Document


 
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 
September 14, 2016
Date of Report (Date of Earliest Event Reported)
 
The Chemours Company
(Exact Name of Registrant as Specified in Its Charter)
 


 
 
 
 
 
 
Delaware
 
001-36794
 
46-4845564
(State or Other Jurisdiction
 
(Commission
 
(I.R.S. Employer
Of Incorporation)
 
File Number)
 
Identification No.)
 
1007 Market Street
Wilmington, Delaware, 19899
(Address of principal executive offices)
 
Registrant’s telephone number, including area code: (302) 773-1000
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))



 
 
 








Item 7.01     Regulation FD Disclosure.
On September 14, 2016, The Chemours Company (the “Company”) furnished presentation slides which will be used for discussions with investors during the month of September 2016. The presentation slides are furnished herewith as Exhibit 99.1. These slides will also be made available on the Investor Relations section of the Company’s website.
The presentation slides are being furnished pursuant to Item 7.01, and the information contained therein shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities under that Section. Furthermore, the information contained in Exhibit 99.1 shall not be deemed to be incorporated by reference into the filings of the Company under the Securities Act of 1933, as amended.

Item 9.01.    Financial Statements and Exhibits

(d)
Exhibits.
99.1
Investor Presentation Slides September 2016









SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


 
 
 
THE CHEMOURS COMPANY
 
 
 
By:
 
/s/ Mark E. Newman
 
 
Mark E. Newman
 
 
Senior Vice President and Chief Financial Officer
Date:
 
September 14, 2016






septemberndrdeck09142016
The Chemours Company Investor Meetings September 2016 Exhibit 99.1


 
This presentation contains forward-looking statements, which often may be identified by their use of words like “plans,” “expects,” “will,” “believes,” “intends,” “estimates,” targets,” “anticipates” or other words of similar meaning. These forward-looking statements address, among other things, our anticipated future operating and financial performance, business plans and prospects, transformation plans, resolution of environmental liabilities, litigation and other contingencies, plans to increase profitability, our ability to pay or the amount of any dividend, and target leverage that 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 not guarantees of future performance and are based on certain assumptions and expectations of future events which may not be realized. The matters discussed in these forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from those projected, anticipated or implied in the forward-looking statements, as further described in our filings with the Securities and Exchange Commission, including our annual report on Form 10-K for the fiscal year ended December 31, 2015. Chemours undertakes no duty to update any forward-looking statements. This presentation contains certain supplemental measures of performance that are not required by, or presented in accordance with, generally accepted accounting principles in the United States (“GAAP”). These Non-GAAP measures include Adjusted Net Income (Loss), Adjusted EPS, Adjusted EBITDA and Free Cash Flow, which should not be considered as replacements of GAAP. Free Cash Flow is defined as Cash from Operations minus cash used for PP&E purchases. Further information with respect to and reconciliations of such measures to the nearest GAAP measure can be found in the appendix hereto. 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. Historical results prior to July 1, 2015 are presented on a stand-alone basis from DuPont historical results and are subject to certain adjustments and assumptions as indicated in this presentation, and may not be an indicator of future performance. Additional information for investors is available on the company’s website at investors.chemours.com. Safe Harbor Statement 1


 
Titanium Dioxide 42% Fluoropolymers 22% Fluorochemicals 17% Performance Chemicals & Intermediates 9% Cyanides 6% Sulfur Products 4%  Chemicals used in gold production, oil refining, agriculture, industrial polymers and other industries  #1 producer in Americas of sodium cyanide  Titanium dioxide (TiO2) is a pigment used to deliver whiteness, opacity, brightness and protection from sunlight  #1 global producer of TiO2 by capacity, sales and profitability  Products for high performance applications across broad array of industries, including refrigerants, propellants and industrial resins  #1 global producer of both fluorochemicals and fluoropolymers The Chemours Company at a Glance Sales(1): $5,526 Adj. EBITDA(1): $616 % margin: 11% Titanium Technologies Sales(1): $2,322 Adj. EBITDA(1): 307 % margin: 13% Fluoroproducts Sales(1): $2,194 Adj. EBITDA(1): 361 % margin: 17% Chemical Solutions Sales(1): $1,010 Adj. EBITDA(1): 45 % margin: 5% By Geography(2) By Product(2) Dollars in millions (1) Data represents last twelve months ending June 30, 2016 (2) Geographic and product data reflect full year 2015 net sales; does not reflect impact of divestitures Adjusted EBITDA includes corporate and other charges which are not reflected in individual segment Adjusted EBITDA. See reconciliation of Adjusted EBITDA in Appendix. 2 North America 45% Asia Pacific 24% EMEA 17% Latin America 14%


 
3 Transformation Plan Priorities Refocus Investments  Concentrate capital spending on investable business portfolio  Announced investment in the next increment of Opteon™ capacity  Rationalize annual capital spending to ~$350M over time Reduce Costs  Achieved cost reductions of ~$100M in first half of 2016  Anticipating $200M of cost reductions to be realized in 2016 over 2015  Targeting additional cost reduction of $150M in 2017 Optimize The Portfolio Grow Market Positions  Support customer growth in TiO2 through successful Altamira start-up and disciplined approach to pricing  Continue ramp up of Opteon™ product lines in Fluoroproducts  Grow Cyanides business with key customers  Target $150M Adjusted EBITDA growth from Opteon™ and Altamira through 2017 Plan Well Underway to Enhance Adjusted EBITDA by $500M, Improve Free Cash Flow and Reduce Leverage to ~3x in 2017 Enhance Our Organization  Foster an entrepreneurial organization  Operate with a simpler structure  Maintain a commitment to a safe and sustainable future  Completed strategic review of Chemical Solutions segment  Closed Aniline, Sulfur and Clean & Disinfect sales, generated ~$695M in gross proceeds  Retaining and improving cost position of Belle, WV site


 
Altamira Commercial Operations A Year of Transformation 4 AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG TiO2 Price Increase Communicated 2015 2016 Set 1st Post-Spin Dividend Edge Moor Plant Closure Transformation Plan Launch Opteon Capacity Announced DuPont Liquidity Agreement; Credit Facility Amendment TiO2 Price Increase Communicated Aniline Transaction Closed Sale of Clean & Disinfect Business Announced Reactive Metals Closure Announced Headcount Reduction Sulfur Transaction Closed TiO2 Price Increase Communicated C&D Transaction Closed SEP


 
Titanium Technologies


 
Paper 14% Coatings 57% Plastics 25% Specialty 4% North America 32% Asia Pacific 32% EMEA 22% Latin America 14%  Global leader in TiO2 with production capacity of 1.25 million metric tons(1) − 4 TiO2 plants with 7 production lines (1) − 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 ~800 customers globally Chemours Titanium Technologies Business Overview  Coatings – architectural, industrial, automotive  Plastics – rigid / flexible packaging, PVC pipe/windows  Papers – laminate papers, coated paper/paperboard, sheet  Specialty – rubber, leather, diesel particulate filters Geography(3) End Market(3) Source: Company filings and data. Titanium Technologies: TZMI (2015) (1) Pro forma for completion of Altamira expansion (2) TiO2 market share statistics based on volume statistics from company filings and market estimates (3) Reflects full year 2015 segment net sales 6 Business Overview Chemours is #1 in TiO2 Globally (2) 18% 13% 13% 9% 8% 5% 3% Chemours Cristal Huntsman Kronos Tronox Lomon Henan


 
Ore-to-Pigment Routes 30% TiO2 95% TiO2 90% TiO2 70% TiO2 Sulfate Pigment Competitive Chloride Pigment Ilmenites Slags Synthetic Rutiles Leucoxenes Rutiles Chemours has scale, leading process technology and manufacturing flexibility creating a sustainable low-cost position adaptable to customer needs and market conditions TiO2 Process Technologies & Chemours Capabilities 7  100% chloride process  Highest throughput operations  Process technology and operational discipline  Flexible manufacturing circuit with sustainable expansion options TiO2 Process Technologies The Chemours Advantage


 
Chemours delivers high-quality product to serve customers in attractive higher value-add segments of the TiO2 market TiO2 Market Segments Addressed by Producers 8 Source: Chemours Estimates  Quality and performance of TiO2 products differ considerably across market segments and applications  Segments are supplied by two manufacturing systems (Regional and Multinational Producers)  Utilization is higher at manufacturing facilities supplying specialty and higher value pigment segments  Separation remains in multi- purpose segments based on pigment quality, product design and supply capability


 
Chemours’ product value and cost offer supply security in a stressed TiO2 industry TiO2 Market: Cost Differentials 9 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 110% 120% 130% 140% 0 500 1,000 2,600 1,800 3,100 3,600 4,100 1,400 4,500 5,000 5,500 6,000 N o rmail z ied C o st/ p ric e $/ T o n n e Realizable Capacity (Metric kT) Multi-National Producers 2Q16 avg. China export quality Range of China Domestic Cost China Export Chemours China Domestic 2Q16 avg. price HQ Global Source: Chemours estimates based on internal calculations; price estimates from industry sources 2Q16 avg. China domestic – low quality


 
Chemours’ Profitability Focus in TiO2 10 Working towards improving profitability that supports sustainable reinvestment levels Pricing Actions  January 1 price increase – implemented across the globe  May 1 increase – implemented across the globe  Announced September 1 price increase of $150/t in EMEA and Latin America  Chemours applies an analytical approach to pricing and will seek prices consistent with factors such as: − Product value − Supply/Demand − Reinvestment economics Cost Reductions  Shutdown of Edge Moor plant and line at New Johnsonville, TN  Integrated ore capability – from sourcing to use  Fixed cost and working capital reductions as part of Transformation Plan


 
Fluoroproducts


 
 Supplies products for high performance applications across broad array of industries  #1 in Fluoroproducts globally − Fluorochemicals: #1 in refrigerants, #1 in propellants, #3 in foaming agents − Fluoropolymers: #1 in industrial resins, #1 in fluoropolymer specialties  Key Brands include Teflon™, Freon™, Opteon™, Krytox ™, Nafion™, Viton™ Fluoroproducts Business Overview Geography(1) Product(1) Source: Company filings and data, Fluoroproducts: Company filings and Management estimates (1)Reflects full year 2015 segment net sales (2)Fluorochemicals and fluoropolymers market share statistics based on 2015 internal revenue estimates and company filings (3)Includes 100% contribution from the DuPont-Mitsui Fluorocarbon Company joint venture 12 F lu o ro chemical s F lu o ro p o ly mer s (3)  Fluorochemicals – mainly refrigerants, propellants, and foam expansion agent  Fluoropolymers – mainly industrial resins and downstream products & coatings  Key End Markets – AC, refrigeration, automotive, aerospace, wire & cable, consumer electronics and telecommunications 22% 17% 17% 8% 7% Honeywell Arkema Dongyue Mexichem25% 16% 12% 11% 6% Daikin 3M (Dyneon) Solvay Dongyue Business Overview Chemours is #1 in Fluoroproducts Globally(2) North America 47% Asia Pacific 24% EMEA 18% Latin America 11% Fluoropo lymers 56% Fluoroch emicals 44%


 
Fast Pace Adoption of Opteon™ 13 Opteon™ YF Next Gen Gas for mobile air- conditioning HFO-1336(Z) Next Gen Liquids for Foams, Centrifugal Chillers, Organic Rankine Cycles, High Temp Heat Pumps Opteon™ YF blends Next Gen Gas for Commercial Refrigeration, Residential/Light Commercial A/C, Chillers, High Temp Heat Pump Market-Leading Portfolio Opteon™ Technology offers sustainable technology option in the face of upcoming regulatory deadlines • Opteon™ Expected to Provide >$100M of Adjusted EBITDA Growth thru 2017 • Growth beyond 2018 will be supplied by facility in Corpus Christi Opteon™ Revenue Outlook >$100M Incremental Adjusted EBITDA


 
Fluoropolymers: Tailored Solutions for Growth Opportunities 14 Diverse End-Use Applications Chemours delivers high value fluoropolymer solutions used in complex and highly demanding applications Market Dynamics  Demand conditions driven by GDP growth in North America Europe and slower growth in China  Weak Euro and Yen in 2015 led to pricing pressures  Chemours’ strong collaborations in automotive, telecommunications, and consumer electronics markets provide solid base of demand and growth opportunities  Targeted innovation and application development in fluoropolymer resins and formulations expected to produce future customer solutions Energy Storage – Nafion™ Specialty ion exchange polymer membrane to store alternative energy in flow batteries Consumer Electronics – Teflon™ Faster data speeds & power/data combination cable designs Turbo Charger Hoses – Viton™ Enable higher engine temperatures and advanced technology options to drive fuel efficiency improvements


 
Chemical Solutions


 
Divest Total gross proceeds of ~$695 million - Average multiple of ~10 – 12x Minimal net free cash flow impact Focus to drive out stranded costs as part of Five-Point Transformation Plan Clean & Disinfect • Sold to Lanxess for $230 million • Completed September 2016 Sulfur • Sold to Veolia for $325 million • Completed July 2016 Aniline • Sold to Dow for ~$140 million • Completed March 2016 Strategic Review of Chemical Solutions Portfolio Complete 16 Strategic Review Results * Includes Methylamines, Glycolic and Vazo product lines Close Reactive Metals • Expected end of 2016 Retain Cyanides Belle, WV Site*


 
Chemours Cyanide Opportunity 17 Americas Sodium Cyanide Market The Chemours Advantage  Aligned with customer values  On-purpose producer, reliable supply  Differentiating product stewardship  Strong logistics network  Long term contracts 9% CAGR 2014 (252 KTons) 2019 (393 KTons) Imports NAFTA Producers Chemours Imports NAFTA Producers Chemours Americas NaCN demand forecast to grow at 9% CAGR over next four years  Remains net import market  Deteriorating ore quality contributes to underlying NaCN demand growth Source: Chemours internal estimates


 
Financial Position


 
2Q16 Overview 19 Second Quarter Financial Summary 2Q16 2Q15 ∆ Yr/Yr 1Q16 ∆ Seq. Net Sales $1,383 $1,508 ($125) $1,297 $86 Adj. EBITDA 187 127 $60 128 $59 Adj. EBITDA Margin (%) 13.5 8.4 5.1 9.9 3.6 Net Income (loss) (18) (18) 0 51 (69) Adj. Net Income 49 17 32 11 38 EPS1 ($0.10) ($0.10) $0 $0.28 ($0.38) Adj. EPS1 $0.27 $0.09 $0.18 $0.06 $0.21 Free Cash Flow2 $11 ($145) $156 ($219) $230 ($ in millions unless otherwise noted) See reconciliation of non-GAAP measures in the Appendix 1 Periods prior to 3Q15 are represented by pro forma diluted EPS 2 Defined as Cash from Operations minus cash used for PP&E purchases; 1Q16 excludes benefit from DuPont prepayment of ~$166M as at 3/31/16 Year-over-year  Transformation Plan cost reductions and Opteon™ growth were partially offset by lower TiO2 pricing and currency headwinds  Continued meaningful improvement in Free Cash Flow performance Sequentially  Benefits from seasonal TiO2 and refrigerant volumes, higher TiO2 pricing, cost reductions and Opteon™ growth led to improved profitability


 
Liquidity Profile Since Spin 20 $0.0 $1.0 $2.0 $3.0 $4.0 $0.0 $0.5 $1.0 $1.5 $2.0 2Q15 3Q15 4Q15 1Q16 2Q16 Cash Revolver Availability Net Debt 2Q15 3Q15 4Q15 1Q16 2Q16 T o ta l Liquidit y * ($B ) Net D e b t ($B ) $0.7B $3.8B $1.0B $3.8B $1.1B $3.6B $3.6B $3.5B $1.2B $1.1B *Defined as cash plus revolver availability


 
2016 Outlook Reaffirmed 21  2016 Adjusted EBITDA Expected to be Greater than 2015,  including $200M of Transformation Savings,  Generating Modestly Positive Free Cash Flow Market Factors • TiO2 price • Currency • End-market demand Chemours Initiatives • Cost reductions • Working capital productivity • Ramp up in Opteon™ • Altamira start-up Key Factors Influencing 2016 Performance:


 
Appendix


 
Quality and performance of TiO2 products differ considerably across segments of the market that serve different applications TiO2 Applications  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 C h e mour s Fo c u s 23 * Chemours does not participate in these applications


 
Segment Net Sales and Adjusted EBITDA (unaudited) ($ in millions unless otherwise noted) LTM 2Q16 2Q16 1Q16 4Q15 3Q15 Titanium Technologies 2,322$ 596$ 521$ 589$ 616$ Fluoroproducts 2,194 573 531 515 575 Chemical Solutions 1,010 214 245 256 295 TOTAL NET SALES 5,526$ 1,383$ 1,297$ 1,360$ 1,486$ LTM 2Q16 2Q16 1Q16 4Q15 3Q15 Titanium Technologies 307$ 111$ 54$ 62$ 80$ Fluoroproducts 361 105 85 80 91 Chemical Solutions 45 11 10 16 8 Corporate & Other (97) (40) (21) (26) (10) TOTAL ADJUSTED EBITDA 616$ 187$ 128$ 132$ 169$ LTM 2Q16 2Q16 1Q16 4Q15 3Q15 Titanium Technologies 13.2% 18.6% 10.4% 10.5% 13.0% Fluoroproducts 16.5% 18.3% 16.0% 15.5% 15.8% Chemical Solutions 4.5% 5.1% 4.1% 6.3% 2.7% Corporate & Other 0.0% 0.0% 0.0% 0.0% 0.0% TOTAL CHEMOURS 11.1% 13.5% 9.9% 9.7% 11.4% * - Note summation of individual quarters may not sum to LTM figure due to rounding. SEGMENT NET SALES (UNAUDITED) SEGMENT ADJUSTED EBITDA (UNAUDITED) SEGMENT ADJUSTED EBITDA MARGIN (UNAUDITED)


 
GAAP Net Income (Loss) to Adjusted EBITDA and Adjusted Net Income Reconciliations 25 ($ in millions unless otherwise noted) LTM 2Q16 2Q16 1Q16 4Q15 3Q15 Net income (loss) attributable to Chemours (82)$ (18)$ 51$ (86)$ (29)$ Non-operating pension and other postretirement employee benefit costs (32) (7) (7) (8) (10) Exchange losses (gains) 4 14 6 28 (44) Restructuring charges 250 9 17 85 139 Asset related charges 136 63 - 3 70 (Gain) loss on sale of assets or business (79) 1 (89) 9 - Transaction costs 24 12 3 9 - Legal and other charges 26 13 5 8 - Provision for (benefit from) income taxes relating to reconciling items 1 (116) (38) 25 (43) (60) Adjusted Net Income 131$ 49$ 11$ 5$ 66$ Net income attributable to noncontrolling interests - - - - - Interest expense, net 211 50 57 53 51 Depreciation and amortization 275 73 66 66 70 All remaining (benefit from) provision for income taxes 1 (1) 15 (6) 8 (18) Adjusted EBITDA 616$ 187$ 128$ 132$ 169$ Adjusted earnings per share, basic 2 0.72$ 0.27$ 0.06$ 0.03$ 0.36$ Adjusted earnings per share, diluted 2 0.72$ 0.27$ 0.06$ 0.03$ 0.36$ 1 Total of provision for (benefit from) income taxes reconciles to the amount reported in the interim consolidated statement of operations for the three months ended June 30, 2016, March 31, 2016, September 31, 2015, June 30, 2015, March 31, 2015 and year ended December 31, 2015. 2 On July 1, 2015, E.I. du Pont de Nemours and Company distributed 180,966,833 shares of Chemours' common stock to holders of its common stock. Basic and diluted earnings per common share for the three months ended March 31, 2015 and June 30, 2015 were calculated using the number of shares distributed on July 1, 2015.


 
Free Cash Flow Reconciliation 26 ($ in millions unless otherwise noted) LTM 2Q16 2Q16 1Q16 4Q15 3Q15 C sh provided by (used for) operating activities 541$ 90$ 36$ 302$ 113$ Purchases of property, plant and equipment (400) (79) (89) (127) (105) FREE CASH FLOW 3 141$ 11$ (53)$ 175$ 8$ 3 As of June 30, 2016 and March 31, 2016, remaining DuPont prepayment was ~$131M and ~$166M, respectively. Free Cash Flow excluding the DuPont prepayment was ($173M) and ($219M) for the six months ended June 30, 2016 and three months ended March 31, 2016, respectively.


 
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