Chemours Company Q2 2026 Earnings Call Summary

1Key Financial Results and Metrics

Net Sales: Slightly below expectations, impacted by weaker residential stationary AC demand in Thermal and Specialized Solutions (TSS).

Adjusted EBITDA: Exceeded expectations, driven by operational performance, improved product mix in Advanced Performance Materials (APM), and lower corporate costs.

TSS Adjusted EBITDA: Increased year-over-year, with margins expanding due to higher pricing despite volume pressures.

Titanium Technologies (TT): Net sales increased slightly year-over-year, supported by global pricing strength.

APM Performance Solutions: Net sales grew 8% year-over-year, reflecting strong demand in data center and semiconductor markets.

Free Cash Flow: Expected to be at least $50 million for Q3, with a conversion rate above 25% for the full year.

2Strategic Updates and Business Highlights

Pathway to Thrive Strategy: Progressing well, focusing on strengthening the balance sheet, enhancing operational performance, and expanding into high-value markets.

Pricing Actions: Successful execution of pricing increases in TiO2, with a cumulative increase of approximately 5% year-to-date.

Market Position: Chemours is positioned strongly in high-growth markets like data centers and AI infrastructure, with over 40% of Performance Solutions sales targeting these areas.

Legacy Litigation: Progress made in resolving legacy litigation, including settlements with the U.S. EPA.

3Forward Guidance and Outlook

Q3 Guidance:

TSS net sales expected to decline 15-20% sequentially, with adjusted EBITDA between $125 million and $140 million.

TT net sales anticipated to increase in the low to mid-single-digit percentage range, with adjusted EBITDA between $70 million and $80 million.

APM net sales expected to increase in the mid- to high single-digit percentage range, with adjusted EBITDA between $20 million and $30 million.

Full Year 2026 Outlook:

Net sales growth projected between 1% and 5% over 2025.

Adjusted EBITDA expected to range from $775 million to $825 million.

Capital expenditures anticipated between $250 million and $280 million.

4Bad News, Challenges, or Points of Concern

Market Challenges: Softer demand in the residential and light commercial aftermarket for Opteon blends due to destocking and macroeconomic uncertainties.

Volume Pressures: Decline in aftermarket sales is expected to continue into Q3, with potential normalization only in Q1 2027.

Competitive Pressures: Concerns regarding the competitive landscape in the TiO2 market, particularly with increased supply from Chinese producers.

Cost Pressures: Ongoing inflationary pressures affecting input costs, particularly for TiO2 production.

5Notable Q&A Insights

Margin Expectations: Q3 margins in TSS are expected to decline due to a mix shift and lower aftermarket sales, but the business is still viewed as a 30% margin business long-term.

Aftermarket Visibility: Chemours has good visibility into the aftermarket despite its fragmentation, but recent colder weather and economic conditions have impacted demand.

Liquid Cooling Market: Chemours is positioning itself in the emerging liquid cooling market for data centers, with opportunities for growth in both single-phase and two-phase systems.

Strategic Portfolio Actions: No specific actions were disclosed, but the company remains open to opportunities that could enhance shareholder value as part of its Pathway to Thrive strategy. Overall, Chemours is navigating a challenging market environment while executing on strategic initiatives that aim to strengthen its financial position and capture growth in high-value markets.