Chemours Co. Aktie

Good morning. My name is Michelle, and I will be your conference operator today. I would like to welcome everyone to the Chemours Company First Quarter 2026 Results Conference Call. [Operator Instructions] I would like to remind everyone that this conference call is being recorded.

I would now like to hand the conference over to Brandon Ontjes, Vice President, Head of Strategy and Investor Relations for Chemours. You may begin your conference.

Good morning, everybody. Welcome to the Chemours Company First Quarter 2026 Earnings Conference Call. I'm joined today by Denise Dignam, Chemours' President and Chief Executive Officer; and our Senior Vice President and 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 filings. 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. During the course of this call, we will 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 evening. Additionally, we posted our earnings presentation on our website yesterday evening as well.

With that, I will turn the call over to Denise Stignnam.

Thank you, Brandon, and thank you, everyone, for joining us. During today's call, I will begin by discussing highlights from our recent performance before turning it over to Shane, who will provide details around our outlook for the second quarter of 2026 and some commentary on the remainder of the year. Finally, I will provide updates on our meaningful progress against our Pathway to Thrive strategy and current view of our operating environment before taking your questions.

We started 2026 with strong results, delivering a first quarter that was well above earnings expectations and showcased the strength of Chemours' disciplined execution and strategic focus across the company. Both Thermal & Specialized Solutions and Titanium Technologies delivered standout performances with TSS not only achieving another quarter of double-digit year-over-year growth in Opteon Refrigerant, but also excelling in quota execution and capturing additional opportunities in Freon Refrigerants through sharp market focus and agile commercial execution. TT also exceeded our earnings expectations, driven by global pricing actions, strong commercial discipline across all regions and customer segments and continued operational focus.

In Advanced Performance Materials, the business worked to quickly stabilize operations following the Washington Works outage and is seeing strength in our Performance Solutions order book, especially in high-value data center and semiconductor markets. Adding to the strong performance and aligning with our efforts to improve our balance sheet, we completed the sale of nearly all of our Kuan Yin properties ahead of schedule and promptly used the available proceeds to pay down a meaningful portion of our near-term debt, further strengthening our balance sheet and enhancing Chemours financial flexibility as we look ahead.

We remain on track to complete the sale of the remaining parcel of the land in 2026, which should provide an incremental $60 million of gross proceeds. This development follows the $700 million refinancing completed in March of our 2027 unsecured notes and a portion of our 2028 unsecured notes, extending these maturities out to 2034 and increasing our balance sheet flexibility. Let me expand a bit further on the quarter's business activities. Our TSS business delivered a record first quarter with continued strength in both Freon and Opteon Refrigerants driving double-digit year-over-year growth. Net sales for TSS increased 22% versus the prior year quarter, largely driven by higher pricing, stronger volume growth and a favorable product mix across refrigerant markets.

Pricing benefited from automotive aftermarket Freon Refrigerant sales in North America and Opteon blends, while overall volume growth was supported by seasonal strength. These top line results translated into record adjusted EBITDA for TSS in the quarter with margins expanding to 33%, reflecting strong pricing realization for Freon and an improved Opteon blend mix. While higher input costs, particularly R32, created some offset, these results underscore the power of our commercial execution and disciplined quota management.

Sequentially, net sales increased 28%, consistent with the typical seasonal ramp we see across refrigerants and pricing strength in certain products. For our TT business in the first quarter, the team executed well amid a challenging market environment. We experienced continued global stability and observed solid seasonal demand improvements in North America and Europe. However, lower volumes and less favorable product mix in certain non-Western markets offset these gains, resulting in reduced global volumes overall compared to the prior quarter.

While volumes trended down sequentially, net sales finished within our expectations due to disciplined global pricing execution. Notably, adjusted EBITDA exceeded our expectations, driven by our pricing actions, along with strong cost management and our focus on operational excellence. In line with our efforts to improve security of supply and input optimization, we signed a long-term chlorine supply contract with Olin to service our DeLisle site starting in 2028. This agreement ensures a reliable supply at value-accretive economics, strengthening DeLisle global competitiveness and supporting our operational excellence focus under Pathway to Thrive.

It also reinforces Chemours' commitment to being one of the lowest-cost chloride TiO2 producers worldwide. While we had previously announced our intention to pursue an on-site chlorine facility at our DeLisle site with a third party, in March, the supply agreement terminated, and we will not be proceeding with this project. As we look ahead, our team remains agile and responsive to ongoing market changes and economic uncertainty. We continue to keep our manufacturing operations flexible, modifying production levels to meet shifting demand. Our pricing strategy is firmly in place as exemplified in our recent price increase communication, first in December and continued on April 1st across all key end markets.

These announcements demonstrate our ability to adjust prices while consistently delivering outstanding and dependable service and quality. The first quarter's results with pricing up 3% sequentially reflect the initial impact of implementing these price changes alongside our progress in operational reliability, which strengthens our ability to respond effectively to shifts in market demand. APM results in the first quarter reflected both operational and portfolio-related headwinds with net sales down year-over-year due primarily to lower volumes.

Overall, first quarter sales were constrained by the Washington Works outage and the prior closure of the Advanced Materials SPS Capstone line. These factors provided a difficult comparison to last year and the outage weighed meaningfully on sales and incremental costs, resulting in a $25 million headwind in adjusted EBITDA. While our first quarter performance was not what we believe the business is capable of, with these discrete events now behind us today, APM is building a more effective and efficient foundation for coming quarters.

Notably, our Performance Solutions order book is seeing particular strength in high-value markets, positioning APM for continued improvement as we move through 2026. Separately, our corporate level performance also showed a significant decrease in expenses compared to the same quarter last year, largely due to lower costs associated with legacy litigation activities. We remain focused on balancing the timely execution of global corporate initiatives with appropriate cash expenditures.

With that, I'll turn it over to Shane to walk through our outlook for the quarter ahead and provide thoughts on what remains for 2026.

Thank you, Denise, and good morning, everyone. As shared in the earnings materials available on our investor website, I now would like to discuss our expectations for the second quarter and provide some updates on our business as we look ahead. Beginning with TSS. For the second quarter, we project net sales to rise sequentially in the low to mid-teens percent range, primarily attributable to favorable seasonal trends related to the cooling season in the Northern Hemisphere.

It is worth noting that some demand and associated sales having about a $10 million impact on adjusted EBITDA was pulled forward into the first quarter due to timing, which modestly tempers the sequential progression we would have otherwise expected and added strength to our first quarter TSS performance. Despite this pull forward, the seasonal uplift we anticipate for TSS will be underpinned by strength across our Opteon and Freon Refrigerant channels. Adjusted EBITDA for TSS is also expected to grow sequentially, ranging from $210 million to $225 million, primarily driven by seasonality as well as specific opportunities our commercial team is capturing in the Freon aftermarket and continued transition to Opteon Refrigerants. In the first quarter and into the second, weakness in residential demand was more pronounced than anticipated.

This softer demand has been largely driven by a slower start to the reference cooling season, which has delayed equipment installations and associated aftermarket activity and is consistent with what we are hearing more broadly across the residential HVAC value chain. Specific to expectations in the first quarter and into the second quarter, overall aftermarket demand has slowed as new equipment demand has decelerated into distribution networks, an important leading indicator for downstream demand. Looking to the full year, we continue to expect year-over-year growth in the business, supported by our strong market position, regulatory tailwinds and overall pricing strength.

However, we remain appropriately cautious on residential demand signals. One other important factor to consider is that TSS is a quota-driven business. Our company can drive differentiated value through disciplined execution and allocating our available quota to the most attractive pockets of demand. While we do not expect the same year-over-year double-digit top line growth for the remainder of 2026 as comparisons begin to reflect the regulatory-driven adoption under the U.S. AIM Act that drove robust demand in late 2025, we remain bullish on the opportunity ahead as we allocate our quota to achieve optimal profitability.

Overall, demand across our Opteon channels, together with continued momentum in the Freon automotive aftermarket supports the growth profile and consistent margins we outlined last quarter. For our TT business, we expect sequential net sales to increase in the mid- to high teens percentage range in the second quarter, driven by a more favorable seasonal comparison and related pricing actions. This improvement is supported by increased mineral sales following first quarter timing dynamics related to our mining restructure as well as some strength we are seeing in our TiO2 pigment sales amid actively developing global market conditions.

Our guide for the second quarter anticipates the initial effects of the price increase on April 1st as well as the continuing effects from pricing increases announced in December. These adjustments are being applied across our key end markets as contracts allow. Although global geopolitical events continue to affect supply chains and impact the worldwide TiO2 market, both directly and indirectly, we are confident that our TT business is strategically positioned to take advantage of emerging opportunities. Aligned with the current market environment and the improved agility of our operational circuit, for the second quarter, we expect TT's adjusted EBITDA to range between $40 million and $50 million.

Although geopolitical outcomes remain uncertain and the related market impact is unclear, recent enhancements to our operating circuit and improved visibility of order patterns support the second quarter earnings. As the year develops, consistent with prior messaging, we are controlling what we can control, and we intend to stay true to our commercial strategy, which will be supported by robust pricing efforts that will continue based on our assessment of market conditions. We remain resolute in our belief that this strategy positions our TT business for success regardless of market and demand conditions.

Now for our APM business. For the second quarter, we anticipate net sales to increase within the low to high 30% range on a sequential basis, primarily due to the resumption of normal operations at the Washington Works facility. Adjusted EBITDA is forecasted to be between $12 million and $18 million. While sequential growth in EBITDA is expected, earnings remain below targeted levels as cost pressures and volume limitations related to the Washington Works downtime experienced in the first quarter continue to weigh on second quarter profitability. Although we are facing outage-related constraints, our APM order velocity has reached a level that has not been experienced in the past several years.

Within our Performance Solutions portfolio, demand remains strong in the semiconductor and data center end markets, which are driving orders for our Performance Solutions products. These sectors are tied to growing and sustainable demand for APM's products and are areas where Chemours is uniquely positioned to serve these markets. In addition to our higher-value end market activity, our Advanced Materials portfolio is also experiencing strong order levels. While the industrial end markets that Advanced Materials generally serve remain weak, our commercial team is seeing signs of destocking for specialty materials that may have been overbought in prior years.

While the impact of these demand tailwinds is limited in our second quarter outlook, we see direct pathways to achieve significant second half strength while the macroeconomic environment remains tepid. On a consolidated basis, we anticipate our second quarter net sales to increase in the range of 15% to 20% sequentially, with consolidated adjusted EBITDA expected to range between $220 million to $250 million. Also, we anticipate corporate expenses to range between $45 million and $50 million. Our capital expenditures for the second quarter are expected to be in the range of $50 million, with free cash flow generation of at least $100 million.

In connection with the strong free cash flow we anticipate for the second quarter, we expect to realize interest expense savings in the quarter as we reduced our debt by approximately $160 million in April. Also, we remain committed to enhancing our balance sheet flexibility, including the $700 million refinancing completed in March, which builds on the close to $2 billion of near-term debt we have addressed since the fourth quarter of 2025. We are proud of these efforts, which strengthen our balance sheet and enhanced financial flexibility, key enablers of our Pathway to Thrive strategy.

Turning to the full year. Despite a mixed global operating environment that includes challenging commercial end markets and overall raw material and other cost inflation, we still expect our full year consolidated net sales, adjusted EBITDA and capital expenditure forecast to align with our previous guidance. Full year free cash flow conversion is now expected to be above 20%, slightly lower than our prior guide, driven by Kuan Yin land sale tax implications, which impact free cash flow. That said, the earlier-than-anticipated closure of the majority of the Kuan Yin parcels positions Chemours to immediately begin to delever as we pay down approximately $150 million of our outstandin Euro Term Loan B in rating.

As we close the final Kuan Yin land parcel and repatriate the remaining proceeds expected this year, we intend to use those proceeds to continue redeeming future debt maturities. This positive development paired with our diligent cash management activities provides us with confidence towards achieving our liquidity objective of net leverage below 3x adjusted EBITDA. For 2026, we now anticipate our net leverage ratio will be below 3.8x adjusted EBITDA by the end of the year. Additionally, our efforts will provide approximately $9 million in interest expense savings to the company going forward annually by year-end after the reference repayment in April.

Overall, we started the year out well. And looking ahead, we see strong pricing momentum in TT, robust refrigerant demand and operational reliability improvement across our sites, which gives us confidence to deliver a step-up performance in the second half of the year, enabling us to deliver on our full year guide. Also, we remain front-footed on our assessment of operational and commercial impacts stemming from geopolitical considerations around the globe to ensure we address inflation ahead of any financial impact as well as addressing any potential opportunities as they present themselves. We have the right team in place and a strong understanding of our customer base to achieve the goals and outlook we have laid out for the current year.

Given these perspectives on the second quarter and remaining year, I'd like to now hand the call back over to Denise to share her closing thoughts and perspectives.

Thank you, Shane. As I look across our first quarter performance, we continue to see clear progress against our Pathway to Thrive strategy, which remains the foundation for how we operate, allocate capital and create long-term value. We remain on track and are seeing tangible accomplishments across all pillars, including improved operational reliability, disciplined cost execution, targeted growth investments, continued portfolio improvements and efforts to derisk our balance sheet aimed at strengthening the business over time.

Our teams are performing effectively across all Pathway to Thrive pillars. In the area of operational excellence, we continue to integrate the Chemours business system to implement lean principles, ensuring a high standard of consistency, reliability and cost efficiency. Although CBS was implemented earlier this year, we are already observing positive outcomes. For enabling growth, our focus remains on areas that set us apart and provide clear market advantages. This is evidenced by ongoing momentum in Opteon Refrigerants, increased engagement within high-value end markets across TSS and APM and continued efforts to drive value through recent pricing strategies.

For portfolio management paired with our disciplined capital allocation approach, we've improved our balance sheet with the nearly completed Kuan Yin land sale and existing cash reserves, enabling a reduction in debt that will continue through the year. We are dedicated to aggressively reducing our leverage while making steady progress in our strengthening the long-term pillar where we are progressively working to reduce our exposure to legacy matters. These efforts highlight our focus on derisking Chemours to ensure our ability to secure our future in exciting high-value end markets and opportunities.

In taking a broader view of Chemours, we are closely monitoring the ongoing conflict in the Middle East and the resulting volatility across energy markets and global chemical supply chains, which is adding uncertainty to the broader macro environment with the potential to weigh on demand, particularly in more impacted regions. To this, we are focused on actively working to mitigate cost headwinds through core price and other pricing mechanisms. As sulfur markets tighten due to this conflict, sulfate-based TiO2 producers are seeing tangible cost inflation, creating potential opportunities for those positioned to respond.

Chemours has decades of leadership in the titanium dioxide market with deep technical, commercial and regional expertise. As conditions evolve and potential tailwinds emerge, we are applying that experience with discipline, remaining selective and deliberate as we monitor the macro environment and act accordingly. In parallel, we are taking a disciplined approach to risk management across the enterprise, prioritizing cost control, supply chain resilience and capital allocation to ensure flexibility in this more uncertain macro environment. We believe that our positioning considering these market dynamics provide opportunities for Chemours as we move into the second half.

Before we move to questions, I want to thank our employees around the world for their continued focus, resilience and commitment. Their execution and adaptability are central to our performance and our progress against Pathway to Thrive. I'd also like to thank our customers for their ongoing partnership and trust as we support their needs across critical end markets. With a strong start to the year, the right strategic actions underway and a proven ability to execute through uncertainty, Chemours is well positioned to deliver on our commitments and drive sustained value creation for all of our stakeholders as 2026 progresses.

With that, I'd like to open the line for your questions.

[Operator Instructions]Our first question is going to come from the line of Joshua Spector with UBS.

I wanted to ask just on TSS and specifically in first quarter, when you're talking about some of the benefits from the pricing step-up in the Freon products into the auto aftermarket. I was wondering if you can characterize that. Was that more of a step-up in some contract type structure? Or is that more of a tightening of the legacy refrigerant market? And did you expect that, I guess, when you gave your guidance earlier in the year?

Question, Josh. Yes, from Freon, we -- first of all, we, as a business, are always looking to optimize our EBITDA by per quota. So we do see strength in the auto aftermarket, but we are uniquely positioned when it comes to the auto aftermarket. We have 1 of 2 domestic suppliers of 134A versus other foreign suppliers. We also have a great quota position. And then also, there are some constraints for other suppliers that are stemming from EPA regulated phasedown of the key raw material that goes into their process of TCE. So we see this as very sticky. I would say going into the quarter, we did anticipate strength going in, maybe not as high as it turned out to be, but we certainly expect that to continue.

Okay. And I guess just sticking with TSS and thinking about 2Q, I think your comments clearly say you expect weaker resi OEM. I think that's the interpretation. So you're being somewhat conservative there. Does that help your view on margins in the quarter? And I guess there's just a bunch of moving parts now with costs moving up, you're trying to get pricing and generally just trying to understand kind of the margin cadence you'd expect as either OEM comes back into the mix or some other factors maybe help on the cost side as you go further through the year?

We always talk about the TSS business to be around the 30%, 30% margin or higher in the low 30s. So that's kind of where we are. When I think about equipment installations in 2026, we're really around the projection at around 7.5 million units, which is really low. And we expect that to grow as there's more optimism around housing and expecting more around the 9 million unit on a longer-term basis. We see a lot of strength in our aftermarket positioning and see a lot of growth that's coming from that. So we anticipate around Opteon still a really good growth year for us.

Josh, just to add too, I mean, you mentioned about the Q2 guide and a little bit of weak I do want to emphasize in the script, we talked about a $10 million adjusted EBITDA impact that was pulled into the first quarter. Our commercial team did great executing at the last part of the quarter, and we shifted about $10 million of EBITDA in the first quarter. So if you normalize the Q2 for that $10 million, I think you would see more seasonal trends.

Our next question is going to come from the line of John Roberts with Mizuho.

This is Fabien Himenez on for John. Question on APM. With the Washington Works outage and your closure of SPS Capstone line, what should we expect to see in terms of a sustainable earnings power of the segment? And also, what's the timing of this ramp?

Thanks for the question. Yes, we expect the APM business to be in the $30 million to $40 million EBITDA range, and we definitely expect getting back to that range in the back half of the year. We have a really strong order book when you look at our Performance Solutions portfolio, really centered around semiconductor growth and data center. So you'll start to see that as we get into the back half.

And switching gears here. On Corpus Christi, can you share what your playbook is if the city declares a Level 1 water emergency? What levers can you pull here potentially?

Thanks for the question. This is something that has been on our radar for the better part of 2 years. So we've been very proactive. We actually -- if you -- we don't see -- right now, there's a potential for a 25% curtailment, which is potentially announced for the fourth quarter. That is already dialed into our outlook. So we do not see any hiccups from that. And we also have a very, very robust supply chain. So if it came to other knobs, we have other partners that we work with that we can supply our customers.

Our next question comes from the line of John McNulty with BMO.

So I wanted to dig into one of the points that you were bringing up toward the end around some of the sulfur-related impact on other parts of the TiO2, I guess, producer market. It looked -- we've seen -- because of sulfur constraints, we've seen some really significant price hikes from a lot of the Chinese producers. I guess, how do you think about your playbook as you push through the rest of this year in terms of either going after price and kind of working underneath that higher pricing umbrella that some of your competitors are pushing or going after the volumes that may be left on the table because you don't have to necessarily raise price quite as much. I guess how is -- how are you thinking about that from a playbook perspective? And can you speak to your ability to address some of the international markets that are starting to see some of that really aggressive pricing pushing through?

Great. Our playbook is, as we talked about before, where our strategy is around gaining share in fair trade regions. But along with that is also profitability and prioritizing price. So we came out in December ahead of any disruption with the Iran war and start raising prices, and we're successful. As you can see going into the first quarter, our pricing is up 3%. So we're going to continue as we see opportunities to raise price. So we already made an announcement for a price increase of the same order of magnitude in April. One thing just to say is we have great flexibility in our contracting around driving pricing. So I would say we're going to continue around -- our playbook is continuing around driving our share in the fair trade market, but also prioritizing profitability and raising prices. it's clear with sulfur costs increasing, there is an opportunity to go back in history, as sulfur costs increase, there's a one-for-one correlation to what happens in the cost curve of sulfate producers.

I would just add too, John, I mean, if market disruption is occurring and there's volume opportunities, you might remember in the third quarter last year, we talked about bringing capacity down about 10% to 20% just to align with where we thought demand was going to be. And we have flexible operating circuits that we bring that back up to address that as well.

Yes. And even in the first quarter, we saw volumes increasing over what we had expected, we were able to respond.

Got it. Okay. No, helpful. And then I guess, can you just give us an update on your 2-PIC solution? I think NTT was doing some heavy trials on you. I think you've also got some potential capacity coming up later on this year. I guess, can you give us an update as to how that's progressing?

So yes, we're excited about towards the end of the year, we're going to have the capacity that comes on. And we're going to be using it to sample customers as well as refining our process technology for future scale up. So when it comes to NTT, the 12-month field trial using our fluid was successful. There were no signs of fluid or equipment degradation. There were over 200 prospective customers and partners that have seen the fluid in action. So we're going to continue working with NTT through 2028 and really continue to expand the visibility of that technology.

Our next question comes from the line of Hassan Ahmed with Alembic Global Advisors.

A question around your Q2 as well as full year guidance. I mean if I sort of take a look at what you guys have guided to, I mean, you're guiding to a first half EBITDA of around $404 million. And if I compare that to what that means or implies for the back half of the year, it's essentially a range of $396 million to $496 million. So I'm just trying to sort of figure out that bridge to the higher end of that EBITDA range. I mean, what gets us to that incremental, call it, almost $100 million on the higher end side of things, I mean, particularly factoring in seasonality and the like?

Thanks for the question, Hassan. I'll just start by saying coming into 2026, we were very optimistic on growth 2025 to 2026, and we remain very optimistic on that growth. When you think about pricing, we have very strong pricing. When you think about volume, we see very stable volume and our cost actions are really working. So we feel good about the growth year-over-year, but I'm going to turn it over to Shane to get into more of the specifics around your question.

Yes. Thanks for the question, Hassan. So certainly, as you just put the math to it, it looks as if we're back-end weighted. But you have to remember, we started out the year really slow in ATM with Washington Works outages. We mentioned $25 million in the first quarter. And then we also had some expense come through as well as constraints on overall sales into the second quarter as well. That normalized for the second half is a good runway to get to that balance. I would say outside of that, right, we talked a bit about TT.

We really are looking at strong pricing and some tailwinds according from that side. Denise mentioned the strong adoption in December, and we just announced April as well. So on the backs of a lot of these efforts and controlling what we control as well as operating and then also APM had a really good order book. I mentioned in the script, the best we've seen in several years. So we feel very confident with this guide. And as we think about opportunities within TiO2, I think there's upside here and some tailwinds as well.

Very helpful. And as a follow-up on the TT side of things, I mean, I know you guys commented on sulfuric acid and some of the price increases we've seen over there. I mean, as you take a look, so the question really is around where cost sit today and also sort of how that impacts the rationalization that we were seeing leading into some of these sort of sulfuric acid price moves. I mean, if I've run my numbers correctly, some of the sort of latest rounds of price hikes in TiO2 that we've seen, it just seems barely cover the higher sort of costs coming out of higher sulfuric acid prices and the like. So I mean, the state of affairs for TiO2 cost curve wise was pretty dire even prior to this run-up in sulfuric acid prices. So I mean, where are the cost curves today? Are a large chunk of the producers still losing money despite these price hikes? And how does that impact sort of rationalization, particularly in China on a go-forward basis?

Yes. Thanks for the question. I mean, first of all, let's just go back to what our strategy is, and it's really to be low-cost chloride producer globally, and we continue on that path. We don't have any sulfate production. So we are very much on the left side of the cost curve. Clearly, for sulfate producers, they're moving to the right. And depending on how much sulfur increases, that's how far they're going to right. Can I say what kind of decisions they're going to make around their capacity? No. But what I can say is we are clearly focused on our strategy of gaining share in the fair trade markets, continuing our advocacy and being reliable suppliers to our customers.

Our next question comes from the line of Arun Viswanathan with RBC Capital Markets.

Congrats on the results here. So I guess I just wanted to follow up on the last point. So for TT, I think you're guiding to about $40 million to $50 million for Q2 EBITDA. How does that evolve as you kind of move through the year? Are there any discrete items like cost reductions or maybe something on the ore supply side that would lift that in Q3? Or is it going to be mainly dependent on demand?

Yes, I would say that we definitely see improvement as we go through the year, and I would point to 2 primary factors. We are not building any volume upside into our outlook. It's really pricing and continuing our cost out work, which we definitely see evidence every -- we saw it in the first quarter, we see it coming through the rest of the year.

Okay. And another question on TSS, I guess, if I could. When you think about the last year, and you did have a pretty big step-up because of the step down in the quota. How are you seeing growth play out this year in TSS in absence of that? Do you still have a strong backlog that's going to catch up to prior orders? And also, maybe if you could comment on the pricing environment and the mix environment. Will we be selling any more Freon? And would that affect the mix in a positive or negative way? Or is that destocking all done?

Great. Thanks for that. Yes. So as it evolves, as we've said, first of all, we still expect year-over-year growth in Opteon and in TSS. We -- as we get to the second half of the year, you're going to see more of a slowdown as we've talked about, because of the transition. But we see a lot of upside in the aftermarket as new equipment gets installed, and we have a really, really strong position in the aftermarket. When you think about Freon, as I said earlier, we see stickiness in our pricing and in our volumes because of our position in the auto aftermarket. So we feel very optimistic about the growth and our position for the rest of the year.

And as it relates to the margins, Arun, talked about a 30-plus margins in this business, and we feel very confident with that. Seasonally, Q2, Q3 tend to be seasonally the strongest margins, and we anticipate such again.

Our next question comes from the line of Pete Osterland with Truist Securities.

I just wanted to start on TT. So you called out the lower TiO2 sales in North America in the first quarter. It looks like sales were down 12% year-over-year in the region. Was that a reflection of underlying market demand, I guess, or anything to note from a customer inventory perspective? And just going forward over the next couple of quarters, what's your outlook for the North American market?

Yes. I mean going into -- actually coming into the year, we had projected this -- the volume actually, we and particularly in North America than we had anticipated. As we go into second quarter, we definitely see a step-up with the coating season.

Okay. And then just as a clarification on your free cash flow guidance being lowered to 20% from 25%. Does that represent anything other than the tax outflow from the Kuan Yin proceeds? I guess, any other cash headwinds that you hadn't previously incorporated?

Thanks, Pete. Yes, I appreciate you bringing this up. As you mentioned, yes, this is really just specific to the Kuan Yin land sale. We had taxes that are forecasted to be in operating cash flow, whereas the Kuan Yin proceeds going to be outside of free cash flow. So it's really just a presentation of those. But I will make sure to emphasize that 20% is a floor, right? We're confident in really generating upside here, and we'll continue to focus on that free cash flow generation of the company.

Our next question comes from the line of Duffy Fischer with Goldman Sachs.

Question on the new chlorine contract. One, is it more of a cost plus? Or is it a market minus type contract? And then two, if you look at it versus what you've paid over the last 2 or 3 years, is it a meaningful cost advantage for you when that rolls through?

Yes. Thanks for the question, Duffy. Yes, we can't talk about specifics of the contractual terms. But all I can say is this provides secure, reliable supply of chlorine at a very attractive rate. It secures our competitive position and it's very aligned with our drive to the left side of the cost curve.

Okay. And then on the Q1 slide deck, you called out $17 million of kind of onetime impacts that you thought were going to happen in TT. With that quarter now done, what was that -- did it come in at $17 million? Was it higher? Was it lower? Did some of that get pushed into Q2? Can you just talk about that?

Yes. Thanks, Duffy. Yes, I appreciate you bringing that up. That was really related to some ore mix items within the cold season at some of our plants. I would say the $17 million we saw come through. However, we did have some onetime benefits that came through as well. So we had less than the $17 million that we saw come through, but not too much of a quantum less.

Our next question comes from the line of Laurence Alexander with Jefferies.

This is Dan Rizzo on for Laurence. You mentioned that Freon is sticky. When you say sticky, is it for this year where it's some sort of restock? Or is it like a multiyear growth story? And I guess more importantly, can it provide some tailwind when the Opteon adoption kind of slows a little bit?

I'm sorry, can you ask the second part of that question again?

Well, I was wondering if Freon is going to be a multiyear growth story because as -- I mean, Opteon is still very strong, it will eventually peter out -- not peter out, but it will slow to a more, I guess, longer pace. And I was wondering if Freon could kind of augment that.

Yes. I mean we see a multiyear trajectory around Freon strength. So as we said, we always -- the way we run this business is managing quota and getting the best margins for CO2 equivalent. As I said, we have a very advantaged position in the U.S. relative to this product. And we have a good quota position. And we have -- our process is not impacted by some of the EPA actions. So definitely see this persistent.

And is the demand -- I mean -- and maybe a simple question, but is the demand coming almost entirely from auto aftermarket? Or are there other factors or other areas contributing?

Yes, it's really auto aftermarket. And I would say, if you look at even the trajectory of like ICE vehicles, there's a long tail for that. So that's how you can kind of think about that on sales.

Our last question will come from the line of Vincent Andrews with Morgan Stanley.

I'm just wondering if you could comment a little bit on the TiO2 market and what you think the impact to the market as well as to you will be from the restarts of the Venator assets. I guess there's one in Italy that's restarting and then LB seems to have gotten approval for the one in the United Kingdom. It's not clear exactly when that might restart. But what will -- I know Europe is not necessarily the biggest market for you, but what do you think it will do to the market? And how will you play around that?

Yes. I mean I think -- thanks for the question. I think there's definitely -- will be a small impact. We'll see how those assets start up. They definitely need some work to get started. So I think if anything, we would start seeing something maybe next year. But we feel, especially around, say, the U.K. asset, there's going to be -- I would say our biggest concern there is can that asset be used for pull-through of other Chinese volume, and we see the risk of that low. We have a lot of trade advocacy going on, making sure we're not -- there's no circumvention of antidumping tariffs and also really strengthening -- working with authorities to strengthen the rule of origin definition. So I would just say it's really not something that we see as a big impact. These are also very high cost to operate facilities.

Okay. And then, Shane, if I could just follow up on the cash flow. The fourth quarter, when you put out the 25% number, you obviously had announced the sale of the land. At the time, did you just think there was going to be a way to not incur taxes on that and then that didn't play out? Or just what happened there?

Yes. Thanks, I appreciate the question. I would say, as we announced that, I think we were fine-tuning the overall distribution plan out of Taiwan. We are going to carry with it. That said, we are -- we've announced net proceeds of $290 million here way ahead of time, right, as well as we're seeing net-net, probably more than we expected. We said net roughly around $300 million. I would say net, we're roughly in the $310 million range. So yes, the original 25% did not take into account that tax item. but it was more presentation. We anticipated that net item being kind of netted to the proceeds instead of being presented in operating cash flow.

Thank you. And I'm showing no further questions at this time. Ladies and gentlemen, this will conclude today's question-and-answer session as well as today's conference call. Thank you for participating, and you may now disconnect. Everyone, have a great day.

Good morning. My name is Carmen, and I will be your conference operator today. I would like to welcome everyone to the Chemours Company Fourth Quarter 2025 Results Conference Call. [Operator Instructions]I would like to remind everyone that this conference call is being recorded.

I would now like to hand the conference over to Brandon Ontjes, Vice President, Head of Strategy and Investor Relations for Chemours. You may begin your conference.

Good morning, everybody. Welcome to the Chemours Company's Fourth Quarter 2025 Earnings Conference Call. I'm joined today by Denise Dignam, Chemours' President and Chief Executive Officer; and our Senior Vice President and 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 The Chemours SEC filings. 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. During the course of this 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 evening. Additionally, we posted our earnings presentation on our website yesterday evening as well.

With that, I will turn the call over to Denise Dignam.

Thank you, Brandon, and thank you, everyone, for joining us. During today's call, I will begin by discussing a few recent developments across Chemours in addition to highlights from our recent performance. I will then turn it over to Shane, who will provide details around our outlook for the first quarter of 2026 and key drivers for the full year ahead. Finally, I will provide updates on our meaningful progress against our Path to Thrive strategy before taking your questions.

First, as we should in January, we have reached an agreement to sell our Kuan Yin site. Since the shutdown of our titanium dioxide operations at this facility in 2023, we've been actively decommissioning the site and preparing to sell the remaining property. I'm happy to report that the estimated net proceeds of $300 million we expect to receive from the landfill will make a significant impact in reducing our outstanding debt and support our continued progress towards lowering our targeted net leverage below 3x. I'm proud of our team's effort to get us to this point.

Additionally, I want to welcome Mike Foley as the new Business President of TT. And joining Chemours, Mike brings extensive leadership experience in the chemicals industry, running multiple business units with experience centered on operational excellence. As an established leader, I'm confident that Mike will continue to drive improvements in our titanium dioxide business staying true to our value-based commercial strategy, strengthening reliability across our asset base and advancing our long-term cost position initiatives.

Turning to our fourth quarter results. We are pleased with the robust cash flow generated and the ability to drive sales performance within our expectations. Net sales met expectations largely due to TSS achieving record sales driven by continued strong Opteon adoption and consistent commercial performance across all divisions. We posted solid earnings overall. However, for the APM business due to near-term end market weakness, we shifted our focus to promote cash flow as the quarter progressed. -- resulting in certain noncash charges and the sale of certain products to reduce inventory levels. These decisions enabled us to make meaningful steps towards driving cash flow while setting a foundation for improved earnings as we get deeper into 2026. While these incremental costs resulted in us just missing the low end of our earnings range, we are pleased with our ability to generate strong quarterly free cash flow of $92 million, which we believe is more reflective of Chemours' longer-term cash generation potential to drive value for our shareholders.

With this background, I'd like to provide some additional context on our business level performance. Our TSS business reported a fourth quarter record for Opteon sales with double-digit growth of 37% compared to the prior year quarter, in line with our expectations. Overall, TSS' top line increase was primarily due to higher pricing and moderate volume increases, supported by a favorable mix for Opteon refrigerant blends driven by the U.S. AMX residential HVAC equipment transition and opportunistic sales for certain Freon refrigerants. This could not have been achieved without the TSS team's excellent commercial execution, which resulted in new sales opportunities and efficient use of our quota allowances.

TSS had record annual sales in 2025 despite a year with subdued shipped HVAC units in the residential stationary OEM market. Additionally, these efforts led to overall annual Opteon refrigerant growth of 56%, making up 75% of total refrigerant sales in 2025, up from 56% the year before. top line success helped to drive annual adjusted EBITDA margins of 32%, up from 31% in the prior year. Despite additional costs of approximately $22 million in liquid pooling and next-generation refrigerants R&D investment over the same period.

Moving to TT. In the fourth quarter, the TT team had strong execution with our top line performance results coming in line with our expectations and our adjusted EBITDA remaining ahead due to stabilized pricing and cost performance. While we continue to operate in a more tepid global market experiencing volume seasonality in certain key markets, we have maintained a strong result in implementing our pricing efforts across all key end markets. To these efforts and our pricing announcement in December, we experienced pricing stability between the third and fourth quarter, laying the groundwork for continued pricing strength in 2026. We are confident in our conviction of our value-based commercial strategy and remain resolute in this approach. Our overall objective to drive improved operational and longer-term cost performance remains unchanged.

Consistent with that, we shared in the third quarter we have calibrated our production expectations to be more closely aligned with anticipated market conditions, and we continue to challenge what we can control. including improvements on all our costs while continuing to prioritize cash flow generation in the business. As part of our recent strategic portfolio management initiatives for TT we commenced a restructuring of our mining operations in early January, including the temporary idling of 1 of our mines in North Florida and transitioning to a third-party earthmoving contractor. This revised approach will support our overall cost efforts and promote improved cash generation.

Shifting over to APM. While our cash flow driven changes weighed on our earnings results this quarter, the decisions we made strengthened our cash generation, even as we navigated headwinds in certain cyclically sensitive end markets, notably in auto and industrial construction, which we believe will stabilize as we get into early next year. Entering the first quarter of 2026, the APM business in Performance Solutions observed a strengthening order book, particularly within the semiconductor sector, which shows preliminary signs of recovery. Additionally, growth was noted in data center materials and other key end markets. In January, Washington Works, a key manufacturing facility experienced a disruption that necessitated a temporary shutdown, limiting our capacity.

This event was traced to equipment affected by a local utility service outage in August, which is integral to our fluoropolymer supply chain and involves complex chemical processing technology. Although operations have now resumed the unplanned outage coincided with challenging winter weather resulting in delays to the restart. Our strategy has always included additional work on these assets and for Q1 of 2027. Despite less an ideal earlier timing, these efforts are critical to ensuring long-term reliability and establishing operational stability to meet improving demand for APM's Performance Solutions products.

Lastly, I would like to briefly address corporate level performance, which demonstrated a significant decrease in expenses compared to the same quarter last year. This cost reduction reflects ongoing efforts in expense management and underscore the progress achieved through our operational excellence pillar as part of the Pathway to Thrive strategy.

With that, I'll turn it over to Shane to walk through our first quarter outlook and key drivers for the full year 2026.

Thank you, Denise, and good morning, everyone. As was shared in the earnings materials available on our investor website, I now would like to discuss our expectations for the first quarter and factors that will drive our business as we look ahead.

Beginning with TSS. For the first quarter, we project net sales to rise sequentially in the mid-20s to 30% range, primarily attributable to favorable seasonal trends and continued growth in Opteon refrigerants, where we are also forecasting a sequential increase of 30% to 40% in the first quarter. This sustained double-digit Opteon refrigerant expansion is expected to be driven by the continued regulatory adoption associated with government mandates under the U.S. AIM Act.

Adjusted EBITDA for TSS is also anticipated to grow sequentially, ranging from $170 million to $185 million, also driven by seasonality and the continued transition to our Opteon stationary refrigerants. As we look beyond the first quarter, we expect year-over-year double-digit growth for Opteon refrigerants to continue into the second quarter of 2026, but will then begin to normalize to more typical seasonal patterns in the second half of the year as year-over-year comparison points will reflect the regulatory-driven market demand we saw in late 2025.

Additionally, we believe that pricing strength stemming from favorable pricing mix for Opteon blends and opportunistic pricing in free on refrigerants will continue into 2026. Also, we expect benefits from cost out efforts throughout 2026, including our recent Corpus Christi capacity expansion, which will be partially offset by increased raw material costs primarily due to R32, a key component of our stationary preference.

Overall, we anticipate that the confluence of these factors will underpin strong sales and earnings growth for TSS in 2026, with consistent overall margins compared to that of 2025. For our TT business, we expect sequential net sales to decrease in the low to mid-single-digit percentage range in the first quarter. In our recent reporting, we split out our mineral sales from our TiO2 pigment sales to provide greater visibility in line with recent strategic decisions. In the first quarter, we anticipate that our mineral sales will be down 60% sequentially driven by sales timing and the impact from the recent changes in mining efforts while our TiO2 pigment sales are expected to be down in the low single digits.

The slight anticipated decline in TiO2 pigment sales during the first quarter is due to weaker seasonal volumes in non-Western markets, which will offset the volume increases we expect in Western markets. supported by our global pricing efforts as highlighted in the previous quarter across all of our regions. Our global pricing improvement is driven by our pricing announcement in December of last year, which we have seen signs of strong adoption globally as we continue to demonstrate our value-based commercial strategy within our TT segment. It is our expectation that overall average global pricing for TiO2 pigment should be generally in line with the prior year quarter.

For the first quarter, we expect TT's adjusted EBITDA to be between breakeven and $5 million. This low level of EBITDA is due to the timing of mineral sales, paired with an additional approximately $17 million of net costs we expect in the quarter tied to inventory and ore mix as well as overall impacts from low plant utilization. The combined force of these near-term impacts is expected to result in higher net costs for the quarter. However, TT is positioned to grow earnings and cash flow during the year.

Beyond the first quarter, we see a year where our top line will be driven by positive TiO2 pricing trends across regions and stabilized volumes in Western markets, followed by non-Western markets as the year progresses. For pricing, we've already seen expected increases start to take form through stabilized Q4 pricing, which has reflected growth into 2026. Our portfolio and operational initiatives will continue to drive improved earnings as the year progresses with a clear realization of important cost savings efforts becoming more visible, further underpinned by improved cash generation.

Now for our APM business. In the first quarter, we expect net sales to decrease in the high teens percentage range sequentially due to sustained market weakness, combined with customer timing and constraints from the Washington Works outage. Adjusted EBITDA is projected to range from breakeven to $5 million. primarily due to the previously referenced outage at the Washington Works facility. This outage is expected to result in a negative impact of $20 million to $25 million for the quarter, with most of this effect attributable to restricted sales associated with the facilities interruption.

As Denise noted earlier, the plant has returned to normal operations and will be a key contributor to the improved earnings we anticipate in APM throughout the rest of 2026. Specifically, we see a return to more profitable quarters for APM after the first quarter of 2026, with progressively improved sales and earnings as we move further into the year. While the overall top line will include lower net sales due to closure of the Advanced Materials SPS Capstone line in 2025, and we plan to replace those lost sales with an increase of specialty-focused Performance Solutions products with higher bottom line contributions.

Although we are facing constraints from our outage, demand remains strong in the semiconductor and data center end markets, which are driving current and anticipated sales growth of our Performance Solutions products. These are sectors where we see tremendous inroads for APM's chemistry to help enable the growth and adoption of artificial intelligence across global economies. While we expect some negative cost effects to carry over slightly into our second quarter, we plan to counter these through increased operations at our Washington work site and the increased realization of existing and continued cost reduction efforts as production improves.

While the year did not begin as we had planned, we are confident that APM will finish strong in 2026 as we work to recover lost volume on our plant circuit at elevated levels and continue to drive commercial and operational excellence. Through these initiatives, we anticipate adjusted EBITDA to be slightly higher than 2025 levels, while cash generation will see meaningful improvement. On a consolidated basis, we anticipate our first quarter net sales to increase in the range of 3% to 5% sequentially with consolidated adjusted EBITDA expected to range between $120 million to $150 million.

Also, we anticipate corporate expenses to range between $45 million and $50 million. Our capital expenditures for the first quarter are expected to be in the range of $50 million, with free cash flow reflecting a use of cash not to exceed $100 million. For the full year 2026 at a consolidated level, we anticipate overall net sales growth to be between 3% and 5% and adjusted EBITDA to range from $800 million to $900 million, primarily driven by increased TSS and APM Performance Solutions demand, expected pricing strength in TT and further benefits of more pronounced cost realizations in TT and APM throughout the year.

Additionally, we expect capital expenditures to be between $275 million and $325 million, with free cash flow conversion to be above 25%, supported by improved earnings and working capital improvements that we expect to realize as the year progresses.

As we advance into 2026, we remain committed to executing our Pathway to Thrive strategy, and are focused on prioritizing a platform of robust cash flow generation annually going forward via various initiatives across all areas of the company. We view these cash flow efforts to be based in driving clear performance goals across our cash conversion cycle, which we are already seeing take for. These initiatives will take time to fully implement, but we believe improved cash generation in 2026 serves as a starting point where we anticipate further free cash flow expansion in the future. Through these efforts, coupled with approximately $300 million in net proceeds from the sale of our Kuan Yin facility, which will be used to reduce our debt. We anticipate our net leverage ratio to be below 4x adjusted EBITDA by the end of 2026. This is a key milestone that further positions us to achieve our long-term objective of a net leverage ratio of below 3x adjusted EBITDA across economic sites.

Given these perspectives on the first quarter and full year 2026, I'd like to now hand the call back over to Denise to share her thoughts and perspectives on our strategic execution under Pathway to Thrive. .

Thank you, Shane. As we look ahead to 2026, it is important to build upon the substantial strategic progress achieved in 2025. Our Pathway to Thrive strategy remains central to how we make decisions allocate capital and conduct our business operations, and I believe our team has demonstrated notable success in delivering results across every pillar of the strategy. Starting with operational excellence. We continue to advance the disciplined work in driving cost out and making meaningful step-change improvements in how we operate. We fulfilled our commitments for 2025, delivering at least $125 million of gross controllable cost savings. While these efforts have been more visible at the corporate level and through SG&A, we believe that this work will become more clear as operational levels improve, primarily across our TT and APM businesses this year.

In the case of TSS, our focus on operational excellence and controllable cost improvements has been concentrated around the completion of capacity expansion efforts at Corpus Christi. This expansion represented a sizable capital investment made in late 2024 and has established a foundation for TSS to further vertically integrate and reduce reliance on third-party YF purchases. While this has provided benefits in 2025, over time, this will provide a substantial cost upside for TSS in support for increased customer demand in connection with the global low GWP transition.

More recently, we formally rolled out the Chemours business system, which we have established to embed lean principles to reduce waste and drive increased productivity across the organization. Our team is energized by this effort, which we are already actioning across our manufacturing circuit. Our enabling growth pillar is where we continue to demonstrate the strength of our market positions and the value of our innovation. As we've shared, TSS delivered another great year, breaking quarterly records as adoption of our Opteon refrigerant accelerates.

We also made meaningful progress towards commercializing our 2-phase liquid cooling solution, including the qualification of our fluid by Samsung Electronics and the start of a manufacturing agreement with [Navin] Flooring where we are targeting initial commercial production in the third quarter of 2026. Public and next-generation refrigerant growth opportunities reflect important ventures serving as long-term growth opportunities, where we look to continue to invest at a rate of roughly $5 million per quarter. These ongoing investments also contribute to expanding our overall presence in high-value data center and semiconductor end markets, where we are experiencing sustained growth and continued order book strength in APM's Performance Solutions products, particularly in high-purity PFA sales.

Furthermore, we anticipate that TSS' double-digit data center growth achieved in 2025 will persist and serve as a catalyst for increased refrigerant sales. Across our businesses, we are sharpening commercial effectiveness and investing selectively where our differentiators position us to win and support long-term growth.

Turning to portfolio management. We made decisive progress across the portfolio to drive significant economic value to Chemours. Outside of the Kuan Yin site sales, and the restructuring of mining efforts in our TT business, we continue to advance our European asset review, which will extend into 2027. After completing the APM SPS Capstone business exited 2025, we are now announcing the closure of our Real Estate Paul site in France, originally intended for additional hydrogen development. This decision aligns our industrial operations with current market demand.

Moving now to the significant progress made under our strengthening the long-term pillar, which includes reaching a proposed judicial consent order with the state of New Jersey. This milestone provides greater clarity for our stakeholders and reflects our continued commitment to advancing measurable progress in resolving legacy liabilities in close partnership with our MOU partners. With responsible manufacturing at the center of how we deliver essential chemistry, we also reported strong progress against our 2030 corporate responsibility commitment goals. At the same time, independent government level assessments, including from the EU Industry Research and Energy Committee and the U.S. Department of are reinforce the essential role fluoropolymers and gases play across critical industries.

Building on Shane's remarks, our recent efforts have positioned us to generate more cash with our previous working capital headwinds clearly behind us. Going forward, we aim to grow earnings, improve free cash flow conversion and continued deleveraging. As we close out 2025 look ahead to our opportunities in front of us, I want to emphasize that Chemours is focused on executing with discipline across every pillar of pathway to thrive, and we believe by remaining dedicated to doing the hard work now that will provide strong returns to our shareholders through long-term stable value creation. The progress we've made gives me great confidence in our trajectory.

I want to thank our employees for the focus, resilience and commitment they have demonstrated throughout 2025. With the talent, technology and portfolio we have today, and the clarity of strategy guiding us and confident in our ability to deliver for customers, communities and shareholders in 2026 and beyond. Thank you for your continued support.

With that, I'd like to open the line for your questions.

[Operator Instructions] Our first question comes from Pete Osterland with Truist Securities.

I just wanted to start on the TT segment. Could you share some more detail on the assumptions for TiO2 volume growth that are embedded in your 2026 guidance? What do you expect the global industry to grow volumes at this year? And how would you expect your volume growth to compare to the industry average?

Sure. Peter, thanks for the question. I would say our outlook is that demand is stable and there's not major demand triggers. Our outlook is really based on -- we announced a price increase in December we've seen, I'll say, strong yield of that price increase. We talked about flat pricing from Q3 to Q4, flat year-over-year pricing as we head into Q1 and we feel really good about that. So that's kind of how we see it progressing stabilized demand with our pricing power.

Great. And then just switching gears, I just wanted to follow up on your comments on your legacy liabilities. Do you have a lot of sight for meaningful progress towards resolving what you have left during 2026. Any key items or dates to be watching out for this year that you could share?

Sure. We've made significant progress in the fourth -- our fourth pillar, strengthening the long term. And we're really proud of the work that was done in -- with New Jersey, really kind of laid a framework and hopefully, you can see how we're going to progress going forward. The 2 other areas where we're focused and continue to make progress is in our West Virginia facility as well as in North Carolina. So I would expect to hear additional information relative to those facilities as we progress the year.

Our next question comes from the line of John Roberts with Mizuho. .

It seems like there are a lot of mix effects running through the APM segment. Maybe you could peel apart some of the different end markets there to let us know how much some are down and where some of the strength is?

Yes. Thanks, John. I mean as we said in my prepared comments, things like auto, industrial production, those things are down. But -- there's a real opportunity in our Performance Solutions portfolio of products. If you think about PFA and the expansion that we did in our Teflon product line, there's a lot of demand related to the AI search and the build-out of data centers which is also building out the semicon and all of the demand for additional memory that those chips will need. So it's really, I would say, in those -- in that area really a pull on the AI side.

And my understanding is there's still some more maintenance to be done in 2027 on washing works. Why not pull all of the 2027 maintenance until whatever downtime you've got here in the March quarter of 2026?

Yes. Actually, thanks for the question. All of the -- we have regular turnaround. So that's something that happens every 3 years at our site. So we had already had that plan for the beginning of next year. We actually pulled all the maintenance related to the situation, the disruption in January forward. So we've actually taken scope out of that turnaround. There's still more work to do. It's just a regular turnaround. But yes, we have pulled that forward. And really, our decision was we wanted to have really reliable operations and to make sure we did not -- that particular issue that hit us last summer did not continue to pull it down. We really wanted to make sure we had stable operations. So I would call it more of the turnaround more of a tune-up versus significant maintenance work that would drive stability.

It comes from Arun Viswanathan with RBC Capital Markets.

I guess my first question is just on the Q1 and the full year guide. So the midpoint for Q1 is 135, looks like the full year midpoint 850. Maybe you can just talk a little bit about how -- what are some of the bridge items as you move into Q2? I imagine, obviously, there's seasonality for both TSS and TiO2 that's pretty pronounced in Q2 and Q3. But I guess I'm just curious what else we should think about or some disruptions that you had last year in the middle of the year as well. Obviously, is it your assumption that those don't repeat. Maybe you can just understand how you plan to see that uplift from, say, the 135 to maybe a $200 number or so for the middle of the year.

Thanks, Aaron. Yes, we have full confidence in our full year guide. As I said in the prepared comments, we expect earnings growth in all 3 of our businesses. I'm going to turn it over to Shane to give you a bit of the walk.

Arun, so specific to kind of -- you got the midpoints right in Q1 and year-end guides and then you really -- as we look at Q2, right, just thinking through what happened in Q1, we are looking at low ranges of 0% to 5% in TT and APM that is inclusive of some, what I'll call, unusual items specific to APM, we had the Washington Works outage of roughly $20 million to $25 million of an impact. And then for TT, we had roughly $17 million of inventory and really mix areas around the ore. So as you think about that with the midpoint of the guide in the first quarter, the $40 million in addition to that onetime it's going into next year or going into the second quarter, it's a good start.

Then as you pointed out, it's really seasonality. It's really strength in our refrigerants and Opteon business. It's getting the price in the fact that Denise had earlier talked about in TT and continuing that momentum as well as pricing over assess. And we're going to continue to control what we can control across each one of our businesses and getting cost out across on that side, which is going to progress as the year goes on as well.

Great. And then as a follow-up, just on the free cash flow, you noted that, obviously, your teams did a lot of good work in Q4 to harvest some of that, especially in -- could you just maybe walk us through, I guess, Denise, you may have mentioned that $92 million is more reflective of the quarterly run rate of cash flow generation. So is it also the implication is that you feel comfortable that free cash flow could eclipse $300 million or $350 million as you go through the year?

Yes, Arun, why don't I take that one. First of all, I'm very proud of the team of what we've done in Q4, ending the year driving free cash flow over our high end of the range. As we look ahead, Denise talked about the normalization thinking through what the cash generation capabilities of this business are, we're really thinking that as reflective of the full year. As you probably know, right, we are seasonal as it relates to working capital. And I mentioned in my script that in Q1, we don't anticipate over $100 million of outflow, but we do anticipate an outflow in Q1 given working capital seasonality.

But for the full year, we wholeheartedly stand by the above 25% free cash flow guide, and we feel comfortable attaining that. So really excited for the capabilities of the team and really driving through cash conversion through unlocking further working capital and really hitting the mark on earnings to generate that cash flow in '26.

Our next question comes from the line of Duffy Fisher with Goldman Sachs.

First question is on TT. Can you walk through the 3 geographies that have some antidumping activities going on in India, Brazil and Europe? And just -- what have you seen in those areas already from those antidumping actions? And what do you think is still left on the come for the Western players?

Duffy, thanks for the question. I mean we see that there is -- we're seeing benefits from the antidumping duties. If you look at Brazil, we see really high duties really good market for us out of our Mexico facility. So really feel very good about that. India, I'm sure you know, there's been a little bit of back and forth. We're confident that those duties are going to come back, but it's just a process that has to come through. We've seen in Europe that, obviously, we've had some uplift in Europe there has been some currency changes since this dumping went in, which gives some benefit to Chinese producers, but it's not anything that is going to dramatically change our view of Europe.

Fair enough. And then jumping to TSS, can you walk us through what impact has kind of the bringing online of Corpus Christi been either increased costs? Is it ramping -- and then what's left as far as benefit as that plant fully fills out?

Yes. So what we talked about in our -- before with TSS is that it was going to be a 2-year ramp. So you could see last year, we talked about improvement in margin that comes from cost out as well as price. So we saw -- started seeing some improvement last year. The second half of that facility will be ramping up this year. So we will continue to see improvement there. The technology we have is the lowest-cost technology in the world. So we feel really good about the tailwinds that we're going to get from that facility.

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

You have James Cannon on for Josh. I wanted to touch back on the ore mix impact that's flowing through in TT this quarter. I know there's some noise around some legacy purchase contracts. And I was wondering I think the last 1 of those continues to run through, I think, this year or next year. Is any of that something that we should be modeling continuing? Or is it something that should be contained in the first quarter?

Yes. I would say that for the first quarter, the change in our mix was really related to the winter interruption and the need to consume higher grade ore. Definitely, as you've said, we had 2 contracts, long-standing contracts that were unfavorable. One is completed, 1 is finished, and we're working through the second contract right now. we have laser focus on our input cost in the TT business. So you will continue to see that improving over the year. We also talked about our restructuring that we've done in our mines in -- by taking down 1 mine, it's all aimed towards lowering our input costs. One of the primary costs that go into our plants and actually a competitive advantage for us.

Okay. Got it. And then on the -- just a follow-up on the Freon side. It seemed like you called out some opportunistic sales that drove a pretty solid sequential in the quarter. My math gets me to a first quarter guide that has continued growth there. Can you just talk through what you expect on that side of the business without the transition happening this year and new step downs as far as I'm aware.

Yes. Thanks for the question. We're pretty happy with some of the tailwinds we saw in the fourth quarter related to the Freon business. As we look ahead, in my script, I mentioned really thinking through the tailings of pricing around both Opteon and Freon, and we can look at '26 and see that continuing. So we're really proud of both the execution on the Opteon side and Freon side in '25, and we'll continue to execute and grow in both next year.

Our next question comes from the line of Hassan Ahmed with Alembic Global Advisors.

Just wanted to revisit some of the questions asked earlier on TT. Particularly as it pertains to you guys as volumes, you obviously reported volume declines in Q4 and the volumes aren't looking that great for Q1 as well. And I'm just trying to sort of think through the antidumping duty side of things, the 4 countries, large regions, in particular, where those antidumping measures have been announced. I mean if I sit there and think through for lack of a better way of putting it, the volume that is up for grab, it's around 800,000 tons, right? So I mean, what is baked into that $800 million, $900 million EBITDA guidance that you guys have given in terms of any potential antidumping related market share gains for you?

Yes. Hassan, thanks for the question. When you think about us in TT for the year, we're really focused on executing on our price increase. And I know you're smart, and you can figure it out, kind of put the pieces of the puzzle together. We are really focused on our pricing. Our pricing was a global price increase all regions, there's no mix impact. So while we talk about the duties and they clearly have been helpful, we are really focused on delivering value and creating value for this business through our pricing efforts.

But I mean, just any sort of guidance in terms of the market may typically grows at 2% to 3%? I mean, will you be in line with the market? Will you be better than the market in terms of volume growth?

Yes. We are projecting a stable market. I don't think anyone sees any big reason to expect significant growth. Again, we're focused on value and our pricing and with stable volumes. Maybe I'll kind of take it up a level 2. We have -- I talked about seeing growth in our businesses throughout the year. we're super proud of what was accomplished with our TSS business. We are coming off a record quarter, a record year, strong foundation. If you look at what we've been able to do, we have a leading market position with OEMs in the aftermarket -- and we're really close to our customers. And we are very, very well positioned for growth this year in TSS. Additionally, as we talked about with APM, as we look at the AI trend, we also see great opportunity for growth there as well.

Understood. And as a follow-up, Denise, if you don't mind, just sticking to the TT side of things. I mean a lot of folks you guys included, had talked about 1.1 million tonnes of capacity rationalizations since 2023. Are you guys still comfortable with that figure? And what are you guys seeing in terms of potential rationalizations in China on the back of anti involution?

Yes. I mean we're so confident in that. I mean, those announcements were made, they're all public. We feel we feel confident in that. As far as additional with anti evolution, I really can't speak to that at this point. We don't know that we've seen much more than that.

Our next question comes from the line of John McNulty with BMO Capital Markets.

This is Caleb on for John. I was just hoping you could provide a little bit more color on what would get you to the high end of the range and the low end of your range for the full year?

Sure. Thanks, Caleb. As I think about the range of possibilities here, I think it really depends upon a couple of things. The high end, depending upon market evolution how the actual economic returns comes. -- if there's further rate cuts, for instance, and that really has impact on the overall market. I would say the other parts on the high end is really just overall cost out and thinking through where the net inflation and cost improvements go side.

I would say then finally, would be really continued execution on the pricing side and broader adoption across the businesses. I would say, on the low end of the range, continue to thinking through the cost inputs and thinking through if there's additional costs that we're not seeing right now as we kind of evolve throughout the year. I would say on the opposite side of what I just said, if there's less price receptivity going through there. And then I would say on the other areas is if there's any thoughts around volume depression on the adaptation right side.

Yes. Maybe I'll just add on to that. I think we've been -- we're focused on things we can control. So I would say the market would be the really a key variable in that.

Okay. That's helpful. And then for TSS in the -- over the past couple of years, you've seen the benefit of the AIM act and then the H2L transition. Going forward, how do you see the growth algorithm for that business kind of playing out? And especially relative to your previous commentary for like mid- to high single-digit sales growth over the longer term.

Yes. Thanks for that question. So I would say coming into the first part of this year, we still see significant growth from HFO transition, whether it's additional units the mix of HFC versus HFO units that get sold as well as replenishing inventory that was drawn down in the fourth quarter. So we see that through the first half of the year. One thing to keep in mind is this is a pretty depressed market when it comes to the residential segment. So we see as new units are put on and as the housing market picks up, we see substantial growth there. So we will continue to grow in line with the residential segment. But the other areas to focus on our growth in data centers and chillers and some of the other spaces where we participate.

Our next question comes from the line of Vincent Andrews with Morgan Stanley.

I just kind of want to follow up on that a little bit. Could you talk about what your residential HVAC customers are doing. It seems like they're reducing production for various reasons. Is that leading to a destock from you? And can you help us understand how much of that mix -- how much of your mix that is now versus other parts of the TSS business, whether it's data centers or aftermarket and how much of those are going to contribute this year volumetrically?

Yes. Thanks for the question, Vincent. Yes. I mean, first of all, I want to say that we have -- hopefully, we've established a lot of credibility in this business to this point and what we see going forward. I kind of laid out what we thought was -- what we believe is going to happen as we enter this year. So we do see our customers Actually, inventory was drawn down in the fourth quarter. So we do see some of that coming back in the first half of the year as well as the -- the HFC to HFO transition of the mix of what gets sold to customers. We also see on that, the aftermarket that comes with those installations. So we see solid growth, especially we'll talk about the first half double-digit growth for this space.

Okay. And Shane, if I could ask you on the cash flow, the target to do at least 25% conversion this year. What are the things that are inhibiting you in 2026 from doing better than that from getting up to, say, 40% or 50% conversion. I noticed there were some line items for full year '25, whether it was an inventory build or your payables went down a couple of hundred million dollars and also a fair amount of movement in the crude liabilities and other liabilities, which I know is below the working capital line. But maybe you can just help us reconcile some of the important lines on the cash flow statement this year? And what's going to help you year-over-year and what's going to inhibit you?

Yes. Thanks, Vincent. First, we put out at least 25%, and I really feel comfortable with that, and we will obviously strive to be more than 25% as we go forward into '26. Specific to the areas that I will keep in mind, it's story a lot is around inventory and getting our DIOs improved. We do -- earlier, there was a question around contracts and TT that are going to wane through the year. Unfortunately, that is a headwind coming into the year because that is mandated high-grade ore that we had to fight against, but we feel very confident, even though we will have additional ore put on that throughout each 1 of the businesses will have inventory reductions outside of that.

So I think the inventory is a big story. I think navigating, as you just mentioned, other areas around cash conversion and driving up DPO as well as being efficient on the collections is certainly areas that we'll focus on. And then going forward, I really feel that the CapEx in this company is going to increase year-over-year, but that's really around -- we talked about planned maintenance activities or in the year. So I think it's going to kind of impact our free cash flow in a given year compared to last year as well.

So all in all, I think really the story here is we're control what we control, really confident in that 25% number and really will drive ahead to get them even more into the year.

One moment for our next question. It comes from Jeff Zekauskas with JPMorgan.

In the titanium dioxide segment, actually, your revenues in North America and in Europe were flat to up, the issue was in Asia, where for the year, your revenues went from roughly $660 million to $465 million. So you're down 30% in Asia. What happened in Asia? And where is that business going?

Yes. So I mean, as we've talked about, our strategy is we're focusing on the fair trade markets, and there's been in India in particular. So I mean, that was a trend that was happening for us as we move towards the fair trade market. And India, there was a pullback on the tariff. So -- as I said, we're confident it's going to come through, but I'll say it's temporary.

Okay. So secondly, there's a focus on free cash flow generation. And basically, if you look at Chemours from, I don't know, 2019, your inventories used to be $1.1 billion, and now they're $1.6 billion, and even this year, they're up 7%. And your revenues over that from 2019 to 2025 were up about 5%, inventories are up 50%. What's all that inventory? Is it titanium dioxide? Is it something else? Why do your inventories keep growing? And what can you do about it?

Thanks for the question, Jeff. I think certainly, it's -- obviously, we are carrying more inventory than we need right now from that side and we'll own to that. When you look at back to 2019, as you mentioned, we're different business right now. As we think about TSS with Corpus Christi up and running in other areas. So you can't really look at the past trends, but I own up to the fact that their inventory is an area that we are concerned reduce. Certainly, as I mentioned earlier on the call, we have contracts to take-or-pay contracts with a high or that is areas that we don't necessarily need, but we can use so that some of that that's put on there.

But I would say across each 1 of the businesses that we're carrying too much inventory and we have stretch goals in 2016 and beyond to get it back to more normalized levels on that area.

So we have reached the end of our Q&A session. Thank you for joining the Chemours Fourth Quarter 2025 Results Conference Call. You may now disconnect.

Good morning. My name is Gigi, and I'll be your conference operator today. I would like to welcome everyone to The Chemours Company Third Quarter 2025 Results Conference Call.

[Operator Instructions] 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, Head of Strategy and Investor Relations for Chemours. You may begin your conference.

Good morning, everybody. Welcome to The Chemours Company's Third Quarter 2025 Earnings Conference Call. I'm joined today by Denise Dignam, Chemours' President and Chief Executive Officer; and our Senior Vice President and 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 filings. 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.

During the course of this call, we will 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 evening. Additionally, we posted our earnings presentation and prepared financial remarks on our website yesterday evening as well.

With that, I will turn the call over to Denise Dignam.

Thank you, Brandon, and thank you, everyone, for joining us. During today's call, I will begin by discussing highlights from our third quarter performance, and we'll then turn it over to Shane, who will provide details around our outlook.

Finally, I will provide updates on meaningful progress on our pathway to 5 strategy along with strategic developments before taking your questions. For our third quarter performance, we exceeded our adjusted EBITDA expectations despite the persisting macroeconomic weakness that affected some economically sensitive sectors of our business. Our stronger earnings were driven through diligent commercial execution in stationary aftermarket sales of Opteon refrigerants under the backdrop of the 2025 U.S. AMX stationary equipment transition. Further supported by lower corporate costs. While we had highlighted some anticipated operational disruptions heading into the third quarter, these issues are now resolved, aided by our manufacturing center of excellence enabling quicker response and enhanced issue mitigation.

Now turning to each segment's performance in the third quarter. Starting with TSS. Our TSS business reported another quarter with results exceeding earnings projections as Opteon sales maintained double-digit growth of 80% compared to the prior year quarter. This marks a third quarter record for Opteon sales. The increase in Opteon was primarily due to higher pricing and volume associated with sales into the stationary aftermarket in connection with the U.S. AMX residential and commercial HVAC equipment transition this year. Throughout this transition, the TSS team displayed its focus on commercial excellence, capturing sales opportunities while making efficient use of our quota allowances.

As a result of the achievement, Opteon refrigerants now account for 80% of total refrigerant sales an increase from 58% in the previous year. TSS' excellent commercial discipline drove earnings performance and a 35% adjusted EBITDA margin underscoring the strength of our differentiated portfolio and ability to capture profitable growth tied to the regulatory transition. This earnings performance also reflected some higher-than-anticipated onetime costs associated with continued investment to commercialize our liquid cooling product. The latest notable achievement in this journey being the reason successful technical qualification of our 2-phase emergent coin fluid by Samsung Electronics.

Altogether, this was an industry-leading performance from TSS, outpacing our third quarter adjusted EBITDA expectations and setting a solid foundation as we head into the fourth quarter and next year.

Turning to APM. APM also drove solid top line performance for the third quarter, which ensured earnings performance was in line with our expectations. Washington Works was back up and safely running by mid-August following the external utility disruption due to the diligent response effort from our site team. In addition to driving expected earnings results, the APM business continued to make notable progress to execute upon our portfolio management efforts, completing the shutdown of the SPS Capstone product line during the third quarter.

Adding to this strategic execution, the APM business also announced an agreement with SRF Limited in India to support needs for essential applications. This partnership positions our company to benefit from a more flexible and robust operational footprint while providing optionality to better serve our dynamic customer base.

Moving to TT. In the third quarter, TT delivered overall results below our expectations, primarily due to sustained macro weakness across the global TiO2 market. In our key western markets, we experienced seasonal trends compounded by some near-term destocking that was partially offset by some sequential pricing strength.

In these Western markets, we view this destocking activity as short term as customers look to preserve cash as they navigate uncertainties in exiting the year. Alternatively, in our non-western markets, sequential pricing weakness was offset by sequential volume strength. Despite challenges in the broader market, our team demonstrated resilience while effectively addressing anticipated disruptions. Through our efforts, we are now well positioned to minimize future disruptions and respond proactively to external factors that may arise. While the broader market has yet to indicate improvements, we remain steadfast in our pursuit of a value-based commercial strategy.

This approach is aligned with the higher product quality that we provide to our customers and is reflective of the competitive advantages that we provide in reliability, customer service and sustainability. In line with this approach, in the fourth quarter, we recently communicated a global pricing increase, which is reflective of our value in the market. As we look at global market capacity, during the third quarter, we continued to see capacity rationalization of Chinese production and other western producers as the market continues to realign to a weaker demand environment.

While it is clear that exports of Chinese products continue, albeit at lower rates than last year, much of this inventory continues to be exported to Southeast Asia, the Middle East and Africa and parts of Latin America. In light of this, we are seeing the recent fair trade actions in Europe holding strong, but with additional supply in the market due to excess inventory from a Western producer's inability to continue operations in the third quarter. Also, we are pleased to see finalized fair trade actions taken in Brazil and the Kingdom of Saudi Arabia.

However, Note that it will take some months for the existing oversupply of titanium dioxide inventory to work its way through the system in these markets. We believe these changes in the global supply environment provide longer-term opportunities in Western markets, but they are more muted in the near term due to the continued macro weakness and additional inventory in the system. I will provide additional perspectives on our strategic progress and our path for TT after Shane shares an update on our guidance for the period ahead. At the corporate level, we continue to make progress against our underlying cost structure, while it did incur some slightly more favorable cost partially due to the timing of certain legal spending, a portion of these lower costs are due to the continued cost efforts that the company has executed over time.

With that, I'll turn it over to Shane to walk through our outlook.

Thank you, Denise, and good morning, everyone. As shared in our earnings materials as well as the supplemental prepared financial remarks available on our investor website. I would like to now discuss our expectations for the fourth quarter and as we look ahead.

Beginning with TSS. For the fourth quarter, we expect net sales to decrease sequentially in the high teens to low 20s percentage range, driven by traditional seasonality with continued double-digit Opteon growth. This option performance is anticipated to more than offset declines in our Freon business year-over-year. TSS' adjusted EBITDA is expected to decrease sequentially, ranging between $125 million and $140 million, also driven by seasonality. As we made progress on our next-generation refrigerants and liquid cooling solutions, we anticipate continued investments to support our commercialization and product sampling efforts.

Similar to the $22 million in cost we saw this quarter, reflective of some onetime production-related costs, we expect another $8 million in the fourth quarter, burning our full year estimate of product development cost to approximately $40 million. As we look ahead into next year, we anticipate that we will continue to achieve double-digit year-over-year Opteon growth into the early part of the year as OEMs continue to transition to R454B in the U.S. We also expect modest benefits from our cost-out efforts driven by our expanded capacity through our recent Corpus expansion, which will continue to expand margins over time.

Also, we anticipate product development costs to be closer to $20 million next year, consistent with earlier expectations for annual spend. Overall, we anticipate continued sales growth for TSS paired with improved earnings as we head into next year. For our ATM business, we expect net sales to decrease in the low single-digit percentage range sequentially due to market weakness in the global industrial end markets where we have more sensitivity to macroeconomic conditions. Adjusted EBITDA is expected to approximate $30 million to $40 million in the fourth quarter, driven by a return to normal operations at our Washington Works site paired with continued progress on cost reduction efforts. We believe that APM's fourth quarter EBITDA will reflect our continued focus on operational excellence to drive increased reliability paired with continued cost-out efforts and should be at a more normalized level of earnings which we expect will continue in future quarters.

For our TT business, we expect sequential net sales to decrease in the high single digits to low teens percentage range, driven by seasonality, regional sales mix as well as near-term destocking, which we see continuing until the end of the year. Adjusted EBITDA is expected to decrease sequentially, ranging between $15 million and $20 million. During the third quarter, the company decided to lower its production volumes concurrently with what we are seeing in TT's value chain, while near-term demand expectations remain muted. This decrease in production will result in a $25 million cost impact to TT's adjusted EBITDA in the fourth quarter, offsetting sequential benefits or improved operations and cost reductions, but will improve TT's cash charge.

As Denise shared earlier, we anticipate that this destocking will be short term as downstream customers look to conserve cash moving into the end of the year. Looking to 2026, we anticipate similar stocking efforts in the first quarter. In connection with this first quarter restocking, we expect improved earnings as we head into next year, supported by improved operational performance.

However, we do anticipate unit market conditions to persist in the quarters ahead. Considering these weaker conditions, we are placing a greater emphasis on promoting improved cash generation, and we'll seek to closely align our production with anticipated demand. To this, when the broader market demand profile improves, we will align production, which will drive improved cost absorption across our circuit. With our resolve unchanged, we continue to make good progress on costs. however, recognize that the full benefit of these reductions may be masked by the impacts of our lower circuit operations.

On a consolidated basis, we anticipate our fourth quarter net sales to decrease 10% to 15% sequentially, with consolidated adjusted EBITDA expected to range between $130 million to $160 million. Also, we anticipate corporate expenses to range between $40 million and $45 million, considering the timing of certain accrued expenses.

Our capital expenditures for the fourth quarter are expected to be in the range of $50 million with free cash flow conversion expected to be between 50% and 70%. Based on these metrics, we would anticipate that full year 2025 sales would range between $5.7 billion and $5.8 billion with adjusted EBITDA to range between $745 million and $770 million with CapEx in the range of $220 million for the year. Looking forward to 2026, at a consolidated level, we anticipate overall sales and earnings growth with improved cash flow performance, supported by continued progress on our cost-out efforts.

We remain committed to improving our enterprise's financial position to support our pathway to drive strategy. Beyond the recent recapitalization of our U.S. term loan, which extended the maturity of the facility from 2028 to 2032, we continue to review our business portfolio as well as looking at other avenues to create value similar to critical minerals, which Denise will discuss in a minute. We are also taking a disciplined approach to the review of our nonoperating real estate footprint to determine how it can be optimized without impacting existing operations. Efforts like these aim to ensure that our resources are being used effectively and efficiently to further our strategic goals and to balance our financial flexibility.

With that context on our look ahead, I'd like to now hand the call back over to Denise to share perspective on our engagement in critical minerals and our continued strategic execution under pathway to Thrive.

Thank you, Shane. We continue to execute our pathway to Thrive strategy with clarity and conviction to build on the progress we have achieved to date across all our pillars. With that perspective, I'd like to provide additional context on where we participate in the area of critical minerals, which is concentrated in our TT business supporting our enabling growth pillar. While our minerals business is limited, we currently estimate approximately $90 million in mineral sales annually with roughly past consisting of high-value minerals comprised of [indiscernible] and precision investment casting, zircon. The monazite that we process domestically through our mines would support existing titanium dioxide feedstock operations continues a uniquely high portion of heavy rare earth elements that are used to produce permanent magnets critical for the electric vehicle and defense markets.

This attribute differentiates our domestic supply of Moneta compared to other forms of rare-earth pounds in North America. Additionally, we are the only qualified zircon supplier into U.S. precision investment casting applications, which is critical to the aerospace industry for both defense and commercial end users. While our access to mines in Florida and Georgia provide the opportunity to extract these minerals, our TT business also possesses the ability to separate these critical minerals.

Considering our specialized experience in the mining and mineral separation space, which has spanned over 75 years, we have been able to leverage this expertise to more recently attract government funding around our separation capabilities. This funding is designed to support innovative separation assets and to provide a framework to drive future growth in this space. Total grabs funding awarded for 2025 and 2026 approximate $10 million. While an area that we have operational experience in, we look forward to continuing research of this innovative separation technology to develop future critical mineral opportunities in the United States.

The presence of our mineral sales in the business today, combined with the potential of government support for future opportunities provides an exciting pathway for our company to enable growth while continuing to serve the needs of these critical end markets. With regards to the execution of our operational excellence pillar, we have also launched the Chemours business system to take the next step in operational excellence, applying lean principles to drive step change improvements in safety, quality and efficiency across our business operations.

As we build on our recent operating improvements, we are also focused on pursuing further rigor in our commercial effectiveness. We believe that the reduced operational disruptions and enhanced commercial efforts will drive earnings growth as we head into next year. As we shared in recent quarters, we remain focused on controlling what we can control while pursuing commercial growth opportunities where we can. We are confident in our ability to close out the year and remain committed to driving long-term value for our shareholders through disciplined execution, strategic growth and operational rigor.

As we continue to execute on the 4 pillars of our Pathway to Thrive strategy, we are routinely evaluating our existing portfolio for opportunities where there may be a more efficient path to return value to our shareholders. Our senior leadership and Board remain grounded in our belief that the execution of our transformation strategy will provide a greater degree of strategic flexibility and position the business to thrive.

Our team continues to pursue new ways to enable growth, remaining focused on optimizing our portfolio management efforts and is steadfast in our efficacy and execution to strengthen the long term for Chemours.

Thank you for your continued support. With that, I'd like to open the line for your questions.

[Operator Instructions] Our first question comes from the line of John McNulty from BMO.

So maybe the first question is just on the TSS business. It sounds like despite what we've been hearing from some of the residential HVAC OEMs around kind of what looks like a volume speed bump. It sounds like you're not really seeing that and you don't expect it as you look to 2026.

I guess, can you help us to understand why that would be some of the smoothing mechanism that you may have in place and/or look, maybe it's just not -- while it was a big improvement this year, it may not be it's not the only part of your business. But I guess help us to understand why we're not going to see that speed bump work through the refrigeration side of the business.

John, thanks so much for the question. Yes, I mean, we, as a business, are focused always on maximizing value of our quota. So we have a broad portfolio outside of HVAC OEMs from an application, from a product, from a regional perspective. So we're always focused on maximizing the quota. We expect double-digit growth going into the fourth quarter and as we start 2026, I feel really proud of what the team has been able to deliver.

If you look at our refrigerant sales were up year-over-year 32%, 80% increase in Opteon year-over-year. And from a segment, our sales are up 20%, and we've had margin expansion from 30% to 35%.

Got it. Okay. Fair enough. No. And look, it's been a great performance this year so far. Okay. And then I guess the second one I wanted to dig into kind of goes to your last point, where you're constantly kind of reviewing the path to return value to the shareholders. And I guess to that, you've got -- you have a lot of balls in the air at this point. You've got the data center opportunity. It sounds like you at least have some opportunities around critical minerals as well as kind of running the other core businesses.

So kind of a lot going on. I guess, do you think Chemours has the bandwidth to manage all of that or are there other potential owners of some of these assets that might be better owners, not that you guys aren't good owners, but maybe better owners for specifically the way to get as much out of these assets as they could.

Yes, John, thanks for the question. We actually feel really good about the things that we're working on and really aligned with our pathway to thrive strategy. When you think about the strategy that we put in place, it really is about strengthening the company over the next several years. So you look at operational excellence, getting out $250 million of costs, enabling growth, getting to a 5% CAGR, portfolio management, as you talked about, the critical minerals or data centers and even around our ATM portfolio, some of the things that we've done and then our last pillar is strengthening the long term around our legal legacy liabilities and advocacy and really strengthening the whole portfolio.

So it's really about creating a strong company, strong balance sheet and to give us optionality as we move beyond pathway to Thrive.

Yes. Just to add to that, John, as you think about the third pillar about portfolio optimization going to are we the right owners, et cetera, we'll do whatever the right thing is to optimize the value to our shareholders and that's including as we're managing these internally and thinking through our options there.

Our next question comes from the line of Pete Osterland from Truist Securities.

So first, I just wanted to start on just operating performance within the TT business. It looks like you're guiding for the impact from operational disruptions to be 0 in the fourth quarter. So I was just wondering if you could give a bit more detail. I guess what specifically were the major improvements you've made operationally here. How much opportunity is there to improve further in the coming quarters and potentially offset some of the cost impact if you have to continue running at lower production rates.

Thanks, Pete. Yes, from an operation standpoint, and we're feeling very, very good. Many of the issues that we phase were onetime distinct issues. We've put contingency plans in place around those issues. We have brought in really strong operational leadership. We stood up our manufacturing COE and reliability is really 1 of the key elements of that work. We've responded extremely well in the third quarter, and it was really through the resilience of that teamwork. And we're moving forward even bolstering further putting in a standardized operating system throughout the company. So I feel really good about it.

I'm going to turn it over to Shane to kind of talk through the numbers.

Pete, thanks for noticing it. We do only anticipate the one-off operational issues that we saw earlier part of this year and the third quarter going forward, given all the efforts that Denise just mentioned and continued excellence will be -- that said, we did call out $25 million of, call it, fixed cost absorption that we're going to see in the fourth quarter, just given that we are decreasing production to align with what the demand is that we see ahead of us.

Those costs will continue, but it will depend upon where we ramp up production depending upon as we view demand ahead of us. That, as you mentioned, potential offsets, we continue that first pillar and pathway to drive and really driving out costs within TT, they are somewhat masked based on these fixed cost absorptions, but we'll continue to optimize and control what we can control.

Very helpful. And then just as a follow-up on TT, just on your announcement of the TiO2 price increase effective in December, what gives you confidence that this will be implemented given that global demand conditions are still pretty weak? And I guess by region, are there specific areas where you think market conditions are relatively more or less likely to support a price increase?

Yes. Actually, I feel really good about it. We've talked about our strategy being to maximize value and focusing on the fair trade markets. We've seen -- throughout the year, we've actually seen price stability in these markets. There's obviously stuff going on at the end of the year. There's onetime issues. They're temporal, right? So you have liquidation of inventory from a Western player that's unable to continue operations. You have liquidation of inventory from in Chinese producers. There was uncertainty in tariffs that was introduced by India, but that's going to get resolved. And if you look at the value chain, there's destocking from the value chain we're confident that our customers are going to be restocking in the first quarter that ADD is going to be resolved in India and we're going to start seeing the impact of the other areas in Brazil and Saudi Arabia. We're confident moving forward. As I said, we've seen stability in the fair trade markets we play in. And in particular, in EMEA in North America. So we're confident moving forward.

Our next question comes from the line of John Roberts from Mizuho.

How are you thinking about the replacement market for HFOs? How fast do you think that develops? And does it become financially material in the next 18, 24 months to sort of move the overall HFO numbers.

John, as we look ahead, we gave perspectives around '26 that we see double-digit Opteon growth into the first part of next year. Obviously, that is driven by the HFO market. As we look at growth into '26, we gave a guide just overall growth in sales and earnings and cash flow for TSS, and that's going to be driven primarily by that HFO transition, both on the OEM side and the aftermarket.

Our next question comes from the line of Arun Viswanathan from RBC Capital Markets.

I guess maybe I'll start with TT. So -- when we go back about a year or so, it looks like we were thinking that the segment would be maybe in the 300-or-so million range for EBITDA, and you're significantly below that. And similarly for the company, we were kind of in the 875 range. Now you're in the 750 range. So I guess, as you look back on this year, would you say that the main shortfall has been in TiO2 demand? Or would you cite something else as well? And is this -- because we went in this year thinking that the pathway to thrive would add maybe $100 million or $125 million of cost reductions. And it seems like the demand weakness has more than offset that.

So maybe you can just comment on what kind of played out in TiO2 this year and if it was worse than what you expected.

Yes. Thanks, Arun. Definitely, demand played a part in TiO2. Also some of the, I'll say, the shakiness with the tariffs and the duties implementation. As well as -- as I talked about, these onetime operational issues, we are very confident in our $125 million cost out. You can see it in many places already disguise and some, but I'm going to turn it over to Shane to give you a little bit more color on that.

Yes. Thanks, Arun. As we look -- coming into this year, I don't think we expected the $100 million -- close to $100 million in operational impacts in the year. certainly a step back as well as the impacts on TT, whether it be the destocking areas that we've seen or Denise mentioned some of the operational impacts of just overall lack of demand in slow markets.

Now on the flip side, right, I think we are really pleasantly surprised on the impacts of TSS and really what they've driven in the year from a solid performance. So just really wanted to applaud that group as we're looking at some of the decreases in the year, but also we've had really solid performance in our PSS business.

Great. And I guess maybe I can just ask a follow-up on TSS. So maybe you can kind of give us some of the drivers for that growth that you expect next year Again, it seems like we're coming off a pretty strong step down year as well as shortages that maybe drove some pretty robust pricing. So -- when you look into next year now that Corpus is running up, would that be a contributor, maybe the chiller adoption does that get you in the kind of double-digit growth?

Or how should we think about TSS, especially in light of some of those HVAC inventory OEM overhangs?

Yes. Thanks, Arun. As we look ahead to 26, 1 of the thing to note as you look at the OEM transition, about 75% has transitioned in. So we still have that runway going in as well as we believe the aftermarket will grow somewhat as well. we feel confident in our commercial execution. If you look at what happened in '25, we really think just looking ahead that our commercial group is primed to continue the growth in TSS given the transition aspects. The other area there as you look at just cost out and controlling control, you mentioned the expansion of Corpus Christi.

We do believe that will be a tailwind going into next year as we drive further cost optimization. And then lastly, we did have some higher onetime costs related to our next-generation refrigerants as well as our liquid cooling venture, which we don't anticipate to occur. I put that is this year, it's going to be roughly about $40 million, and we believe the annual run rate is going to be in the $20 million range.

Great. And just as a quick follow-up. So when you think about -- again, when you think about this year and how it played out, -- there were a number of operational disruptions. There were, again, weak demand. How do you kind of foresee the next year? I mean, do you think those operational disappointments are kind of in the rearview mirror?

What can you do to not necessarily have those kinds of disruptions impact you next year and really kind of show that growth that we know that the portfolio can achieve. It's just been a little bit disheartening at times when we know that the growth is there. It's just not -- it's just getting offset by some of these factors that some of which appear to be somewhat in your control. So maybe you can just address what you're doing to really tighten that up.

Yes, definitely. I completely agree. We -- and this has been a #1 focus. Our first pillar is operational excellence. And we've made a lot of investments. We talked about the manufacturing COE in leadership and operations and just investments in really how we work in our processes. So -- and I feel really good about that. I agree. It's something that we look at is in our rear-view mirror.

Our next question comes from the line of Josh Spector from UBS.

I had a few follow-ups on TSS. I'll just leave together. First, just to confirm on the liquid cooling investment, the $22 million versus the targeted $5 million that flow through EBITDA, correct? And just what exactly drove that delta versus your expectation?

Yes. Thanks, Josh. It did flow through EBITDA, yes. And what drove it was, as we're continuing development of the liquoring venture and thinking through that side, there are areas that we continue to develop specific to the charge related to an intermediate related to the product development side that we had to essentially take a charge-off for. So it's a onetime area. It's not something we anticipate going forward.

So is that something you spent money on that you're writing off related with liquid cooling? Or is that some other investment?

No. It's a noncash item. As we look ahead, we do anticipate value coming out of that. It was more of an accounting related area.

Okay. And then secondly, with the whole TSS moving parts of what you've had. So if we look at what you reported in 3Q and 2Q, you beat your expectations that you put out there by about $20 million. I mean if we then add back this item that we're discussing, that's maybe $35 million in the fourth quarter -- sorry, third quarter. I guess if you separate the pieces, we know your competitor had some issues with sales and you guys benefited in aftermarket. How much of that is sustainable and that you won share, you keep it? How much of that would you characterize as potentially temporary due to the supply constraints and just the dynamics within 2Q, 3Q that do not repeat into next year.

Josh, thanks for the question. Yes, I mean, we feel confident in our commercial capabilities. Certainly, there's a little bit of a competitive aspect. But we really deliver and we know the customers and the value chain appreciated it. We also have other levers as Sean talked about relative to margin with the scaling up of our Corpus facility and the continued growth in the aftermarket segment where we've demonstrated a lot of strength.

But I guess to be clear on that last point, scaling Corpus helps you maybe $20 million, $30 million does that offset some of the shift that you would expect, and therefore, that's neutral? Like is that rough framing about right? Or would you characterize it differently?

Yes, Josh, I go back to the guidance we provided, which is we anticipate earnings growth going in from '25 to '26 that's inclusive of the Corpus expansion, but also inclusive of where we believe our top line revenue is going, as I indicated, sales were going to grow. As you mentioned, right, we've had some really good performance in Q2 and Q3. We believe we can hold on to that performance and in the material amount and going into '26 as well.

Our next question comes from the line of Duffy Fisher from Goldman Sachs.

Can you help size for me as we've kind of pushed the Chinese out of Europe with ADD, Venator liquidating, how much opportunity or how much volume does that open up for you guys to go after? Same thing for Brazil and India. And then relative to your market shares in those markets, would you expect to be below kind of at your market share or above your market share and winning the business that's kind of foregone by those actions?

Thanks, Duffy. Yes. I mean our strategy is to grow our share in the fair market markets. And we expect about 800 kilotons around, if you think about all those areas, Europe, India, Brazil. So yes, a great opportunity for us, and we expect to be focused on growing share.

Okay. And then could you size for me on your ore inputs, how important is Rio's African operations? As you know, publicly, they've said that they're looking at that you don't know what hands those could end up in potentially maybe a Chinese competitor.

So how important is their ore in your operations? And if that fell in the hands of somebody who was a competitor, what would be the needed steps you'd take to offset that?

Yes. I mean we have -- our strategy is really around as we've talked about in the past, a really large portfolio of ores that we can accept and the diversity of the way we're able to run our manufacturing plan. So we don't see that as having any material impact on us.

Our next question comes from the line of Hassan Ahmad from Alembic Global Advisors.

Denise and Shane. A question around the net Q4 sort of TT guidance you guys gave. If I read correctly, you guys are guiding to sales declines in the high single digits to low teens. I'm just trying to reconcile that. From the sounds of it, it seems you're looking for sort of maybe low single-digit volume declines -- and I'm just trying to reconcile that with 1 of your larger sort of Western competitors talking about 3% to 5% volume increment sequentially in Q4.

I mean is this a geographic footprinting, is this a market share thing? All of the above? I would love clarity around that.

Yes. Thanks, Hassan. I mean -- we have -- obviously, from our -- from different competitors, we have different customers, we have strength in different regions. This is what we see where we are, and it's also the strategy that we're executing.

Understood. Understood. And as a follow-up, just your thoughts on anti-evolution. I mean since 2023, it seems 1.1 million tons of titanium dioxide capacity has been shuttered. And if I sort of take a look at some of these older subscale facilities, in China, they amount to maybe around 700,000 tonnes.

So I mean, what's your thought process around potential shuttering of those 700,000 tons of capacity in China?

Yes. I mean, our current belief is that based on the research we've done is that at least $300 million kilotons will be permanently shut down. I would expect and more would shut down, especially as the duties really come into play. I mean, we've seen it in the U.S. We've seen it in Europe. -- with that, with the duty structure, it really does protect the Western players from the dumping of the Chinese producers. So at least 300 expected to be more.

And Dennis, just to clarify, that $300 million would be incremental to the $1.1 billion that's already been announced, correct?

No, it will be inclusive.

Our next question comes from the line of Laurence Alexander from Jefferies.

Could you roll out the comments around destocking and give some perspective as you look back on the year, how much of a net headwind, do you think those kinds of dynamics might have had so that we can think about level setting for 2026 and 2027.

Yes. I mean from the destocking standpoint, it really is on both sides, right? So it's on the producer side. as well as on the -- I would say that is really more kind of third quarter-ish, going maybe a little into the fourth quarter. And then from customer value chain perspective really seeing that in the markets where we serve going into the to the fourth quarter, but let Jane maybe add some color around the numbers.

Yes. Thanks, Lawrence. I mean, obviously, we've seen a volume impact this year since '24 to '25. I think there's a balance there between the destocking we saw in the beginning part of the year and going into the end of the year, but offset by some really good diligence with the commercial team in gaining share. So quantifying such I'd rather not get into at this point, but really it's a balance between the share gains and really the destocking decrease on the other side.

And secondly, just on the TT side, can you give sort of an update on how important Architectural Coatings are to the overall profit pool for you?

Yes. I mean architecting are very important for us. It's about, I would say, 70% of our PC business.

And then on the refrigerant gases, can you give us a sense for kind of what the next wave after option of refrigerants might look like? And in particular, I guess I'm curious if there's eventually going to be a fluoro gas, that is also sort of engineered to self-destruct sort of to deal with the -- to basically -- like are there ways in fluoropolymers and fluorogases to deal with the forever chemicals by sort of crafting ones with the same functionality but also kind of a vulnerability in certain environments.

Yes. I mean I would say our work around our next-generation refrigerant, I mean this -- in this business, we continue to kind of reinvent the category and our next-generation refrigerant is along those lines, and we're going to continue to innovate even beyond that.

Our next question comes from the line of Jeff Zekauskas from JPMorgan.

When you look at titanium dioxide market, is there a price erosion in the United States as you see it? Or is it really confined to the other geographies?

Yes. I mean I can really talking about our portfolio, as I said, we've had actually stability in pricing in 2025 in the U.S. Year-over-year, there has been a decline. But as we said this year, we've seen stability, and we're moving forward with a price increase.

And in India, do you think that a ruling on the stay of -- stay of the duties will come in the fourth quarter? Or will it take until next year? Or really, nobody can tell.

Our current intelligence and thinking is that it will happen by the end of the year.

Our next question comes from the line of Vincent Andrews from Morgan Stanley.

Denise, you sort of referenced earlier in TT that pathway to thrive is sort of being obscured by the challenging demand environment in terms of your profitability. So if you could just bridge us, let's assume that the assets run reliably for a full year where -- how much volume growth do you need before you think we would see sort of the full blossoming of pathway to thrive in the TiO2 segment from a margin perspective.

Yes. I mean I think that even if you just look at where we are now, I think a modest increase in demand will actually get us on track. We've had some operational issues, which have hindered us in 2025. So you're feeling positive about it going into 2026.

Okay. And then, Shane, if I could ask you, you mentioned the real estate strategy. So I don't know how significant this could be if you want to tell us about some assets you have that maybe you could completely monetize? Or are you just looking to do sale leaseback kind of things and just get stuff off your balance sheet, but maybe just a little detail on that.

Yes, thanks. That was really one of a couple of things that I pointed to as we think about looking at our portfolio and our assets and our infrastructure and just being outside the box to unlock value, right? So I pointed to, obviously, our portfolio optimization pillar, the critical minerals, which Denise just mentioned during the call, as well as the real estate portfolio as we look at strategic areas.

I don't want to get into the specifics, but I do think there's areas there that can help us from a cash flow perspective going forward, so as not to disrupt our current cash flow.

Our next question comes from the line of Roger Spitz from Bank of America.

Can you give us a sense of the impact on industry pricing and volumes when Venator Materials sort of is liquidating their inventory, which we understand has impacted materially Q3 and I'm thinking it's going to take a lot longer than 1 quarter, I presume, for them to liquidate their inventory. I mean, is this something that's going to take them several quarters that we'll see this headwind.

Thank you. Yes, we don't anticipate several quarters. We really see this probably have kind of coming through in the current quarter from that perspective. I would say just pricing and volume impacts, obviously, was a material impact to us and to the market as we saw in Q3. I don't really want to get into the specific numbers there.

Got it. And I know you don't owe these 2 technologies, but you will aren't very good with chloride process to 2. So you've got this announcement of [indiscernible] buying mentors, [indiscernible] in the U.K. And I'm wondering if you have guys have any sense of how different or similar the effectively ICI chlorous technology is to the on billions who's using, I understand the PPG's core process technology, like 11 billion is trying to improve that PPG operations is getting their hands on the ICI Corpus enology, something that will help them operate better in China?

Yes. I mean, first of all, this is still hasn't been settled right? And there's many questions around that transaction. All I can say is we understand the technologies in the industry. Our technology is really the premium technology. And from a competitive standpoint, we don't see that as an issue.

Our next question comes from the line of Aaron Rosenthal from JPM.

I guess I was looking at the 10-Q, and I noticed the commentary on the government shutdown was pretty interesting. Seems like a lot of moving pieces, but is there any risks that implicate anything tied to the HFO transition or anything on the EPA front maybe as it relates to GSS broadly or even in the context of addressing the legacy environmental liabilities?

And then maybe if you could also help us frame the magnitude of the potential call it, cash payments or collections that are at risk tied to existing government contracts and anywhere exactly within your portfolio, this would be relevant to.

Thanks, Aaron. Yes, relative to the government shutdown and TSS and HFO as we see basically no impact. The market's already transitioned, and we don't see that coming -- that changing Really, from the comments around the EPA, I mean, we've talked about before our fourth pillar around strengthening the long term. A lot of it is about advocacy. And we've had an open door talking with various agencies within the government and for us, with it being shut down, has kind of slowed that down a bit. So we're really excited and hoping that they reopen soon so we can really continue to advance that pillar of our strategy. And your last point there as it relates to government business and any perspectives around accounts receivable or cash flow. We don't see any material impacts due to the shutdown.

Okay. And then maybe just taking a look at the balance sheet and the upcoming maturities. So following the USD term loan being extended, you still have the neuro piece out there and then the '27 unsecured which presumably will be addressed 12 months out from the May '27 maturity. Will you be approaching these refinancings piece by piece or all at once? And I guess is there any willingness to issue new secured debt to refinance the existing unsecured bonds.

Yes, thanks. Obviously, we were out in the market, extending the [indiscernible] that side recently, pretty proud of where it closed just given the hard market that we were facing. I think as we look at other expirations coming up on that side, we'll continue to be opportunistic when we hit the market if it allows on that side. I would say, with the near-term notes, right, you mentioned refinancing that 12 months out. we will look -- or differing structures to ensure that those do not come up for -- to be current. So that's kind of where I will lead that from that perspective.

Great. And then if I could sneak one more in. If you can just remind us what your current secured debt capacity is maybe following that term loan exercise?

Yes. We feel very good about the headroom owner secured side on this side. We have leased 2 turns on that side.

We have reached the end of our question-and-answer session. Thank you for joining the Chemours Third Quarter 2025 Results Conference Call. You may now disconnect.

Good morning. My name is Jericho, and I will be your conference operator today. I would like to welcome everyone to The Chemours Company Second Quarter 2021 Results Conference Call. [Operator Instructions] 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, Head of Strategy and Investor Relations for Chemours. You may begin your conference.

Good morning, everybody. Welcome to The Chemours Company's Second Quarter 2025 Earnings Conference Call. I'm joined today by Denise Dignam, Chemours' President and Chief Executive Officer; and our Senior Vice President and Chief Financial Officer, Shane Hostetter.

Before we start, I would like to remind you that the 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. 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.

During the course of this call, we will 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 evening. Additionally, we also posted our earnings presentation and prepared financial remarks on our website yesterday evening. The prepared financial remarks are intended to largely replace management's quarterly financial prepared remarks allowing for additional time for your questions.

With that, I will turn the call over to Denise Dignam.

Thank you, Brandon, and thank you, everyone, for joining us. During today's call, I will begin by discussing our second quarter performance, including meaningful progress on our pathway to Thrive strategy. I'll then turn it over to Shane, who will provide details around our outlook. Finally, I will share some closing remarks before taking your questions.

As you saw in our announcement on August 4, we reached a settlement with the State of New Jersey continuing the notable progress we've made under our strengthening the long-term pillar of Chemours' pathway to Thrive strategy. The settlement reached with New Jersey announced with DuPont and Corteva is a significant step forward as it resolves all environmental claims, including those related to PFAS across 4 current and former operating sites and all statewide claims.

More to share of the settlement on a net present value basis is approximately $250 million, reflecting a 25-year payment time frame. In connection with this settlement earlier this week, Chemours also established a new agreement with DuPont and Corteva to acquire the rights to Chemours' insurance proceeds, which will provide approximately $150 million to fund the payments for the New Jersey settlement.

The combination of these insurance proceeds and the release of approximately $50 million in restricted cash from the 2021 MOU escrow accounts fully funds $200 million of Chemours' New Jersey payment obligation, which covers our obligations through at least 2030. The present value of payments remaining after 2030 by Chemours for the New Jersey settlement, not considering the potential for additional insurance recoveries is approximately $80 million.

This settlement is a meaningful step forward in our continued efforts to address the overall legacy PFAS and other environmental claims. We will continue to work in partnership with DuPont and Corteva to resolve such matters in the best interest of our stakeholders.

In addition to this achievement, we also delivered strong second quarter results, surpassing our expectations with improved performance across each of our 3 businesses.

In closing out the quarter, our results came in stronger, driven by the following: increased demand for Opteon tied to the 2025 transition, TT sales ahead of our expectations with sequential volume growth across all of our regions and favorable pricing in APM from Performance Solutions in new higher-value applications as well as solid sales execution for our SPS Capstone product line wind down, which is on track for the third quarter.

However, with this strong momentum, we must acknowledge that we've had a significant impact from discrete operational issues in TT and APM, most of which were caused by external events, but some were due to controllable operational matters. We've taken actions to address these issues, which I will speak to later in the call.

Now, turning to each segment's performance in the quarter. Starting with TSS. Our TSS business delivered another impressive quarter, driven by continued momentum in the transition to Opteon Refrigerant. Net sales of Opteon Refrigerants grew 65% year-over-year, supported by seasonal demand and the impact of the 2025 U.S. AIM Act transition mandate for residential and light commercial stationary air conditioning. This performance contributed to a 35% adjusted EBITDA margin, underscoring the strength of our differentiated portfolio and ability to capture profitable growth as the market continues to shift towards lower global warming potential solutions.

While in the last quarter, we highlighted challenges in the air conditioning aftermarket around cylinder constraints and product availability, I am proud of the TSS' team's ability to remain steadfast and customer-focus during this time. As a point of emphasis, our team's ability to be resourceful and solutions-focused to meet the needs of our customers with key to delivering these better-than-expected results.

Looking ahead, we expect continued Opteon demand growth in the second half, moderated by typical seasonality with an unwavering strong regulatory framework to drive the transition within additional stationary subsectors. Driven by this transition at the end of the second quarter, we're now seeing Opteon Refrigerants to make up 75% of total refrigerants revenues, up from 57% in the prior year quarter with superior positioning in the market.

One area I also want to highlight is around the ramp-up of our Opteon YF capacity expansion at our Corpus Christi site. This important investment has been key to securing the capacity to be able to support the growth we're experiencing during this regulatory transition.

Through the second quarter, we remain ahead of our target of half the overall expansion project we plan to have available this year. This team's ability to drive this performance is a clear illustration of our strategic execution under our operational excellence pillar and what we're looking to achieve across all of our sites. To this, a big thank you to all those at our Corpus site who have been part of driving this performance and remain focused on our continued ramp-up efforts. Altogether, an industry-leading performance from TSS, outpacing our Q2 expectations and setting a solid foundation for the second half.

Moving to TT. In the second quarter, TT delivered overall results ahead of our previous guidance with sequential net sales up 10%, supported by increased volumes of 9% paired with overall flat pricing. In this weaker demand environment, our team executed well, securing increased volumes across all of our regions. While we are proud of this result, we've had some discrete operational issues, one being the rail line service interruption, which is now resolved, and the others caused by a gap of operational discipline in this low demand environment.

The teams have now instituted a series of actions to rectify these issues. However, we do anticipate that some of these issues will impact our third quarter results. These recent challenges to run our plants at optimal levels have taken us off our transformation plan and a refocus on our cost-out diligence is well underway. I am confident that the team is taking the right steps to drive long-term improvements through these actions and I will speak to the efforts we're taking to our manufacturing COE later in this call.

From a broader market perspective, in line with our expectations from last quarter, we are beginning to see the effects of Chinese producer capacity rationalization. This change in the global supply environment paired with recent fair trade actions have provided opportunities in Western markets where our teams have been able to drive commercial opportunities.

While we find ourselves in a challenging environment in a global market that is in transition, our team has been diligent in efforts around commercial excellence and our long-term winning strategy.

Turning now to APM. Despite continued weakness in cyclical end markets impacting advanced materials and products serving the hydrogen market under Performance Solutions, APM delivered a notable performance in the same quarter. APM's performance reflects our continued focus on strategic execution under our portfolio management pillar, where we continue to shift our product mix to higher value applications in growing end markets and optimize our asset footprint.

In our Performance Solutions portfolio, APM saw a sequential sales increase of 14%, driven by product sales into the data center cable market with advanced materials seeing a 20% sequential sales increase, primarily driven by stronger pricing in the SPS Capstone product line in connection with the product lines planned exit in the third quarter. The impact of the strategic execution on our bottom line is evident in our adjusted EBITDA margin increasing from 11% in the first quarter of 2025 to 14% in the second quarter.

Our performance in the second quarter is indicative of how we view the APM business going forward, continuing to drive an improved quality of earnings across our strategic pillars with an added emphasis on portfolio management.

However, as we move into the third quarter, I want to highlight an issue that we've had at our Washington work site related to a local power outage. This event caused an unplanned full shutdown of our site. After an initial restart and following further assessments, our team identified damage to a critical piece of equipment that resulted in unscheduled downtime into mid-August. When these circumstances occur, our emphasis is on the safety of our employees and our surrounding community as we work through the repairs and the planned restart. Shane will speak to the impacts on our Q3 outlook shortly.

Overall, I couldn't be more proud of the execution from all of our teams in achieving these results for the second quarter, illustrating Chemours' collective focus on strategic execution. I know we will continue to keep the same focus as we move into the second half of the year.

With that, I'll turn it over to Shane to walk through our outlook.

Thank you, Denise, and good morning, everyone. As shared in our earnings materials as well as the supplemental prepared financial remarks available on our investor website. I would like to now discuss our expectations for the third quarter, followed by our outlook for the full year 2025.

Beginning with TSS. For the third quarter, we expect TSS' net sales to decrease sequentially in the mid-single-digit percentage range, driven by traditional seasonality, primarily concentrated in our Freon refrigerants. TSS' adjusted EBITDA is also expected to decrease in the low teens percentage range sequentially, primarily driven by the seasonality I mentioned as well as overall product mix.

For our TT business, we expect TT's sequential net sales to decrease in the low single-digit percentage range, driven by seasonality and regional sales mix, with volumes expected to remain stable.

Adjusted EBITDA is expected to decline in the low teens percentage range sequentially due to lower sales paired with certain operational disruptions. Costs associated with these operational issues are anticipated to approximate $15 million in the third quarter.

As we look past the third quarter, we expect our operations to improve driven by broader COE efforts, which Denise will speak to later.

For our APM business, we expect APM's net sales to decrease in the mid-teens percentage range sequentially due to production constraints associated with the Washington Works downtime. Adjusted EBITDA is expected to approximate $15 million in the third quarter, considering the lower sales as well as additional costs from the reference site outage, which will approximate $20 million.

On a consolidated basis, we anticipate our third quarter net sales to decrease 4% to 6% sequentially, with consolidated adjusted EBITDA expected to range between $175 million to $195 million. Also, we anticipate corporate expenses to decrease approximately 5% compared to the second quarter.

Our capital expenditures for the third quarter are expected to be in the range of $50 million, with free cash flow conversion expected to be between 60% and 80%.

Turning to the full year 2025, we expect to deliver adjusted EBITDA of $775 million to $825 million in 2025. Our capital expenditures are anticipated to approximate $250 million and our free cash flow conversion for the second half of the year is expected to be between 60% to 80%, driven by seasonal impacts as well as improvements to our net working capital. Also, the company's overall net leverage ratio is anticipated to continue to improve throughout 2025.

With that, I'll hand it back over to Denise for final remarks.

Thank you, Shane. As part of the significant progress we've made to date in executing our Pathway to Thrive strategy, however, we still have work to do. While we've made great strides in resolving legacy litigation this quarter supported by overall strong business performance, operational excellence is a pillar where we continue to place our focus.

Our efforts have driven clear success in certain instances as is exemplified in our ramp-up by Corpus, but while many of our recent operational impacts have been caused by outside events, we have to continue to reduce business interruptions and strengthen our resilience.

We have really ramped up the engagement of our manufacturing COE with my direct involvement. As a former operations leader at Chemours, knowing our asset base, I believe we have room to improve our own performance to be better prepared for the unexpected.

By engaging our COE, I've outlined our priorities in the following phases. First, realignment of experienced resources, creating more effective alignment of in-house manufacturing expertise to drive focus to the highest operational priorities in our circuit. This phase is now complete.

Second, solidifying foundational capabilities, connecting people, processes and data to enhance performance and achieve top reliability benchmarks. Third, building advanced operational capabilities with more effective use of technology to enable us to be an industry-leading manufacturing enterprise.

I believe these are the keys to drive improved operational excellence under Pathway to Thrive and ensuring we drive resilient operational consistency moving forward. I want to thank all our employees for their unwavering commitment and hard work, which have been instrumental in driving our progress this quarter in advancing our Pathway to Thrive strategy. There is no question that the Chemours team's dedication to keeping our customers first and driving strategic execution ensures that we will have continued outstanding performance like we did in the current quarter.

With that, we can now open the line up for questions.

[Operator Instructions] Our first question comes from John McNulty from BMO Capital Markets.

So, I guess, I wanted to dig into the outlook for the full year because based on your 3Q guide, the implications are that 4Q really doesn't have much of the usual seasonal dip. And, I guess, some of that's probably tied to the -- hopefully, the absence of onetime items in APM and TiO2, but it still doesn't quite bridge me there. So I guess, how should I be thinking about the good guys, the things that kind of help to offset that usual seasonal pattern from 3Q down to 4Q?

Thanks for the question, John. I'm going to turn it over to Shane to talk about.

Yes. Yes. Thanks, John. As you mentioned, I mean, just doing math, right, we pointed to midpoint at roughly $185 million for the third quarter, and that kind of puts a midpoint at $195 million for the fourth quarter. Just to note, right, that we had about $35 million of operational items between TT and APM in the third quarter. You add that back, which we are doing everything from an operational perspective and everything looks good so that, that will not repeat in Q4, you will see a seasonal decline.

I would say, as you mentioned, some of the positives that we see for the fourth quarter that are offsetting some of that normal seasonality, I think the strength in TSS, as we look ahead, as demand continues to ramp up with the regulatory change is going to be a positive, and we'll continue to execute across both of the other businesses as well as we end the year.

Okay. Fair enough. And then, I guess, just maybe, as a follow up, maybe we can talk a little bit more about TSS. It looks like lot of moving parts. I mean, you guys clearly blew out kind of your own expectations, our expectations, pretty much everyone's expectations on that one. I guess, can you help us to unpack the drivers there. It sounds like a lot of it may have been some of the aftermarket improvement and the ability to access that or target that market. Can you speak to how -- maybe how big that bucket was, how much was just the regulatory shift for the OEM side and maybe some of the catch-up around the raw material costs that you were dealing with, with the OEMs?

And I guess, also to that, how much of that do you feel like is, hesitate to say onetime, but maybe might not be recurring just because of all the cylinder issues as we look to 2026? And how much of it do you think carries over and continues in terms of the strength that you're seeing.

Thanks, John, for the question. Yes, we are super proud of the TSS team for how we've executed. There's clearly the transition has come on strong. But I would say our performance, we have outperformed our expectations for the market. And we have a lot of confidence.

Clearly, there were some shortage, there was some, what we think is potentially some hoarding going on because of the shortages, but we still are really confident in the growth for the rest of the year and see double-digit growth throughout the year. And we have a lot of confidence going into 2026. We have to consider competitive dynamics, but I would say that, yes, there were some hoarding may be a onetime issue -- short-term issue with the aftermarket, but we don't think that's going to have a big impact on the rest of the year.

Our next question comes from Pete Osterland from Truist Securities.

My first question is on TT. Are your operations and earnings in that business more vulnerable to being disrupted right now, just given that you're also working on some pretty substantial cost-improvement efforts? And I guess, is there any portion of your cost-cutting target that you're finding you might need to delay or cancel in order to focus on maximizing reliability?

Thanks for the question. Yes, absolutely. From a cost-out perspective, I would say, absolutely no concerns. I don't think that there's anything relative to our cost-out efforts that have impacted the reliability of our operations. We're really focused on productivity, and we're really confident in that. I would say, looking at TS -- TT, the overall market is definitely a challenge. And -- but we have a lot of confidence in our strategy. We're focused on our cost-out driving to lowest cost, gaining share in fair trade markets. We definitely have had some issues -- discrete issues in operational performance. But I just want to make sure everyone knows. I'm fully engaged in the operational aspects of the business. We have a clear plan, and I have confidence that we're going to fix these issues and kind of have them behind us.

Very helpful. And then just as a follow-up on the full year guidance. Could you give a bit more color on what's happening with the APM outage? I mean you mentioned it as one of the drivers for hitting the low or the high end of the full year EBITDA guide. So just wondering how much visibility you have there into the total earnings impact and the time frame? And how much of this is under your control?

Yes, I would say the actual issue that occurred was a bit outside of our control, although we really pride ourselves on trying to be resilient for all those things. I would look at it -- first of all, the second quarter was a really good performance by the business. I would anchor back to that. The issue that's happened at Washington Works is really a blip. It's something that happened from a power outage that really shouldn't have happened. So think of that as a onetime, a $20 million impact. But this business is really focused on making progress against the third pillar, portfolio management and commercial excellence, you saw that in the second quarter, and that's what I would expect as we go into the fourth quarter. This should be isolated to the third quarter.

Our next question comes from John Roberts from Mizuho.

Maybe one for Shane. On Slide 7, on liquidity. I guess, I never really thought of insurance proceeds as a source of liquidity. Does the $150 million insurance rights that you sold only relate to existing claims or did you sell forward any rights to insurance for potential future claims? Or how do we think about insurance adding to your liquidity?

John, yes, so related to the $150 million of insurance that we talked about in the New Jersey settlement, this was related to past claims as it relates to, obviously, the New Jersey settlement for Natural Resources. The $150 million is in advance from Corteva and DuPont that will be realized throughout the next 5 years as we talked about, to offset the payments underneath of the New Jersey settlement.

So as we think about what these are, these are areas where we feel very good about getting the actual amounts from the -- from the insurance carriers down the way. The $150 million is just a piece of the total pie we noted in the slide that there's about $750 million out there. It's not to say we're going to get $750 million, we feel very comfortable with the first $300 million, hence, why I believe we were receiving the $150 million upfront.

Our next question comes from Arun Viswanathan from RBC Capital Markets.

I guess, I wanted to ask about the slide that you put out on some of the longer-term priorities. So looks like you have a guidance or a line of sight to greater than sales -- 5% sales growth in the few -- next few years. So does that start as soon as '26? And then, I guess, maybe if you were to think about how that shapes up. I imagine maybe high single-digit growth can continue in TSS, but that could be offset by more moderate growth in the other 2 segments? And then along with that, if you could potentially provide some updates, if there are any, on the portfolio review as well, that would be great.

Thanks, Arun. Relative to the 5% sales growth, we definitely see that impacting in 2026. Definitely TSS, we have -- we see significant growth. But if you look at our second pillar around enabling growth, we have a lot of work going on around commercial excellence. You saw in the second quarter with APM, all the pricing efforts that are going on, and that's going to continue.

Relative to our portfolio work, we're still, as we've announced, working on the review of our European assets. And we've given some updates relative to the exit of the SPS portfolio, which there are 3 sites where that business operates, and that's well underway. So we feel really good about that portfolio work.

And then if I could, just as a follow-up then, so it does start in the '26 period, and it's driven by TSS, does that also imply that maybe as that mix continues to grow of Opteon above 70% of TSS, you could see some margin growth as well. And so the EBITDA growth should be well above that 5% level, maybe high single digits. How should we think about how that translates -- how the sales growth translates to EBITDA, maybe even EPS growth?

Yes. Thanks, Arun. We -- obviously, we're not giving guide as it relates to the bottom line here on a longer-term base. But we always strive for growth on the bottom line above our top line, right, in that side, some of which could come from margin expansion. But as we look at TSS, we're really excited about the business and its perspectives and feel great about being above that 30% EBITDA margin.

Our next question comes from Josh Spector from UBS.

I want to try again on some of the TSS questions to some extent. If I kind of think about where we came into the year, I mean, Shane, you just made this comment again, 30% plus EBITDA margins. Our math looks like you're running closer to 32% now, just top line assumptions initially longer term, thinking high single digits, maybe now you're running mid-teens. So of what you're doing this year, is this a base from a margin perspective and a top line perspective that you build off of into 2026, 2027? Or to John's question earlier, is there a little bit of give back on either of those points sales or margins because of some of the outperformance in the aftermarket this year?

So yes, thanks for the question, Josh. I'll address the margins first as we think ahead. We're -- we come back to the 30%, but as you just talked about run rate 32%, there -- we have some delay in some of the raw material cost increase where we priced ahead a bit, so we will see a little bit of impact there, but we still feel very good with where we're going to exit the year as we think about run rates above 30%. Looking ahead and longer term, I think we're excited about the business and think about the prospects of just overall further adoption in the aftermarket, driving performance.

That said, it is -- we do believe there will be more competitive dynamics going forward. So we're not committing to any growth numbers at this time, but we'll just continue to execute and really believe that TSS is going to be a strong growth enabler for our company going forward underneath the next 3 years under our strategy.

Okay. And if I could just follow up on the PFAS comments, specifically around insurance. Can you just give us a little bit more framework of if, when that can apply? I guess, it appears this was maybe a bit more specific with the sites in New Jersey or New Jersey, I don't know if it was product related. Basically, can this apply to a settlement in North Carolina or anything else you have down the pike, which then maybe extend the MOU funds further out? Or how should we think about that?

So a couple of things there, Josh, right? So as I look at these insurance, and I mentioned a total of $750 million, but that number is the gross number, we'll have to think through what the carriers will ultimately provide and what we'll settle for on that side. Under the MOU, this does extend the amount of items underneath the MOU and provide more cover there. As we think about the applicability and where this is, we're really much focused on the New Jersey settlement at this time, right, and think that this is a really good advance to help us cover the next 5 years from a cash flow perspective.

The specific areas is around product liability and other areas, which were applicable to the national resources underneath the New Jersey. And so we'll continue to look at other avenues to try and apply this elsewhere, but just really focused on New Jersey at this time.

Our next question comes from Duffy Fischer from Goldman Sachs.

I was hoping you could talk to us about what your strategy is in TiO2 currently. Historically, you've been stronger on price and have given up volume to peers in weak periods. This quarter, if you look, your pricing year-over-year was 4% weaker than your biggest competitor, Western competitor. Your volumes were 10% better. So it's pretty clear you are much more aggressive in the market than they were this quarter. Is that a structural change in your strategy to be more volume-driven? And if so, do you think there will be a competitive response from them?

Thanks for the question, Duffy. I mean we are really confident and clear in our strategy. And when we started this, we really looked at we need to be lowest cost manufacturer. We took out our high-cost capacity, and we've talked about the fact that we are going to continue to do that in our assets, and we're going to gain share in fair trade markets. We look -- whenever we have an opportunity, we have a very diligent process. We evaluate all opportunities. I'm confident in our strategy driving lower cost and achieving share gain in those fair trade markets.

I really can't comment on what the response of the competitors will be, but I think it's some really positive signs when you think about what's going on with the capacity that's been taken out of the market. We believe there's at least 400 kilotons that have been taken out. And just even looking at the export data from China, significant reductions year-over-year, quarter-over-quarter even into Brazil and in India, which yet would still do not have the firm duties or tariffs in place. So again, we're focused on lowest cost and gaining share in fair trade deals.

Great. And then maybe just to jump to TSS. Last year, your sequential sales Q2 to Q3 were down about 10%, but the decremental margin was roughly equal to the segment average. This year, your sales are down less, but your decremental margin looks like it's double what the segment average is. So is that a mix shift issue? Is that something around the 4, 5, 4B issues? Why is the decremental so much greater this year than last year?

Yes. Thanks, Duffy. It's really a mix shift. As we look at the free on roll off last year on the pricing according to so dramatic on the decline went right to the bottom line versus a shift in kind of the volumes this year.

Our next question comes from Hassan Ahmed from Alembic Global.

I just wanted to revisit the earlier question, get a little more granular around TT and the 9% sequential uptick you guys saw in volumes versus one of your largest competitors sequentially reporting a 2% decline. I mean my understanding is that Europe sort of became the battleground with the whole sort of antidumping stuff going on over there. And it just seems that you guys were very aggressive on pricing. So again, sort of revisiting some of the stuff that you said earlier, I mean, my fair is that could this potentially signal a walking away from the whole sort of value over volume strategy that the industry is so painstakingly sort of evolved into over the last 5, 6 years?

Hassan, thanks for the question. I wouldn't jump to the conclusion that this is a dropping of price. I would focus on our strategy, our overall strategy of commercial excellence and really winning in the marketplace based on our -- on the value proposition that we offer.

Understood. Understood. And if I could just sort of follow up with, again, sticking to the TiO2 side of things, I mean can you just give me your views both on the supply side and the demand side of things as you see them sort of progressing '26 and beyond. And more particularly, you guys mentioned some capacity rationalization, particularly in China. So if you could sort of expand on that a bit more on the supply side. And on the demand side, obviously, it appears that over the last couple of years, we are well below normal levels on the demand side. So how do you see the cycle evolving '26 and beyond, both from the supply and the demand side of things?

Yes, Ahmed, I'll just chip demand first. I mean, from a demand standpoint, we don't see anything for this year, any big trigger this year. Certainly, we look at certain indicators like everyone else does and expect to see some improvement next year, but really nothing in the short term. I think the story really is on the supply side. There's been significant capacity that's been taken out of the market, starting with our -- initially with us, but we see at least 400 kilotons from China coming out, which is really gives a more balanced supply-demand picture, but also on top of that, the tariffs and duties and the real differentiation between the fair trade markets and the non-fair trade markets. Definitely, I would say, over the next couple of years, it's a very improving trend.

Our next question comes from Laurence Alexander from Jefferies.

It's Dan Rizzo on for Laurence. So in terms of PFAS, what's the kind of the next? Is North Carolina, I don't know, coming up soon? Or is it -- I mean, are your negotiations? Or what can we -- what's the time line? And what can we expect maybe in terms of another announcement if there's anything you can tell us?

Sure. I really appreciate this question. I first want to start with New Jersey is a major milestone for us, and we are just really pleased for just a whole group of reasons to look at a comprehensive settlement. This was for former and current operating front. You talked about North Carolina and West Virginia. So already with New Jersey, we have 4 behind us and 2 more in the future. It's a 25-year payment at NPV value. So it puts more -- I'll say, more under our MOU in addition to the advancement of insurance of $150 million with no cash interest payments along with the escrow, giving us more -- also more room under the MOU and no payment at least through 2030, so just incredible.

And then you go to what the $16.5 million that's been pointed out, $16.5 million that was pointed out in the settlement. That's the PFAS allocation for New Jersey, it really aligns well with the allocation of liability that came from the water district settlement in the 3% to 7% range. So really can't underestimate the importance of this. So when you think about what's next. I talked about the 4 sites behind us. There's 2 North Carolina and West Virginia when you think of the big milestones for the states.

And then beyond that would be personal injury. And we're following the process, we're in settlement discussions, but all I'm going to say here is that overall, we have the same interest in resolving all of our outstanding litigation and liabilities in the same spirit and manner that we did for New Jersey. This is clear examples of executing on our strengthening the long-term pillar and bringing confidence and clarity to our stakeholders, and it really reflects our result to derisk our portfolio.

And the 3% to 7% is -- I mean, is that the blueprint we should think? Or just -- I mean, obviously, anything can happen, but is that the blueprint we should think of going forward when we're thinking about how North Carolina and West Virginia might shake out?

As you said, we can't project out, but certainly the blueprint we think about. And really, it's demonstrating throughout the settlements that it's holding.

Our next question comes from Jeffrey Zekauskas from JPMorgan.

In some of the press and legal accounts of the New Jersey settlement, it's talked about as a $2.5 billion settlement, in that I think, a $1.2 billion remediation fund has to be set up and a $475 million reserve fund has to be set up. Are there claims on you for those? Or how do those amounts relate to the settlement amounts that have been agreed to?

Yes. Thanks, Jeffrey. So as you mentioned, the reconciliation to what we provided versus what the state provided, they're the same numbers. They're just differently presented. The 2 big items that you mentioned. So there was a remediation fund of call it, $1.2 billion in the state's numbers. What that is, is really kind of a reference, a surety or a backstop for future remediation efforts over many years, right, in this side.

Just to note, as we think about that, that's really already in our ongoing cash flow on what we're actually doing on a day-to-day basis at these plants to make sure they're operating appropriately and remediating those environmental items. The other area outside of the $1.2 billion was about $0.5 billion reserve fund. That is a backstop for the surety of which Corteva and DuPont have to post that on that side.

So are there cash flow claims that are in addition to the $500 million in net present value that you're responsible for? Or how exactly do those remediation and reserve funds affect your future cash flow if they do affect them?

So, Jeffrey, in our ongoing results, right, so we have monitoring, we have maintenance, we have other areas to remediate these plants. And so there are ongoing in our past cash flow and will be on our ongoing cash flow for some time. That is depending upon the agreement of how to remediate these sites, which we will have conversations on in the future. And just to note, the $1.2 billion is the high end of that surety, right? So we believe it will be a lower amount, which will be discussed within this 1-year description underneath the agreement.

And then maybe to add a little bit to the top end, how that top end was alive. We have done assessments. So based on science and -- they're at the low end of the range. We have -- it's not like we've gone into this line, right? So we've done our assessment work. In order to get the settlement done, the timing didn't really allow for a lot of diligence and reconciliation between what New Jersey thought and what our science would tell us. So we established this range. And as you'll see in the JCO, just a really practical process to align and we're really happy with that outcome.

And then lastly, your CapEx is roughly $250 million this year, roughly. What's a normalized level for you? When you think about the next few years, where do you think your capital expenditures normally will be?

Yes. Yes, we've had -- we expect around $250 million as we've guided. I would note that's lower than any recent periods, and I think more as a history. The outlook depends upon some strategic growth initiatives, which we've had very focused spend in this given year, and we'll continue to very much focus on that side. I do think as we look ahead, there may be a little bit more CapEx, but it's not going to be anything past the range of where we're at from now and past history, it's not going to get out of bounds. The efforts here is really to be strategic on what is really needed to operate our sites, both safety and compliant as well as very much focused on strategic growth initiatives that are very much focused.

Does that mean $350 million?

Yes, Jeff, I'm not going to give a guide on range from a CapEx perspective. I do think if you look in the past, right, so this is the lowest area, I do think we'll have potentially a little bit more as we look ahead. But I'm not going to give a range to the high and low end at this point.

Our next question comes from Vincent Andrews from Morgan Stanley.

This is Justin Pellegrino on for Vincent. I wanted to shift back over to TT for a second and ask if you could give us kind of the competitive dynamics in the different regions around the world? And then within the countries that have put in place the fair trade or the antidumping duties, have you seen some duties be more effective than others? And kind of what are driving those differences?

Thanks for the question, Justin. So relative to the competitive dynamic, I would say on an overall perspective, that from many regions where we call the fair trade markets, it's more of the multinational competitors, excluding the Chinese manufacturers. It's -- I would say it's pretty competitive in those non-fair trade markets, there's a lot of pressure from Chinese producers in those areas. Can you repeat the second part of your question? I'm sorry.

Yes. Just within the countries or regions that have put in antidumping duties. Is there any differences between the regions or within the duties that they've put in place? And if there are any differences, what's driving those differences?

Yes. I would say that where the duties have been put in, they've been very effective. So in the U.S. and Europe, there's a time for transition, right? So once they come in and you say, when did Europe finally probably took a good 9 months for inventories to be worked down, but you can see the signs of how these are going to be effective in other regions where that are contemplating the -- or have preliminary rulings around tariffs or antidumping duties. As I mentioned earlier, you can just look at the exports into India, you can see the drop there. You can look at the exports into Brazil, you see the drop there. So I would say when the rules become final, we have a lot of confidence in the effectiveness of those.

We have reached the end of our question-and-answer session. Thank you for joining The Chemours Second Quarter 2021 Results Conference Call. You may now disconnect.