, Lawrence. I'll start off. You know, I won't compare and contrast anything.

Speaker Change #101: You have these long term targets for TSS in the high single digits would we be looking at through being higher than that.

Speaker Change #102: In the early 2000 Thirty's.

Speaker Change #103: If your products get approved and adopted.

Lawrence Alexander: I would just say, you know, as far as Chemours goes, and just my expectations of the company, I'm very excited to be here. You know, I mentioned in my script that I came to the company for its innovation and its commitment to the world and its new emerging technologies, as well as the people, and, for that matter, just the resilience of all the people around here. And I'm really excited to be here for my first month.

Thanks, Lawrence I'll start off.

Speaker Change #104: I won't compare and contrast, anything I would just say as far as <unk>.

Speaker Change #104: <unk> goes in just my expectations of the company.

Speaker Change #106: Very excited to be here I mentioned in my script.

Speaker Change #107: I came to the company for its innovation.

Speaker Change #108: Just his commitment to the world in route and its new emerging technologies as well as the people.

Speaker Change #108: And for that matter just the resiliency of all the people around here and really excited to be here in my first month, it's exactly what I expected coming in.

Operator: It's exactly what I expected coming in. You know, as I think about your specific question around working capital, obviously, just initial views, but I mentioned in the script, we will work to appropriately collect from our customers on that side, as well as reduce inventories on that side, so as to try to push improvements on our overall working capital going forward to enhance cash flow. Yeah, maybe I'll add on to even that first segment. I know you didn't ask me about culture, but I'd love to. I'd love to just add on.

As I think about your specific question around working capital.

Speaker Change #109: Obviously, just initial views, but I mentioned in the script, we will work to appropriately collect from our customers on that side as well as reduce inventories in that side. So as to try to push improvements on our overall working capital going forward to enhance cash flows.

Speaker Change #109: Okay.

Denise Dignam: As I mentioned in my prepared remarks, we did a complete values refresh for the company. We did it extremely collaboratively. We had over 1200 people submit surveys, we did over 50 focus groups, and we had participation from over 22 countries. You know, we have a really sound and solid culture in this company, and I'm really proud of the team. Moving on to data centers and what we project, could it be higher than the high single digits as we, you know, get to the end of the decade? I think, you know, we're not going to, at this point, this is what we're saying.

Speaker Change #110: Yes, maybe I'll I'll I'll add onto that given that first segment. I know you didn't ask me about culture, but I'd love to I'd love to just add on as I mentioned in my prepared remarks, we did a complete.

Speaker Change #110: Values refresh for the company and we did it extremely collaboratively and we had over 200 people submit surveys. We did over 50 focus groups. We had participation from over 22 countries. We have a really sound and solid future in this company and I'm really proud of.

Speaker Change #110: The team.

Speaker Change #111: Moving on to data centers, and what we project could it be higher than then.

Speaker Change #110: High single digits as we.

Speaker Change #110: Get to the end of the decade, I think we will.

Speaker Change #112: Not going to at this point is this is this is what we're saying one thing that we have to recognize with this technology is this is not drop and replacement. This is it's going to require some.

Lawrence Alexander: One thing that we have to recognize with this technology is that this is not, you know, a drop in replacement. This is, you know, it's going to require some time for retrofits, or as you build new data centers. It's really as you're building new data centers that you use this technology, so it's going to take some time to develop. But we definitely see it as a meaningful contributor as we get to 2030. Our next question comes from the line of Arun Viswanathan with RBC Capital Markets. Please go ahead.

Speaker Change #112: Time debt to four four retrofits or as you build new it's really as you're building new data centers that you use. This this technology. So it's going to take some time to develop we definitely see it as a meaningful contributor as we get to 2030.

Speaker Change #112: Yes.

Speaker Change #112: Okay.

Speaker Change #113: Thank you.

Speaker Change #113: Our next question comes from the line of Arun Viswanathan with RBC capital markets. Please go ahead.

Arun Viswanathan: Great, thanks for taking my questions, congrats Denise and Shane on those roles, and I appreciate the comments. I guess, I just wanted to ask first about T.T. So, you know, it sounds like utilization rates are probably still in the 50 to 70% range. I don't know if that's accurate, but maybe you can just characterize or give us some kind of range on where you think both the industry and Chemours' own utilization rates are. And if they are in that range, do you think that any footprint rationalization would be necessary? Obviously, you guys sit on the lower end of the cost curve, and we appreciate your flexibility on ore use. But, you know, are there any structural oversupply issues in any markets?

Arun Viswanathan: Great. Thanks for taking my questions.

Shane Hostetter: And Shane.

Shane Hostetter: On those roles and I appreciate the comments.

Arun Viswanathan: I guess just wanted to ask first on TNT. So.

Speaker Change #115: It sounds like utilization rates are probably still in the 50% to 70% range.

Speaker Change #116: Don't know if thats accurate, but maybe you can just.

Speaker Change #117: Characterize or give us some kind of range on where you think both industry and tours is on utilization rates are on J&J.

Speaker Change #118: They are in that range do you think that any footprint rationalization will be necessary. Obviously, you guys said on the lower end of the cost curve and we appreciate your flexibility on oriented spreads.

Speaker Change #119: Are there any structural oversupply issues in any markets that we should think about.

Speaker Change #120: Maybe I'll start with that.

Denise Dignam: Think about it, maybe I'll start with that. Okay, hey, thanks, Arun. Thanks for the question. We don't comment on utilization rates, but, you know, certainly, you know, I think about pricing stabilization. I don't think of utilization rates in that range.

Speaker Change #121: Okay, Hey, Thanks, Arun. Thanks for the question, we don't we don't comment on utilization rates.

But.

Speaker Change #122: Certainly as I think about.

Speaker Change #122: Pricing stabilization I don't think of utilization rates in that range.

Denise Dignam: And, you know, I'm not going to comment on any footprint rationalization, but, you know, only to your point that it's really important in a commodity business to be on the left side of the cost curve, and that's where we're focused. And, you know, we see with our TT transformation plan that we are, you know, we're ahead of plan, through June, we're already $100 million less in or towards that achievement of the $125 million cost savings that we laid out at the end of last year. Okay, that's great.

Speaker Change #122: And I'm not going to I'm not going to comment on on on any footprint rationalization, but only to your point of it's really important in a commodity business to beat.

Speaker Change #122: The left side of the cost curve and that's where we're focused.

Speaker Change #122: And we see with our TT transformation plan that we are we're.

Speaker Change #122: We're ahead of plan through June we're already $100 million.

Speaker Change #122: Last in that towards that achievement of the $125 million cost savings that we laid out at the end of last year.

Arun Viswanathan: And then, could you well, maybe I'll ask another question as well. The immersion cooling opportunity. We had heard in the past that the size of that is maybe on the order of Opteon, or it could be a similar kind of driver of future earnings for you guys. So I know that could be different between PS and DSS, but how do you think about them, or how should we frame the opportunity for Chemours in emerging cooling?

Speaker Change #123: Okay, that's great and then.

Speaker Change #124: Could you well, maybe I'll ask another question as well.

Speaker Change #125: The immersion cooling opportunity.

Speaker Change #125: Heard I guess in the past that.

Speaker Change #126: Size of that is maybe on the order of <unk> or it could be a similar kind of.

Speaker Change #126: Driver of future earnings for you guys. So.

Speaker Change #126: I know that could be different between PFS and DFS, but.

Speaker Change #126: How are you thinking about.

Or how should we frame the opportunity for <unk> for <unk> and emerging cooling.

Denise Dignam: Yeah, the, you know, the tan for the liquid cooling market by 2028 is like 2.5 to $3.2 billion. As I said, you know, our technology is a little different and requires different equipment. But, you know, we expect it to be meaningful by 2030.

Speaker Change #126: Yes.

Speaker Change #127: The Tam for the liquid cooling market by 2028 is like two five to $3 $2 billion.

Speaker Change #128: I said, our technology is a little different requires different equipment, but.

Speaker Change #128: We expect it to be meaningful.

Speaker Change #128: By 2030, so I think you can draw the conclusion that it's a very significant opportunity for us and will be a big part of our future.

Speaker Change #129: Great. Thanks.

Arun Viswanathan: So, you know, I think you can draw the conclusion that it's a very significant opportunity for us and will be a big part of our future. Great, thanks. As a reminder, to ask a question, press star one on your telephone keypad, and our next question will come from the line of Vincent Andrews with Morgan Stanley. Please go ahead. Thank you. Good morning.

Speaker Change #130: As a reminder to ask a question press star one on your telephone keypad and our next question will come from the line of Vincent Andrews with Morgan Stanley. Please go ahead.

Vincent Andrews: I want to clarify a couple of things on the, QP50 product. Denise, I think, if I heard everything you said correctly, and I may not have, when you spoke earlier about the, I believe you said it was 40%, provided 40% cost savings for the customer, I assume, based on your later comment, that's if I'm building a brand new data center, your product versus the incumbent offers that, versus if I already have a data center, that math wouldn't apply because it's not a drop-in replacement and I'd have to buy some other equipment.

Vincent Andrews: Thank you and good morning.

Speaker Change #132: To clarify a couple of things on the.

Speaker Change #133: Q P 50 product.

Speaker Change #133: Denise I think if I heard everything you said correctly and I may not have.

Speaker Change #134: When you spoke earlier about the I believe you said it was 40% provide a 40% cost savings for the customer.

Speaker Change #134: I assume based on your later comment.

Speaker Change #135: If I'm building a brand new data center your product versus the incumbent offers that versus if I already have a data center that math wouldn't apply because it's not a drop in replacement. After by some other equipment is that is that the correct way to think about it.

Vincent Andrews: Is that the correct way to think about it? Yeah, hi Vincent, thank you for the question. Yeah, that is the right way to think about it. And that's why, you know, it is going to take some time to develop, it's going to take, you know, the adoption process, but then, but we're super excited about it. I mean, this is such a compelling value proposition, especially where we are in this point in time in the world when it comes to water and power and space and the needs of computing power in the future.

Speaker Change #135: Yes, Hi, Vince and thank you for the question, Yes that is the right way to that is the right way to think about it and that's why it is going to take some time to develop it's going to take the adoption.

Speaker Change #136: We're super excited about it I mean this is <unk>.

Speaker Change #136: Such a compelling value proposition, especially where we are.

Speaker Change #136: And this point in time in the in the World when it comes to water and power and space in the and the needs of <unk>.

Speaker Change #136: Computing power in the future.

Denise Dignam: And just to follow up on that, there were two other things that you mentioned. One was that you're in the qualification process with all the, you know, sort of large folks that would like to use it. And then you yourself, if I heard you correctly, wouldn't have the product available till 2026 as a function of production or permits or what have you. So those, I assume, are two separate processes where you have stuff you have to do on your own and you have to be qualified for.

Speaker Change #137: And just to follow up on that two other things that you mentioned one was that you are in a qualification process with with all the sort of large folks who would like to use it.

Speaker Change #137: And then you yourself if I heard you correctly. It didn't have the product available till 2026 is a function of.

Vincent Andrews: So could you just walk us through sort of what the big mileposts are on both sides of that equation so that, you know, we can be following along and understand what's happening as it happens? Yeah, sure. So that for the qualification, we actually mean substantial volumes in order to do the qualification. So, you know, we're in the process of that right now; it's going to take, you know, six to nine months, and we're in the middle of that process with, you know, various hyperscalers. So that, you know, that's that piece.

Speaker Change #137: Production of permits or what have you. So those I assume are two separate processes.

Speaker Change #138: Do you have stuff you have to do on your own.

Speaker Change #139: Could you qualify them. So could you just walk us through sort of what the.

Speaker Change #140: Biggs Mileposts are on both sides of that equation. So that we can be we can be following along and understand what's happening.

Speaker Change #141: Yes, sure so thats for the qualification.

Speaker Change #142: We actually mean in substantial volumes in order to do the qualification. So we're in the process of that right now.

Speaker Change #142: It's going to take six to nine months or in the middle of those process that process with.

Speaker Change #142: Various.

Speaker Change #142: Hyper scaler.

Speaker Change #142: So that.

Speaker Change #142: That.

Speaker Change #142: That's that piece in parallel we're working on commercial scale quantity.

Denise Dignam: In parallel, we're working on, you know, commercial scale quantity. And that is what we're saying we will have available in 2026. Thank you very much. Our next question comes from the line of John McNulty with BMO Capital Markets. Please go ahead. Yeah, good morning.

Speaker Change #142: And that is what we're saying we will have available in 2026.

Speaker Change #142: Okay. Thank you very much.

Speaker Change #142: Yes.

John Mcnulty: Sorry, just one follow-up. I had a question just on the balance sheet. I think you spoke to said you've made the cash payment out to the water districts as part of the cleanup of that liability. Yet you still have $600 million or so of restricted cash sitting on the balance sheet. I guess that strikes me as higher than I guess I would have thought post that payout. So can you help us to understand what that kind of is holding as far as a placeholder or why it's sitting in restricted cash? Hey John.

Speaker Change #142: Our next question comes from the line of John Mcnulty with BMO capital markets. Please go ahead.

Operator: Related to the restricted cash payment, it was settled in this quarter for about $600 million in the outflow. If you look on the balance sheet, our restricted cash balance is not $600 million. You might be reflecting what it was last quarter, last year, that side. So you would see a significant decline in our restricted cash. I think it's around $60 million in this quarter. Sorry, $50 million.

John Mcnulty: Yes. Good morning, sorry, just one one followed by the question just on the balance sheet.

John Mcnulty: Thank you spoke to.

Speaker Change #143: You've made the cash payment out to the water districts.

Speaker Change #144: As part of the as part of the clean up of that liability.

John Mcnulty: Got it. Thanks for the call. Sure, thanks. We have reached the end of our question and answer session. Thank you for joining the Chemours second quarter 2024 results conference call. You may now disconnect.

Speaker Change #145: Still a $600 million or so of restricted cash sitting on the balance sheet I guess it strikes me as is higher than I guess I would've thought post that payout. So can you help us to understand.

Speaker Change #146: What that's what that kind of is holding as far as a placeholder of why it's sitting in restricted cash.

John: Hey, John.

John: Related to the restricted cash payment was settled.

Speaker Change #148: And this quarter for about $600 million now when they outflow. If you look on the balance sheet. Our restricted cash balance is not 600, you might be reflecting what it was last quarter last year that side. So you would see a significant decline in our restricted cash I think its around $60 million.

John: This quarter.

Speaker Change #149: I'm, sorry, I got it.

Speaker Change #150: Got it thanks, thanks for the clarity.

John: Sure. Thanks, John.

We have reached the end of our question and answer session. Thank you for joining the <unk> second quarter 2024 results Conference call you may now disconnect.

John: Yeah.

John: Okay.

John: Yeah.