WILMINGTON, Del., Aug. 1, 2019 /PRNewswire/ --
Second Quarter 2019 Highlights
- Net Sales of $1.4 billion
- Net Income of $96 million, with diluted EPS of $0.57
- Adjusted Net Income of $120 million, with diluted Adjusted EPS of $0.72
- Adjusted EBITDA of $283 million
- Returned $108 million to shareholders through share repurchases and dividends
- Completed the acquisition of Southern Ionics Minerals on August 1, enabling operational synergies and access to high value ores
- Reduced 2019 outlook for Adjusted EBITDA, Adjusted EPS, and Free Cash Flow
The Chemours Company (Chemours) (NYSE: CC), a global chemistry company with leading market positions in Fluoroproducts, Chemical Solutions and Titanium Technologies, today announced its financial results for the second quarter 2019.
"The second quarter was challenging on a number of fronts, including softer than expected Ti-Pure™ demand and the continued impact of illegal imports of HFC refrigerants into Europe," said Chemours President and CEO Mark Vergnano. "Both issues impacted our volumes in the second quarter and more than offset increasing adoption of Opteon™ mobile refrigerants in the United States and Asia, as well as productivity efforts. We are clearly not satisfied with these results and remain firm in our commitment to grow our businesses and improve the financial performance of Chemours."
Second quarter 2019 net sales were $1.4 billion in comparison to $1.8 billion in the record-setting, prior-year quarter. Results were driven primarily by lower volume in Titanium Technologies, resulting in a 22 percent decrease in net sales. Currency and price were small headwinds in the quarter. Second quarter net income was $96 million, or $0.57 per diluted share, inclusive of a $7 million charge related to our Fayetteville facility. Adjusted EBITDA for the second quarter 2019 was $283 million in comparison to $497 million in the previous year's second quarter, a result of lower volumes across all segments.
Fluoroproducts segment net sales in the second quarter were $711 million in comparison to $801 million in the prior-year quarter. Illegal imports of HFC refrigerants into the European Union, softer base refrigerants demand in North America, and macro-economic weakness more than offset higher demand for Opteon™ mobile refrigerants and positive impact of application development projects, resulting in a volume decline versus last year's second quarter. Price was a 2 percent headwind on a year-over-year basis. Segment Adjusted EBITDA of $180 million decreased 22 percent versus the prior-year quarter, due to lower net sales and the trailing impact of operating issues communicated in the previous quarter.
Chemical Solutions segment net sales in the second quarter were $130 million in comparison to $153 million in the prior-year quarter. Volumes were lower year-over-year primarily driven by reduced sales in Performance Chemicals and Intermediates as well as in Mining Solutions due to operational issues at a key customer mine. Higher average price was realized as a result of previously communicated price announcements. Second quarter 2019 segment Adjusted EBITDA of $16 million increased 4 percent versus the prior-year quarter, reflecting price tailwinds and increased other income from licensing agreements.
Titanium Technologies segment net sales in the second quarter were $567 million in comparison to $862 million in the prior-year quarter. This decrease was a result of lower volumes of Ti-Pure™ titanium dioxide driven by a combination of weak demand and market share loss as we continue the implementation of our Ti-Pure™ Value Stabilization strategy. Global average selling prices were stable in comparison to last year's second quarter and sequentially against the first quarter of 2019. Segment Adjusted EBITDA was $127 million, in comparison to $295 million in last year's record second quarter. Results were driven mainly by lower volumes of Ti-Pure™ titanium dioxide and higher unit costs.
Corporate and Other
Corporate and Other in the second quarter 2019 represented a $40 million offset to Adjusted EBITDA, versus a $44 million offset in the prior-year quarter. This improvement was primarily attributable to lower costs associated with certain legacy environmental matters.
The company realized an Adjusted Effective Tax Rate of approximately 22 percent for the quarter. The company expects its Adjusted Effective Tax Rate for the full-year 2019 to be within a range of 18 to 20 percent, reflecting the company's anticipated geographic mix of earnings.
As of June 30, 2019, gross consolidated debt was $4.2 billion. Debt, net of $630 million cash, was $3.6 billion, resulting in a net leverage ratio of approximately 2.7 times on a trailing twelve-month basis.
Cash (used for) provided by operating activities for the second quarter 2019 was $7 million, versus $343 million in the prior-year quarter. Capital expenditures for the second quarter 2019 were $124 million, versus $126 million in last year's second quarter. Free Cash Flow for the second quarter 2019 was ($117) million versus the prior-year quarter of $217 million.
Chemours also announced the strategic acquisition of Southern Ionics Minerals, LLC (SIM), a minerals exploration, mining and manufacturing company headquartered in Jacksonville, Florida for $25 million. The transaction with SIM's parent, Southern Ionics Incorporated, closed on August 1. SIM mines and processes titanium and zirconium mineral sands from the same Trail Ridge geological formation mined by Chemours in Florida. This acquisition expands Chemours flexibility and scalability to internally source ore. The acquisition includes a mineral sands processing plant, an existing mine site, administrative offices, and mineral rights currently held by SIM.
As a result of the weaker financial performance in the second quarter and increasing macro-economic uncertainty, the company is lowering its earnings guidance for the full year 2019. The company now expects to deliver 2019 Adjusted EBITDA within a range of $1.00 to $1.15 billion. Capital expenditures are expected to be approximately $500 million, with Free Cash Flow of approximately $100 million. The company expects Adjusted EPS of between $2.37 and $3.08 per share.
Mr. Vergnano concluded, "We are disappointed in having to reduce our guidance for 2019. However, as we look beyond the next two quarters, we remain confident in the growth prospects for each of our three core businesses. We have an outstanding asset base, strong balance sheet, the right strategies, and more importantly, a great team capable of navigating the business cycle. We will continue to work hard to increase the long-term value of Chemours, fully aligned with the interests of our shareholders."
As previously announced, Chemours will hold a conference call and webcast on Friday, August 2, 2019 at 8:30 AM EDT. The webcast and additional presentation materials can be accessed by visiting the Events & Presentations page of Chemours' investor website, investors.chemours.com . A webcast replay of the conference call will be available on the Chemours investor website.
About The Chemours Company
The Chemours Company (NYSE: CC) helps create a colorful, capable and cleaner world through the power of chemistry. Chemours is a global leader in fluoroproducts, chemical solutions, and titanium technologies, providing its customers with solutions in a wide range of industries with market-defining products, application expertise and chemistry-based innovations. Chemours ingredients are found in refrigeration and air conditioning, mining and general industrial manufacturing, plastics and coatings. Our flagship products include prominent brands such as Teflon™, Ti-Pure™, Krytox™, Viton™, Opteon™, Freon™ and Nafion™. Chemours has approximately 7,000 employees and 28 manufacturing sites serving approximately 3,700 customers in North America, Latin America, Asia-Pacific and Europe. Chemours is headquartered in Wilmington, Delaware and is listed on the NYSE under the symbol CC. For more information please visit chemours.com , or follow us on Twitter @Chemours, or LinkedIn.
Non-GAAP Financial Measures
We prepare our financial statements in accordance with Generally Accepted Accounting Principles (GAAP). Within this press release, we may make reference to Adjusted Net Income (Loss), Adjusted EPS, Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow, Adjusted Effective Tax Rate, Return on Invested Capital and Net Leverage Ratio which are non-GAAP financial measures. The company includes these non-GAAP financial measures because management believes they are useful to investors in that they provide for greater transparency with respect to supplemental information used by management in its financial and operational decision making.
Management uses Adjusted Net Income (Loss), Adjusted EPS, Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow, Adjusted Effective Tax Rate, Return on Invested Capital and Net Leverage Ratio to evaluate the company's performance excluding the impact of certain noncash charges and other special items which we expect to be infrequent in occurrence in order to have comparable financial results to analyze changes in our underlying business from quarter to quarter.
Accordingly, the company believes the presentation of these non-GAAP financial measures, when used in conjunction with GAAP financial measures, is a useful financial analysis tool that can assist investors in assessing the company's operating performance and underlying prospects. This analysis should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. This analysis, as well as the other information in this press release, should be read in conjunction with the company's financial statements and footnotes contained in the documents that the company files with the U.S. Securities and Exchange Commission. The non-GAAP financial measures used by the company in this press release may be different from the methods used by other companies. For more information on the non-GAAP financial measures, please refer to the attached schedules or the table, "Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures" and materials posted to the company's website at investors.chemours.com .
This press release contains forward-looking statements, within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, which involve risks and uncertainties. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to a historical or current fact. The words "believe," "expect," "will," "anticipate," "plan," "estimate," "target," "project" and similar expressions, among others, generally identify "forward-looking statements," which speak only as of the date such statements were made. These forward-looking statements may address, among other things, the outcome or resolution of any pending or future environmental liabilities, the commencement, outcome or resolution of any regulatory inquiry, investigation or proceeding, the initiation, outcome or settlement of any litigation, changes in environmental regulations in the U.S. or other jurisdictions that affect demand for or adoption of our products, anticipated future operating and financial performance, business plans, prospects, targets, goals and commitments, capital investments and projects, plans for dividends or share repurchases, sufficiency or longevity of intellectual property protection, cost savings targets, plans to increase profitability and growth, our ability to make acquisitions, integrate acquired businesses or assets into our operations, and achieve anticipated synergies or cost savings, and our outlook for net sales, Adjusted EBITDA, Adjusted EPS, Free Cash Flow, Adjusted Effective Tax Rate, and Return on Invested Capital, all of which are subject to substantial risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Forward-looking statements are based on certain assumptions and expectations of future events that may not be accurate or realized. These statements are not guarantees of future performance. Forward-looking statements also involve risks and uncertainties that are beyond Chemours' control. Additionally, there may be other risks and uncertainties that Chemours is unable to identify at this time or that Chemours does not currently expect to have a material impact on its business. Factors that could cause or contribute to these differences include the risks, uncertainties and other factors discussed in our filings with the U.S. Securities and Exchange Commission, including in our Annual Report on Form 10-K for the year ended December 31, 2018. Chemours assumes no obligation to revise or update any forward-looking statement for any reason, except as required by law.
VP, Corporate Development and Investor Relations
Executive and Financial Communications Manager
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