Chemours Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
July 28, 2023

There are 12 speakers on the call.

Operator

Good morning. My name is Jeannie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Chemours Company Second Quarter Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

Operator

Thank you. Brandon Onchez, Vice President of FP and A and Investor Relations, You may begin your conference.

Speaker 1

Hi. Thanks, Jeannie. Good morning, everybody. Welcome to the Chemours Company's 2nd quarter 2023 earnings Q and A conference call. I'm joined today by Mark Newman, President and Chief Executive Officer and our recently appointed Senior Vice President and Chief Financial Officer, Jonathan Lock.

Speaker 1

Before we start, I'd like to remind you that Comments made on this call as well as in the supplemental information provided in our presentation and 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 of new information. During the course of this call, management 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 are included in our release and at the end of our presentation.

Speaker 1

As a reminder, our prepared remarks, A full transcript plus our earnings deck have been posted to the Investor Relations section of our website along our earnings release. This morning's call will focus purely on Q and A. With that, I'll turn the call over to our CEO, Mark. Mark?

Speaker 2

Thank you, Brandon, and thank you all for joining us this morning. In addition to reporting solid results in the 2nd quarter, As you saw from our press release, we had an active and productive quarter. In TSS, we had another record All time record quarter. And as you'll know it in the last 6 quarters, we've had 5 record quarters in TSS, which really speaks to the momentum and growth in this business. In APM, we had another double digit growth quarter in our Performance Solutions business And we launched the Mobility FC Membranes Company, which will be focused on Nafion membranes for the fuel cell requirements of the hydrogen economy.

Speaker 2

In TT, we made the difficult decision to close our Kuan Yin facility. And I just want to take this moment to acknowledge the profound impact the closure will have on our dedicated and skilled colleagues To have been valuable members of our team in Taiwan. During this transition, consistent with the Chemours culture, We will remain fully committed to working with our local leaders to offer support and assistance in this difficult transition. Additionally, as you saw, we reached a comprehensive settlement of PFAS related drinking water claims of a defined class of U. S.

Speaker 2

Public water systems. We also published our 6th sustainability report, which shows significant progress on both greenhouse gas and Fluororganic compound emission reductions. On capital allocation, we agreed to the sale of our glycolic acid business, which we expect to close this quarter, And we continue to return capital through dividend and stock repurchases to our shareholders. It was also a quarter marked by a number Leadership changes. So on April 1, Denise Dignam became the President of our Titanium Technologies business.

Speaker 2

In early June, we had Jonathan Locke appointed to the CFO role and obviously Brandon Anja is stepping up Into the Investor Relations slot, Matt Abbot became our Chief Enterprise Transformation Officer at the same time. And then earlier this week, we announced Joe Martinko as the President of our Thermal and Specialized Solutions business. When I look at all the changes, including Gerardo Familia being named earlier this year behind Denise going into TT, We've had a number of leadership changes, which really speaks to the strength of the talent on the Chemours bench And how well we're developing diverse and capable leaders of the future. As I think of the quarter in Total, I think it's a real demonstration of the Chemours brand of courageous chemistry. We did not miss a beat Despite the leadership changes and we got a lot done and as we face a weaker second half this year, The team is full of energy and energized to drive continued great performance and to deliver value to our shareholders from our 5 strategic priorities.

Speaker 2

So with that, Genie, let's go to Q and A.

Operator

Your first question comes from the line of Arun Viswanathan from RBC Markets. Your line is open. Mr. Viswanathan, your name is Your line is open.

Speaker 3

Thanks. Could I just ask about the TiO2 plant closure? Is that plant maybe at the upper end of the cost curve and maybe speak to the regional dynamics that led to that decision? Thanks.

Speaker 2

Hi, everyone. Good morning and thanks for your question. Yes, as I said in my opening, this was a really difficult Decision for us given the impact on our Chemours colleagues. But as we look at Where that plant and other plants are on the cost curve, it has been since day 1 Designed to be more of a high grade ore plant than what's more traditional in our North American facilities where we can use a broad spectrum of ore. So yes, historically great performance on uptime and safety metrics at that plant and productivity.

Speaker 2

But by design, a high grade ore plant, Which in with some of the cost escalation we've seen in recent years makes it more difficult. It has historically been a swing Within the circuit. So by taking this plant out, We get really 2 benefits. We fully task the circuit. We move from a cost variable cost perspective To more low grade ore usage and as you saw in our materials, we expect a run rate fixed cost reduction of about 50,000,000 next year.

Speaker 4

Thanks for

Speaker 3

that, Mark. And then if I could, as a follow-up, You noted some challenges in the second half. Could you just elaborate on that? Is that TiO2 Volume weakness and then maybe some weakness as well in the Advanced Materials part of APM or yes, could you just flush that out? Thanks.

Speaker 2

Yes. So after really a very robust recovery post COVID in 2020 And several quarters of very strong demand, when we planned this year, we expected a more We know early in the year others were thinking of a very robust recovery, especially in China Post COVID. And so we've always been of the mindset that we were going to have a gradual recovery. I think as we're getting Into the second half, our view is that versus our planning, we expect More modest demand recovery and maybe being pushed even into early 2024. So our expectations here sitting today is that in the second half, we would see volumes versus the first half Flat to slightly up.

Speaker 2

And obviously, seasonally, Q3 and Q4, Q4 especially tend to be weaker So I would say we expect to see flat to slightly up despite the fact that the second half seasonally is typically weaker.

Operator

Your next question comes from the line of Josh Spector with UBS. Your line is open.

Speaker 5

Hey, guys. This is James Cannon on for Josh. Just hitting on the Taiwan plant again. Just wondering if that has any impact on your mix of contracts. And as you continue to talk about Changing and improving the quality of that business.

Speaker 5

Is there anything that you're doing to think about changing the structures you have in place?

Speaker 2

Yes. No impact on our contracted business at all. The way we have looked at this Decision is, can we serve our customer needs well, going forward From our North American plants and we've concluded we can. So this is not there's really no this is just a change in manufacturing, not a change In contracts, as you saw in the quarter, we pursued more opportunities in both our flex and distribution channels, which led to, I'll maybe ask Jonathan to comment more here on this in terms of how we see the dynamic here In the marketplace with respect to volumes.

Speaker 1

Yes. Obviously, as Mark said, in the second quarter, you See the sequential growth in volumes of approximately 13%. While it's a good result sequentially coming at 1st quarter is not necessarily in line with what we would call a recovery. And so as we look out into the 3rd and the 4th quarter, the second half, That causes us to take the glide path down slightly, right, from the recovery we were expecting. So, But all in all, no change, James, to your question to kind of our approach to the market.

Speaker 1

We've been talking about our ability to debottleneck Our facilities over the past couple of years, obviously, that was delayed inside of COVID as a result of COVID. But we're confident that through this transition, we won't miss a beat in terms of our ability to serve our customers, both in the AP region and globally.

Speaker 5

Got it. And just wanted to say congratulations to you, Jonathan. I have one other follow-up on the TiO2 business. And that's just if I think about volumes being relatively stable through the rest of the year, does your guidance anticipate any raw material benefit?

Speaker 2

So clearly, we are seeing some moderation In raw material costs, some are more sticky than others. And obviously, as we retask Our remaining plants in TT, that gives us an opportunity also to run at better utilization rates. So in my view is we continue to work very hard, our procurement team on input costs. Clearly, Energy costs have come down or as we have said earlier this year has been moderating and then our ore mix is advantaged By the decision we've made with respect to Kuan Yin.

Operator

Your next question comes from the line of Duffy Fischer with Goldman Sachs. Your line is open.

Speaker 6

Yes. Good morning, guys. First question is just around the PFAS potential settlement. We've all seen that a number of State AGs have kind of stood up against the 3 ms settlement. Would you expect something similar for your settlement where there would People that prominent that would try to either alter it or kill it.

Speaker 6

And if not, Can yours go forward, do you think with the judge if the 3 ms doesn't?

Speaker 1

Yes. Hey Duffy. No, listen, we saw the news of the AG opposition to 3 ms settlement. Obviously, when you're dealing with something that's complex and this far reaching, I think we would certainly expect folks to have an opinion, right, on how they think the what they think the outcome should be. Sitting here today, we can't predict whether or not similar objections would be raised against our settlement or not.

Speaker 1

But I think that what we do have confidence in is that the settlement that we entered into based on what the plaintiffs have asked It's a very good settlement and I think that that opinion has been reinforced by the court, right, that they believe that this is a good settlement. So We're going to continue to do what's asked of us by the court certainly and work through The process first through preliminary approval and then ultimately right through final approval at the end.

Speaker 6

Great. Thanks. And then, if we could turn to refrigerants, can you just update us on your latest thinking with the step down, particularly in North America with HFO. What do you think that does to pull forward volumes The rest of this year and then can we still grow those volumes into next year with the step down? And what are we seeing on supporting HFC pricing as we're moving into that step down for HFC.

Speaker 2

So Duffy, I'll ask Jonathan to comment Further, but generally speaking, as we look at the second half, we think we believe that the step down It's beneficial to our second half. Clearly, remember that this business has seasonally weaker, especially going into Q4. So bear that in mind as well. And obviously, there We've had a very robust first half on OEM bill rates. The question is, does that continue in the second half?

Speaker 2

And with weaker construction, that's also a moderating impact. So listen, I think it's beneficial to TSS with the step down in terms of folks wanting to make sure they've utilized their quota. Clearly with end demand being more modest in a somewhat weaker economy in the second half, That could have an offsetting impact, but net net, we factored that into our guide.

Speaker 1

Yes. Duffy, I'll just build on that comment And just to remind the folks on the call that the AIM step down coming is 30% and the FGS Step down coming in Europe is 20%. So that's obviously a 2024 dynamic that we're going to face into. And I know that Joe and his entire team are ready to serve the market to make sure that our OEM equipment customers get all of the product that they need to build out their fleet and to deliver that next generation of HFO hardware and to make sure that our new distribution partners On the Refill side are well taken care of through that coming transition. Just to be sure, as we think about the guidance for the full the revised guidance for the full year, we haven't really baked in a material amount of Pull forward, right?

Speaker 1

So we're not envisioning a scenario sitting here today where you get a material amount of pull forward in either the 3rd or the 4th quarter. Obviously, the things that are going to drive that, right, through the summer and into the fall are going to be how hot is it, How much of an inventory depletion do we see down the channel? And of course, what is the strength of the overall economy? Does that give folks the confidence to say, hey, I'm going to pull ahead some volume into 2024. So listen, I mean, this business continues To perform very well, and obviously with the coming 24 step downs, as you all We'll be ready to serve the refrigerant markets that need the product.

Speaker 2

And maybe just one last comment, Duffy. Obviously, Step down in quota drives further adoption of HFO technology. We're hard at work at our Corpus Christi site to drive the 40% expansion there, which we expect to have completed by the end of next year.

Speaker 7

Great. Thank you.

Operator

Your next question comes from the line of John McNulty from BMO. Your line is open.

Speaker 8

Yeah. Good morning. Thanks for taking my questions. So in the TiO2 business, you seem to have Some reasonable confidence that demand picks up. Is that coming from your customers?

Speaker 8

Like I know you've got these Longer term contracts with customers, so you maybe have a little bit better peak behind the curtain in terms of what they're thinking The real demand pull is like so is it coming from that or is it more just a look we can't run at this low of a level for that long, there's just not that much inventory to realistically I guess, how would you characterize your confidence on it?

Speaker 2

Yes. So John, as I said earlier, we had Several quarters of very robust demand before things started to soften last year in Q3 and really much more so in Q4. Our view typically is a typical TiO2 cycle is Somewhere between 12 18 months. So obviously this one feels like it's more towards 18 than 12. And as you've seen recently by some of the commentary by some of the U.

Speaker 2

S. Coating companies, I think it's been a lot more favorable Than it has been previously. So again, our view is, hey, this is taking a little longer. Yes, we continue to have a robust book of contracted business and really very active dialogue With key customers around the world, including the folks I've mentioned earlier here in the U. S.

Speaker 2

Jonathan, I don't know if you have any additional color.

Speaker 1

Yes. No, I mean, the only thing I'd add to that is that, I think coming into the year, we thought that we would find the bottom kind of here in the Early in the first half and the order book would speak to a turn in the second half. And that hasn't been the experience that we've had here in the second quarter. I think We continue to look out at the order book and feel like we're at the bottom, but the inflection is not turning we're at the inflection point, but it's not turning as hard. As we think about what could happen next year in 2024, we're not here to give a 2024 guide.

Speaker 1

But certainly, The North American Northern Hemisphere Coating season in 2024 is what we're all playing for in terms of when we think the re Stock happens. It's just difficult for us to sit here today and think that ultimate end market demand has really declined In line with how we've seen the destock, right? So, what we're trying to do right now In the very near term, as evidenced by what we're doing with our manufacturing circuit is to reduce cost and improve our overall circuit utilization, so that we're well set up for 2024.

Speaker 8

Got it. Okay. No, that's helpful.

Speaker 7

And then I guess just

Speaker 8

on the TSS business, so kind of a look at like the cooling degree data and that type of We'd actually say 2Q despite all the press about the hottest day in the world and all that kind of stuff, it was actually kind of a light Start to the air conditioning season, but it looks like 3Q is really ramped up aggressively. Do you feel that Pull like is it something that I mean I hesitate to say it's spot because that almost implies it's commodity, but like do you feel that pull When it gets hotter and I guess how should we think about how that plays out if the current trends continue throughout the rest of this year?

Speaker 2

Yes. So John, as you alluded to, we had a relatively cool first part of the summer, which delayed the start of the season. And obviously, with the more recent warm weather, We will see higher utilization rates or higher consumption of refrigerants as Folks need to service their equipment to deal with the current weather patterns we're seeing, especially here in the U. S. And Europe.

Speaker 2

And so Our view has always been that any pull ahead related to the step Would come later in the year dependent on how much quota folks had used throughout the year. A lot of the refrigerant product what's really great about our TSS business is that a significant portion of It is a replacement or a service business. And so there's not a lot of transparency In terms of where distributors are in terms of consumption of inventory. And so we Yes, it creates demand when you have hot days like we're seeing recently, but there's also Quite a bit of inventory in the system held by distributors and there's typically not a lot of line of sight as to where that inventory level is and whether folks will need to consume more to use up their quota. As we reflected on the second half, we believe there will be some pull ahead as it relates to the step Folks will want to make sure they've used their quota, but a lot depends on utilization through the end of the year, Especially through the cooling season this summer and we'll just kind of have to watch it as we go.

Speaker 8

Got it. Appreciate the color.

Operator

Your next question comes from the line of Matthew Deo of Bank of America. Your line is open.

Speaker 3

Yes. Hi, good morning.

Speaker 7

This is Salvator Tiano filling in for Matt. The first question I want to ask is a little bit longer term, but there's been a lot of press about The emerging cooling for data centers and how this could benefit companies like Chemours. What are you seeing there? And how far Are we from this actually being a decent sized business for your company?

Speaker 2

Yes. So it is a great question. So we continue to work very diligently on developing and commercializing Immersion and Cooling, we had talked about this several months ago in one of our investor updates on our Thermal and Specialized Solutions business. And as we look at the explosion In AI and the need for high speed data and data centers, we're very excited about what this Technology will offer. We'll have more to say in the future in terms of an official announcement, But I remain confident that Immersion Cooling is another significant growth franchise for thermal and specialized solutions.

Speaker 2

And in a very direct way, we'll tie to the growth of AI in the U. S. Especially and around the world. So more to come on that, but we remain confident This is a technology that we can commercialize, probably not in the immediate Future, but certainly something that will be part of our planning as we look out between here and certainly The middle of the decade.

Speaker 7

Okay, perfect. And I also want to ask a little bit about Illegal refrigerant imports, there have been some articles and some mentions by the American HFC Coalition about the high amount of R-four zero one refrigerant come to the U. S. From China. And I don't believe it was an issue for your 2nd quarter results, but Is it something that you're concerned about in the second half of the year?

Speaker 1

Yes. So Hey, there. It's Jonathan. As we think about illegal imports, we learned a lot of lessons out of Europe, Right. So as we were launching HFO technology in Europe on the stationary side specifically, We learned a lot of lessons from the illegal imports that came across from Eastern Europe and Southern Europe and Change the quota dynamic in that market.

Speaker 1

So we took a lot of those learnings around inventory management, border control checks And working with authorities and layered that into our approach to the U. S. Market and worked a lot with EPA, A number Homeland Security and a number of other agencies in order to make sure that as AIM was getting stood up, We had some of the right enforcement mechanisms in place and we created some awareness right around the issue. So Obviously, we need to remain vigilant on illegal imports. It's not something we're ever going to take our eyes off of.

Speaker 1

To your question specifically about 410, We wouldn't necessarily view that as an illegal import issue, but more of a composition of product issue. And the importation of that being used to kind of skirt other regulations around the import of for 10a. So, our teams are all over this. Joe and his entire team, they work hand in hand with federal, state and local Authorities here in the U. S.

Speaker 1

To ensure that there isn't a problem going forward. So, we'll keep an eye on it, but for now, we remain confident that the law can be well enforced here in the U. S.

Operator

Your next question comes from the line of Laurence Alexander with Jefferies. Your line is open.

Speaker 9

Hi. This is Dan Rizzo on for Laurence. Given what you've done with That TiO2 plant, are there other facilities you're taking a look at that might be higher costs that might be shut down?

Speaker 2

No, not at this time. And obviously, our expectation would be All of our remaining facilities utilize low grade ores in a wide spectrum of ores, which is It improves our cost competitiveness, so not at all.

Speaker 9

And then so have you stated what utilization rate is now for for TiO2 post the closing of the facility?

Speaker 2

No, we haven't. We typically update Our nameplate capacity in our 10 ks disclosures once a year. The way I think you should think about this is, The immediate impact of the Kuan Yin closure will obviously reduce our nameplate capacity. And but we continue to work on debottlenecking of our remaining facilities such that I would Expect over time the change in our nameplate capacity to be quite modest. So the immediate impact obviously is both a cost a fixed cost reduction and a better utilization of our circuit.

Speaker 2

But again, part of our analysis in making this tough Decision was looking ahead to customer demand and being confident that With some of the work underway to debottleneck our 3 facilities here in North America that we could serve our customers well.

Speaker 9

And last question, if the coatings season next year is strong or stronger than expected, I guess you could easily flex up To meet any anticipated demand surge?

Speaker 2

Yes, sir. And obviously, as Jonathan said, We really wanted to take advantage of the continued weak demand to get our manufacturing footprint right in anticipation of a more robust 2024, so that, Hey, we can serve our customers well. And obviously, from a profitability perspective, we would get Our TiO2 business back into sort of the 20% to 25% EBITDA range. So again, we're thinking ahead To 2024 and how we serve that market well.

Speaker 9

Thank you very much.

Operator

Your next question comes from the line of Mike Leithead from Barclays. Your line is open.

Speaker 10

Great. Thanks. Good morning, guys. First question on APM, could you maybe drill down into what areas You're seeing the demand weakness in the second half. And then separately, could you just update us on how you're seeing demand specifically developed for NACION and your semicon PSA currently?

Speaker 2

Yes. Mike, that's a great question. Remember, we've always described 2023 as a transition year for APM. What do we mean by that? We're really ramping up Our ability to our capacity in our Performance Solutions space to serve Both clean energy and advanced electronics markets.

Speaker 2

And so, in terms of where we're seeing weakness, It's in our Advanced Materials business. Think of that as either broad industrial Or in some specific segments like land cables, which are tied to construction, we're seeing some weakness There as well. So I'd say generally speaking, the weakness we're seeing is in our Advanced Materials business. On our Performance Solutions business, we remain sold out. And so what you're witnessing is Our growth rate here this year is really capped by how much capacity we can liberate.

Speaker 2

As we look at the second half, we expect Advanced Materials to be weaker from a volume perspective. And obviously, there's only so much you can do in the second half to relieve capacity. And that's just the timing it takes to implement capital projects or in some cases to get permits to expand at some facilities. So the team is really hard at work In doing everything possible to maximize throughput in our Performance Solutions area, But there's just practical limits in what we can achieve in the second half, while we're seeing a weakening of the Advanced Materials, which today is the larger portion of the total revenue of that Jonathan, I don't know if you have any additional color.

Speaker 1

Yes. No, the only other thing I'd add is that, obviously, if you look at APM like as a business regionally, our Exposure to Asia Pacific is pretty high, right? It's 35%, 40% of the overall business. And so As we think about that and the kind of the lack of a strong recovery in China and whatever kind of Spread that has the rest of Asia that's certainly impacting the business. The only other thing I'd remind folks on the call is that Q3 of 2022 It's going to be a tough comp, right, for Q3 of 2023.

Speaker 1

So as we look ahead, We do expect a drop off there on a year over year basis in addition to something that's going to happen sequentially in terms of both top line and bottom line.

Speaker 10

Great. That's super helpful. And then just second on TiO2, could you maybe talk about your pricing assumptions as we go into the second half? And 2nd, I think you previously talked about getting the business back to about 20% EBITDA margins to exit the year. Where do you think the bar is now just

Speaker 2

Yes, we don't provide Pricing guidance on a forward looking basis. As you saw in the recent quarter, our price was down 1% and so that reflects both regional and customer mix that also reflects Channel mix with more volume, relatively speaking, going through Flexin and distribution. So Again, our view is the second half, we've guided that volume we expect to be flat to slightly up. We're clearly working on rationalizing capacity, which will be beneficial starting in the second half, but really will Show real benefit as we go into 2024.

Speaker 10

Great. Thank you.

Operator

Your next question comes from the line of John Roberts with Credit Suisse. Your line is open.

Speaker 11

Thank you. Two questions. First, a short one. Do you plan to do a debt offering to fund your share of the PFAS settlement? And then, the longer question is how do you re optimize the TiO2 network?

Speaker 11

Do you have some export you mentioned Swing plants. So do you have some exports into Europe that you can serve from North America now and do you just drop your customers in Asia?

Speaker 1

Yes. Hey, John, it's Jonathan here. On your question about the financing, we're obviously always looking at different mechanisms to Obviously, we have the sale of the glycolic acid business, which we project will close at the end of the month. So we're always looking at liquidity to make sure that our balance sheet is in order. Today, we feel good about the capital structure that we have, the go forward liquidity of the business.

Speaker 1

So we'll approach that opportunistically. Obviously, we have the 2025 Term Loan B, I think that's what you're referring to kind of the 2 term loans in front of So, we'll continue to take a look at that. And if there's an open window, maybe think about doing something there.

Speaker 2

And then John on the question with respect to our TiO2 facilities, No, we don't plan to drop any customers. We're very focused on very high levels of customer service. And today, actually, we leverage all of our plants to serve our customers' needs globally. Clearly, we'll have to readjust in terms of what plants are tasked with specific customer requirements. But that's something the team is very capable and has done before.

Speaker 2

So I don't expect any Meaningful interruption here in terms of customer service or meeting customer requirements as a result of this decision.

Speaker 3

Thanks. Thank you.

Operator

Your next question comes from the line of Jeff Zekauskas with JPMorgan, your line is open.

Speaker 4

Thanks very much. I've always thought that the capacity of the Taiwan plant was 160,000 tons. Is that right? And you've talked about the cost savings from closing the plant. Is the plant making any money Or is it losing money?

Speaker 4

What's the trade off there?

Speaker 2

Yes, Jeff, you've asked 2 questions that we probably wouldn't answer in the sense of we don't disclose individual plant capacities. And we certainly don't report out other than at a segment level, our profitability. As I mentioned, it is a higher cost plant in our fleet because of its use of high grade ore and therefore The benefits of the closure is to more fully test the remaining plants and to reduce our dependence on high grade ore. So, I think those together will have a meaningful benefit as we've disclosed. It's a $50,000,000 run rate cost savings, again, which we would expect to start to see in a pro rata Form in the second half here, but obviously on a run rate basis starting next year.

Speaker 4

So is the $50,000,000 a net cost savings? Is that net or there's an offset?

Speaker 2

Yes, sir. That's a net cost savings.

Speaker 1

Yes, that's a net cost savings on the EBITDA, Jeff. And then obviously, as we disclosed in our press release and in our materials, there will be a $25,000,000 cash impact here in 2023 And similar number in 2024 in order to effectuate those. Those are cash costs associated with things like severance.

Speaker 4

Okay. And For my follow-up, imports of titanium dioxide into China as of about August last year fell off a cliff. That is maybe imports into China were something like 15,000 tons a month and they fell to, I don't know, 4,000 tons a month And they've stayed low since that time. Is that something which affected your decision? That is, Is China now being more supplied by TiO2 companies in China?

Speaker 4

And secondly, in your comments, you said that the subsequent cost savings will be substantial in closing the plant. What is that about? That is, is there a cost savings that's above that $50,000,000 starting in $24,000,000 that's meaningfully above?

Speaker 2

So Jeff, clearly there is a fixed cost savings by eliminating a plant. Obviously, there will be a continued focus on optimizing the remaining circuit. And obviously, the remaining circuit will use a wider variety of horse. But what we've disclosed for now It's a fixed cost savings, which we believe we will achieve as a result of that. Just to comment on China.

Speaker 2

Again, I think there was a lot of euphoria earlier this year With the change in COVID-nineteen and the expectation that the China Economy would come roaring back and obviously that hasn't happened. High grade pigments into China You know, our tied to some degree on high end local consumption, but a lot to do with exports from China And things like furniture and other durable goods, which have also been down. So our view is High grade imports into China are not necessarily being substituted by Chinese producers, but are being The demand is being impacted by where those products go into in terms of high end furniture and laminates For export, which are also down, tied to both a weaker economy in Europe and weaker construction in North America.

Speaker 4

Okay. Thank you very much.

Operator

There are no further questions at this time. Mark Newman, I turn the Call back over to you.

Speaker 2

Jeanie, thank you, and thanks everyone for your interest. Again, we continue to be Very active in terms of driving our 5 key strategic priorities. And I just really want to take this opportunity to thank our entire team of employees who are passionate and focused about moving the

Powered by Quartr
Earnings Conference Call
Chemours Q2 2023
00:00 / 00:00