The Chemours Company Goldman Sachs Basic Materials Conference. May 17, 2017

Transcription

1 The Chemours Company Goldman Sachs Basic Materials Conference May 17, 2017

2 Safe Harbor Statement and Other Matters This presentation contains forward-looking statements, within the meaning of the federal securities laws, that involve risks and uncertainties. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. The words believe, expect, anticipate, plan, estimate, target, project and similar expressions, among others, generally identify forward-looking statements, which speak only as of the date the statements were made. These forwardlooking statements address, among other things, anticipated future operating and financial performance, business plans and prospects, transformation plans, cost savings targets, and plans to increase profitability that could cause actual results to differ materially from those expressed or implied by such statements. Forward-looking statements are based on certain assumptions and expectations of future events which may not be accurate or realized. Forwardlooking statements also involve risks and uncertainties, many of which are beyond Chemours control. Additionally, there may be other risks and uncertainties that Chemours is unable to identify at this time or that Chemours does not currently expect to have a material impact on its business. Factors that could cause or contribute to these differences include other risks, uncertainties and other factors discussed in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, Chemours assumes no obligation to revise or update any forward-looking statement for any reason, except as required by law. Management uses Adjusted Net Income (Loss), Adjusted EPS, Adjusted EBITDA and Free Cash Flow to evaluate the Company s performance excluding the impact of certain non-cash charges and other special items in order to have comparable financial results to analyze changes in our underlying business from quarter to quarter. Additional information for investors is available on the company s website at investors.chemours.com. 1

3 The Chemours Company at a Glance Sales 1 : $5,540 Adj. EBITDA 1 : $979 % margin: 18% Titanium Technologies Sales 1 : $2,490 Adj. EBITDA 1 : 571 % margin: 23% Titanium dioxide (TiO 2 ) is a pigment used to deliver whiteness, opacity, brightness and protection from sunlight #1 global producer of TiO 2 by capacity, sales and profitability Fluoroproducts Sales 1 : $2,385 Adj. EBITDA 1 : 515 % margin: 22% Products for high performance applications across broad array of industries, including refrigerants, propellants and industrial resins #1 global producer of both fluorochemicals and fluoropolymers Chemical Solutions Sales 1 : $665 Adj. EBITDA 1 : 41 % margin: 6% Chemicals used in gold production, oil refining, agriculture, industrial polymers and other industries #1 producer in Americas of solid sodium cyanide By Geography (2) By Product (2) Latin America 13% Titanium Dioxide 44% EMEA 20% Asia Pacific 24% North America 43% Divested Business 4% Mining Solutions 5% Performance Chemicals & Intermediates 5% Fluorochemicals 20% Fluoropolymers 22% Dollars in millions (1) Data represents last twelve months ending March 31, 2017 (2) Geographic and product data reflect full year 2016 net sales Adjusted EBITDA includes corporate and other charges which are not reflected in individual segment Adjusted EBITDA. See reconciliation of Adjusted EBITDA in Appendix. 2

4 Titanium Technologies Business Overview Business Overview Chemours is #1 in TiO2 Globally (1) Global leader in TiO 2 with production capacity of 1.25 million metric tons 4 TiO 2 plants with 7 production lines Packaging facility at Kallo, Belgium Mineral sands mine at Starke, FL Industry-leading manufacturing cost position Unique chloride technology Feedstock flexibility Strong brand reputation Ti-Pure sold to more than 800 customers globally Latin America 14% EMEA 23% Geography (2) End Market (2) North America 32% Asia Pacific 31% Plastics 25% Paper 12% Coatings 63% Coatings architectural, industrial, automotive Plastics rigid / flexible packaging, PVC pipe/windows Papers laminate papers, coated paper/paperboard, sheet Source: Company filings and data. Titanium Technologies: TZMI (2016) (1) TiO 2 market share statistics based on production capacity per 2016 TZMI (2) Reflects full year 2016 segment net sales 3

5 TiO 2 Historical Demand and Pricing Cycles Real GDP, $Billions GDP World TiO2 Demand, KT 88,000 84,000 80,000 76,000 72,000 68,000 64,000 60,000 56,000 52,000 48,000 44,000 40, Indexed US PPI for TiO 2 Pigments 6,600 6,300 6,000 5,700 5,400 5,100 4,800 4,500 4,200 3,900 3,600 3,300 3,000 TiO2 Demand, KT World TiO 2 demand tracks global GDP TiO 2 efficiency gains appear in line with history; no evidence of permanent demand destruction Supply/demand relationship moves with economic and capacity investment cycles Historically, pricing increases tied to high utilization o Price fluctuations exacerbated in Source: TiO 2 Market Demand from Titanium Technologies Market Demand Model, PPI:US Government Department of Labor: Bureau of Labor Statistics 4`

6 Historical Price Environment in the Value-Chain TiO 2 price volatility disproportionate in comparison to rest of the value chain 400 Titanium Dioxide Pigment Indexed US PPI for TiO2 Pigment & Coatings 350 Coatings OEM Special Purpose Coatings(Marine, Industrial, Construction & Maintenance) 300 Architectural Paint & Coating Source: US Government Department of Labor: Bureau of Labor Statistics Despite TiO 2 price volatility, customer price remained relatively steady Price volatility is a negative for both producers and customers 5

7 Chinese TiO 2 Market Chinese capacity, price and quality introduced new uncertainties in a period of high volatility Chinese TiO 2 Market Largest and fastest growing market, ~1.5 million T/Yr Exporter of ~680 kt multi-purpose grades Importer of ~220 kt high quality TiO 2 Chemours is the largest MNC supplier Chinese Industry Appears to be Evolving Toward Global Patterns Emergence of a large player, favorable conditions for further consolidation Enforcement of environmental regulations Sulfate ilmenite price increases More ore imports for beneficiation feedstock Chloride technology introduced using globally traded high grade ore feedstock (Metric k Tonne) China Pigment Demand China Pigment Capacity Source: TZ Minerals International PTY, LTD Relative Price China Market Demand Source: Chemours Estimates Chinese Producers Multinational Producers Chemours 500 1,000 1,500 (Metric ktonne)...now, China s TiO 2 industry factors appear to be stabilizing 6

8 Dynamics of the TiO 2 Market Historical View The Chemours Approach Economic cycles are hard to predict Economic cycles are hard to predict All TiO 2 is fungible Universal grades enabled rapid substitution All TiO 2 is not fungible Ti-Pure product design and consistency supports a performance difference to end user Supply-demand dynamics alone govern price Focus on global average utilization and inventory levels Customer Value Proposition Quality, reliability, consistency, capacity, business capability, brand TiO 2 producers have cost incentives to operate near capacity Manufacturing Flexibility Chemours production capability can economically vary production to meet customer demand 7

9 TiO 2 Market Segments Addressed by Producers Chemours actions and accomplishments are consistent with our assessment of the opportunities within TiO 2 application segments Relative Price/Value (USD/metric Tonne) High Other Multinational Producers Ultrafine Specialty Chinese Producers High Quality Low quality Fit for Use Multi- Purpose CP Multi-Purpose Low <80% >80% >90% 1,000 2,000 3,000 4,000 5,000 6,000 Volume (Metric Kt) Source: SEC filings (10-K, 8-K), Earnings Calls, Slides, TZMI TaiBaiFen 2016 & Chemours estimates 8

10 Customer Value Proposition Ti-Pure total offering and product design provide differential performance and enhanced value to the end user Value High Durable agricultural films Ti-Pure R-105 Premium Architectural Ti-Pure One Coat High Quality Multi-Purpose Low 2,300 3,000 4,000 5,000 Volume (Metric Kt) Source: SEC filings (10-K, 8-K), Earnings Calls, Slides, TZMI TaiBaiFen 2016 & Chemours estimates 9

11 Differential Pricing for Ti-Pure Chemours is working with customers towards a range of sustainable prices based on total business value MARKET SEGMENTATION CUSTOMER VALUE PROPOSITION OFFERING DESIGN DIFFERENTIAL END USER VALUE (Quality, Reliability, Consistency, Brand, Business Capability) Price Range Market Segment & Region 1Q17 1Q16 Low Average High 10

12 Enhanced Chemours Circuit Manufacturing Flexibility Chemours improved manufacturing circuit capability through Altamira expansion allows us to economically vary production to meet customer demand Altamira Line 2 ramping up steadily Versus original design, added capability to manufacture more grades, for high quality applications o Additional product capability impacted AL2 line capacity, not the overall circuit capacity Expands Chemours ore grade flexibility, increasing production rate at lower average TiO 2 content feedstock We will continue to adjust production throughout our circuit to meet our customers requirements Feedstock Effective %TiO2 Altamira Line 2 Grade Portfolio TT Ore Flexibility Improvement Source: Internal production plan analyses 11

13 In Summary Chemours is well positioned to establish and participate in attractive segments of TiO 2 market Ti-Pure product design and consistency supports customer product performance and differentiation Multiple factors influence Ti-Pure price; we are working with our customers towards achieving differential value for Ti-Pure We have long-term relationships with our customers to reliably supply their pigment needs Chemours manufacturing capability, enhanced by flexibility can economically vary production to meet customer demand 12

14 2017 The Chemours Company. Chemours and the Chemours Logo are trademarks or registered trademarks of The Chemours Company 13

15 Appendix

16 TiO 2 Applications Quality and performance of TiO 2 products differ considerably across segments of the market that serve different applications Chemours Focus Specialty and High Quality Applications: 40% Performance polymers, Exterior Architectural Paint, Automated Tint System Coatings and durable Industrial coatings Commands premium due to superior pigment product design & performance Pharma, Food and Cosmetics* Multi-Purpose Applications: 30% High quality architectural paint, white, industrial coatings Commands premium due to interior/exterior durability and a high level of product consistency Fit for Use Applications: 20% Interior arch factory color paint, fibers, non durable polymer applications Less stringent batch to batch variability requirements (lesser pigment quality needs) Lowest Quality requirement Applications: 10% Ceramics, road paint * Chemours does not participate in these applications 15

17 GAAP Net (Loss) Income to Adjusted EBITDA and Adjusted Net Income Reconciliations ($ in millions except per share and unless otherwise noted) GAAP Net Income (Loss) to Adjusted Net Income and Adjusted EBITDA Tabular Reconciliations (UNAUDITED) Three months ended March 31, Three months ended December 31, 2016 $ amounts $ per share $ amounts $ per share $ amounts $ per share Net income (loss) attributable to Chemours $ 150 $ 0.82 $ 51 $ 0.28 $ (230) $ (1.26) Non-operating pension and other postretirement employee benefit costs (income) (8) (0.04) (7) (0.04) (1) (0.01) Exchange (gains) losses (5) (0.03) Restructuring charges Asset related charges (Gain) loss on sale of assets or businesses (16) (0.09) (89) (0.49) Transaction costs Legal and other charges Provision for (benefit from) income taxes relating to reconciling items (139) (0.76) Adjusted Net Income $ 142 $ 0.77 $ 11 $ 0.06 $ 15 $ 0.08 Net income attributable to noncontrolling interests Interest expense, net Depreciation and amortization All remaining provision for (benefit from) income taxes 4 20 (6) 96 Adjusted EBITDA $ 285 $ 128 $ 239 Weighted average number of common shares outstanding - Basic 183,408, ,281, ,125,428 Weighted average number of common shares outstanding - Diluted 189,419, ,503, ,036,526 Earnings per share, basic $ 0.82 $ 0.28 $ (1.26) Earnings per share, diluted 5 $ 0.79 $ 0.28 $ (1.26) Adjusted earnings per share, basic $ 0.77 $ 0.06 $ 0.08 Adjusted earnings per share, diluted 5 $ 0.75 $ 0.06 $ The three months ended December 31, 2016 includes $13 million pre-tax asset impairment of our corporate headquarters building in Wilmington, Delaw are and other asset w rite-offs. 2 Includes accounting, legal and bankers transaction fees incurred related to the Company's strategic initiatives, w hich includes transaction costs incurred in connection w ith the sales of the C&D and Sulfur businesses. 3 Includes litigation settlements, w ater treatment accrual related to PFOA and lease termination charges. The quarter ended December 31, 2016 also includes the $335 millon PFOA MDL settlement accrual. 4 Total of provision for (benefit from) income taxes reconciles to the amount reported in the Consolidated Statements of Operations for the three months ended March 31, 2017 and 2016, and for the three months ended December 31, Diluted earnings (loss) per share is calculated using net income (loss) available to common shareholders divided by diluted w eighted-average shares of common shares outstanding during each period, w hich includes unvested restricted shares. Diluted earnings per share considers the impact of potentially dilutive securities except in periods in w hich there is a loss because the inclusion of the potential common shares w ould have an antidilutive effect. 16

18 Segment Net Sales (Unaudited) SEGMENT NET SALES (UNAUDITED) (dollars in millions) LTM YTD 1Q17 1Q Q16 3Q16 2Q16 1Q16 Titanium Technologies $ 2,490 $ 646 $ 2,364 $ 623 $ 625 $ 596 $ 521 Fluoroproducts 2, , Chemical Solutions TOTAL NET SALES $ 5,540 $ 1,437 $ 5,400 $ 1,322 $ 1,398 $ 1,383 $ 1,297 SEGMENT ADJUSTED EBITDA (UNAUDITED) (dollars in millions) LTM YTD 1Q17 1Q Q16 3Q16 2Q16 1Q16 Titanium Technologies $ 571 $ 159 $ 466 $ 157 $ 144 $ 111 $ 54 Fluoroproducts Chemical Solutions Corporate & Other (148) (41) (128) (38) (28) (40) (21) TOTAL ADJUSTED EBITDA $ 979 $ 285 $ 822 $ 239 $ 268 $ 187 $ 128 SEGMENT ADJUSTED EBITDA MARGIN (UNAUDITED) LTM YTD 1Q17 1Q Q16 3Q16 2Q16 1Q16 Titanium Technologies 23% 25% 20% 25% 23% 19% 10% Fluoroproducts 22% 24% 20% 20% 24% 18% 16% Chemical Solutions 6% 9% 5% 7% 5% 5% 4% Corporate & Other 0% 0% 0% 0% 0% 0% 0% TOTAL CHEMOURS 18% 20% 15% 18% 19% 14% 10% * Note summation of individual quarters may not sum to the year to date (YTD), last twelve months (LTM) or full year 17

19 2017 The Chemours Company. Chemours and the Chemours Logo are trademarks or registered trademarks of The Chemours Company 18