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Chemours' (CC) Earnings, Revenues Trail Estimates in Q1

Zacks Equity Research

The Chemours Company CC registered profits of $94 million or 55 cents per share in the first quarter of 2019, down roughly 68% from a profit of $297 million or $1.58 a year ago. The results in the reported quarter include a $27 million charge associated with the company's Fayetteville facility.

Adjusted earnings came in at 63 cents per share for the quarter, which fell short of the Zacks Consensus Estimate of 93 cents.

Net sales fell around 20% year over year to $1,376 million. Lower volumes in the company’s Titanium Technologies unit more than offset higher global average prices across all segments. Revenues trailed the Zacks Consensus Estimate of $1,524.7 million.

The company recorded adjusted EBITDA of $262 million in the quarter, down 44% year over year. The results were hurt by reduced volumes and increased costs. The company saw higher costs related to operating issues including the startup of its new Corpus Christi Opteon refrigerant facility.

The Chemours Company Price, Consensus and EPS Surprise


The Chemours Company Price, Consensus and EPS Surprise

The Chemours Company price-consensus-eps-surprise-chart | The Chemours Company Quote

Segment Highlights

Revenues in the Fluoroproducts segment fell 6% year over year to $687 million in the reported quarter, impacted by lower volumes. Higher demand for Opteon refrigerants was more than offset by Illegal imports of stationary refrigerants into the European Union, weaker base refrigerant demand in North America and supply constraints in Fluoropolymers.

Revenues in the Chemical Solutions unit were $134 million, down 7% year over year. Volumes fell due to lower sales in Performance Chemicals and Intermediates. The company saw higher prices in the quarter.
Revenues in the Titanium Technologies division were $555 million, down around 35% from the prior-year quarter. The decline is attributable to lower volumes of Ti-Pure titanium dioxide (TiO2).


Chemours ended the quarter with cash and cash equivalents of $697 million, down roughly 51% year over year. Long-term debt was $3,965 million, down around 4% year over year.
Cash used for operating activities was $44 million in the quarter, compared with cash provided by operating activities of $196 million a year ago. Capital expenditures were $133 million.

Chemours returned $261 million to shareholders through share repurchases in the quarter.


Moving ahead, the company sees TiO2 markets to stabilize in the second half of 2019. It expects demand for Ti-Pure pigment to return to more normalized levels based on improving underlying market conditions in the second half. The company remains committed o execute its strategy including the installation of its Ti-Pure Value Stabilization framework across its entire customer base and driving the adoption of Opteon.

Price Performance

Chemours’ shares have lost around 42.6% over a year, underperforming the roughly 27.1% decline recorded by its industry.


Zacks Rank and Stocks to Consider

Chemours currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the basic materials space include Sandstorm Gold Ltd. SAND, Flexible Solutions International Inc. FSI and Air Products and Chemicals, Inc. APD.

Sandstorm Gold has an expected earnings growth rate of 200% for the current year and carries a Zacks Rank #1 (Strong Buy). The company’s shares have gained around 12% over the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Flexible Solutions has an expected earnings growth rate of 171.4% for the current year and carries a Zacks Rank #2 (Buy). Its shares have rallied roughly 106% in the past year.

Air Products has an expected earnings growth rate of 10.3% for the current fiscal year and carries a Zacks Rank #2. Its shares have shot up around 22% in the past year.

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