Chemours Q3 2026 Earnings Call Transcript

Quartr
Provided by Quartr
November 3, 2026

Key Takeaways

  • Positive Sentiment: Third-quarter results were solid: net sales rose 3% year over year and adjusted EBITDA reached $200 million, at the high end of guidance, with all three businesses contributing above expectations.
  • Positive Sentiment: APM’s Performance Solutions sales increased 26% year over year and 8% sequentially, supported by strong demand from semiconductor, data-center, and AI infrastructure markets; Chemours expects another sequential sales increase in the fourth quarter.
  • Positive Sentiment: Chemours continued to reduce balance-sheet and litigation risk by repaying an additional €50 million of debt, completing the approximately $56 million Kuan Yin land sale, and advancing PFAS settlements with North Carolina and New Jersey.
  • Negative Sentiment: Fourth-quarter results are expected to weaken seasonally: TT sales are projected to decline in the high-teens to low-20% range sequentially, while TSS faces continued softness in the North American stationary air-conditioning aftermarket.
  • Negative Sentiment: Full-year free-cash-flow conversion was reduced to 15%–20%, reflecting legal settlement payments, taxes related to the Kuan Yin sale, working-capital timing, and maintenance spending, although management still expects 2027 earnings growth.
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Earnings Conference Call
Chemours Q3 2026
00:00 / 00:00

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Operator

Good morning. My name is Marvin, and I will be your conference operator today. I would like to welcome everyone to The Chemours Company third quarter 2026 results conference call. Currently, all participants are on listen-only mode. A question-answer-session will follow the conclusion of the prepared remarks. I would like to remind everyone that this conference call is being recorded. I will now hand the conference call over to Brandon Ontjes, Vice President, Head of Strategy and Investor Relations of Chemours. You may begin your conference.

Brandon Ontjes
Brandon Ontjes
VP and Head of Strategy and Investor Relations at Chemours

Good morning, everybody. Welcome to The Chemours Company's third quarter 2026 earnings conference call. I am 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 this call, we will refer to certain non-GAAP financial measures that we believe are useful to investors evaluating the company's performance.

Brandon Ontjes
Brandon Ontjes
VP and Head of Strategy and Investor Relations at Chemours

A reconciliation of non-GAAP terms and adjustments is included in our press release issued yesterday evening. Additionally, we also posted our earnings presentation on our website yesterday evening. With that, I will turn the call over to Denise Dignam.

Denise Dignam
Denise Dignam
President and CEO at Chemours

Thank you, Brandon, and thank you, everyone, for joining us this morning. On today's call, I will start with highlights from our third quarter performance before turning it over to Shane to walk through our fourth quarter outlook and initial perspectives on 2027. I will then close with an update on our strategic execution under Pathway to Thrive. Our third quarter results reflected strong year-over-year performance in Titanium Technologies and Advanced Performance Materials, paired with disciplined commercial and operational execution across the company, despite weakening macroeconomic conditions across our key end markets. Net sales were up 3% year-over-year as expected, driven by continued pricing momentum in TT and growth of 26% in APM Performance Solutions business, more than offsetting the anticipated softness in TSS due to expected weaker demand in the North American stationary AC aftermarket for Opteon blends.

Denise Dignam
Denise Dignam
President and CEO at Chemours

Adjusted EBITDA was $200 million, at the high end of our guidance range, with all businesses contributing above expectations. With this update, I also want to highlight the progress that we've made under Pathway to Thrive to de-risk our balance sheet through continued efforts to reduce litigation exposure and address leverage. On the litigation front, we were able to reach a settlement with the state of North Carolina and 11 local entities to resolve claims of PFAS and other discharges from our Fayetteville Works site, as well as those unrelated to our site. In addition, we received final approval of the Judicial Consent Order with the state of New Jersey. This was a meaningful step toward completing our settlement and establishing previously agreed funding from our MOU partners to support settlement payments over decades. These developments reflect our continued focus on de-risking the balance sheet.

Denise Dignam
Denise Dignam
President and CEO at Chemours

With this, let me expand on the quarter's business activities. In TSS, third quarter performance reflected the anticipated softness in the North American stationary AC aftermarket. Demand for Opteon blends was lower compared with the prior year period, which benefited from the initial channel fill associated with the stationary AC technology transition under the U.S. AIM Act. While lower aftermarket volumes and higher input costs weighed on earnings in the quarter, we remain confident in the long-term fundamentals of TSS. We believe that the expanding installed base of lower GWP systems and our advantaged position with HVAC OEMs and aftermarket distributors will provide a strong foundation for future growth. As the 2026 cooling season comes to a close in North America, we continue to build on our advantaged position, managing the business with discipline and positioning TSS to capture the attractive aftermarket opportunity in front of us.

Denise Dignam
Denise Dignam
President and CEO at Chemours

Looking further ahead, the business's attractive growth is underpinned by our innovation-led foundation and our intellectual property portfolio, ensuring protection for the breadth of our Opteon products extending into the 2030s. In TT, third quarter performance reflected strong commercial execution against a challenging demand backdrop. Many of our customers continue to navigate a persistently weak housing market and broader macroeconomic uncertainty across most key end markets. Even in this environment, the team delivered growth through a combination of pricing and volume improvement, with strength in North America, Latin America and Asia Pacific outside of China, more than offsetting softer demand in EMEA and China. This execution helped us deliver earnings above the high end of our range. As an additional point, this quarter did include approximately $5 million of earnings benefit for sales and cost timing between the third and fourth quarter.

Denise Dignam
Denise Dignam
President and CEO at Chemours

Importantly, global pricing increased 10% year-over-year in the third quarter, underscoring the success and discipline of the global pricing increases we executed over the past year. Pricing improved across every region and was the primary driver of the significant year-over-year increase in earnings and margin. This performance demonstrates the value of our differentiated Ti-Pure products, consistent commercial approach, and the ability to execute pricing actions while continuing to deliver the quality and service our customers expect. While housing and other TT markets remain under pressure, we are confident in the actions we are taking to strengthen TT through the cycle. Our work to optimize our manufacturing circuit to demand, with a focus on pricing execution, regulatory diligence, and market selectivity, underpinned by cost reduction efforts, have been key elements to enhance the value in a competitive TiO2 market.

Denise Dignam
Denise Dignam
President and CEO at Chemours

We will continue to control what we can control and remain ready to capture the opportunity as market conditions change. In APM, third quarter performance reflected continued progress toward a higher value portfolio mix. The business delivered year-over-year growth despite mixed conditions across broader industrial end markets, supported by pricing, improved volumes, and strong momentum in Performance Solutions. This deliberate mix shift also contributed to meaningful year-over-year improvement in earnings and margin. Notably, Performance Solution sales increased 26% year-over-year and 8% sequentially, underscoring the robust demand signals we continue to see from certain end markets, inclusive of those in the AI infrastructure and semiconductor space. Continued order book strength across data center and semiconductor applications demonstrates the critical role of our differentiated products, now approaching nearly half of Performance Solutions, enabling increasingly complex high-performance technologies.

Denise Dignam
Denise Dignam
President and CEO at Chemours

As Performance Solutions becomes a larger part of APM, it reinforces our confidence in the business's path toward higher value growth and stronger earning potential. More broadly, Chemours continues to expand its presence in attractive AI infrastructure end markets, inclusive of data centers and semiconductors, with differentiated offerings across APM's Performance Solutions business and TT. As of today, we have seen strong growth markets with our sales concentration across TSS and APM now at 10%. With that, I'll turn it over to Shane to walk through our outlook as we move into the fourth quarter.

Shane Hostetter
Shane Hostetter
SVP and CFO at Chemours

Thank you, Denise, and good morning, everyone. As shared in the earnings materials available on our investor website, I would now like to discuss our expectations as we look ahead. Beginning with TSS. For the fourth quarter, we expect TSS net sales to decline sequentially in the high teens to low 20% range, reflecting traditional seasonal patterns as the North American cooling season concludes. We expect Adjusted EBITDA to be between $105 million and $115 million, primarily reflecting the associated seasonal volume and mix impacts. As we look ahead, we are watching the economy closely and monitoring key demand drivers across TSS, including OEM stationary HVAC unit shipments in North America, as well as light vehicle builds. Given the seasonality of the business, we expect better visibility into the aftermarket as we move further into the first quarter of 2027, when seasonal restocking comes more into view.

Shane Hostetter
Shane Hostetter
SVP and CFO at Chemours

While the near-term environment remains dynamic, we remain confident in the business's long-term fundamentals, supported by our positions with OEMs and aftermarket distributors and disciplined commercial execution. For our TT business, we expect TT's net sales to decline sequentially in the high-single digits to low teens percentage-range, and Adjusted EBITDA to range between $60 million and $65 million in the fourth quarter. These expectations reflect challenging end markets as well as normal seasonality, paired with the timing of earlier referenced sales and cost benefits in the third quarter, which will negatively impact fourth quarter earnings. While the sequential outlook reflects these timing and seasonal factors, we continue to see weaker demand volumes across our key regions, with some slight strength in Latin America, reflecting a challenging and competitive global demand environment.

Shane Hostetter
Shane Hostetter
SVP and CFO at Chemours

We also feel well-positioned on pricing, anticipated to be up high-single digits over the prior year, following the three announced increases over the past year. The traction achieved across regions reflects consistent execution, close customer engagement, and our focus on protecting the value of our Ti-Pure offerings. Longer term, we remain focused on controlling what we can control through commercial and operational agility, underpinning this value-focused approach. We are managing production to demand and advancing cost productivity across our manufacturing circuit to strengthen earnings and cash flow through the cycle. Turning now to our APM business. For the fourth quarter, we expect APM's net sales to increase sequentially in the low to mid-teens percentage range, driven by continued strength in Performance Solutions.

Shane Hostetter
Shane Hostetter
SVP and CFO at Chemours

We expect Adjusted EBITDA to be between $40 million and $45 million, reflecting the benefit of higher sales and continued cost and operational improvements across APM's manufacturing circuit. The circuit is currently working well, and our focus remains on consistent execution and reliable customer service. At the same time, the business is addressing broader demand tailwinds across AI infrastructure, data center, semiconductor, and related end markets, where the quality and differentiated capabilities of our products continue to earn customer loyalty. These demand trends have strengthened the Performance Solutions order book and continue to support strong momentum from attractive end markets. As we fulfill that demand and shift the portfolio towards higher value Performance Solutions products, we see a clear path to stronger earnings and sustained growth in APM.

Shane Hostetter
Shane Hostetter
SVP and CFO at Chemours

Looking to our consolidated outlook, we now expect net sales to grow around 2% compared with 2025, and Adjusted EBITDA to now be between $775 million and $800 million. As we move further into the fourth quarter, this outlook reflects broader pricing momentum in TT with seasonal volume declines, partially offset by anticipated cost improvements, continued APM demand strength in high-value end markets supported by operational improvements, and stationary aftermarket weakness in TSS, which we expect will result in modestly lower earnings to close the year. Looking at liquidity, we now anticipate free cash-flow conversion to be between 15%-20%, which reflects CapEx between $220 million and $230 million. This free cash-flow conversion outlook reflects notable recent developments, most of which were not in our previous outlook.

Shane Hostetter
Shane Hostetter
SVP and CFO at Chemours

First, the increase in restricted cash related to the PFAS insurance proceeds MOU in connection with the finalization of the Judicial Consent Order with the state of New Jersey, which we expect to be more than offset by related legal settlement payments to the state of New Jersey and payments associated with our settlement with the state of North Carolina, both falling in the third and fourth quarters. These dynamics, together with timing of our net working capital spend, partly related to turnaround plans at the APM, have lowered our cash flow projections for the remainder of the year. Transaction taxes associated with the sale of our Kuan Yin property of approximately $25 million also impacted the third quarter, with the remaining $5 million in the fourth quarter. Our net leverage ratio is now expected to be below 4.2 times Adjusted EBITDA at the end of 2026.

Shane Hostetter
Shane Hostetter
SVP and CFO at Chemours

Related to our leverage position, we have continued to prioritize debt repayment. In the third quarter, we prepaid an additional 50 million euros for our euro term loan B, bringing total debt reduction for the year to 280 million euros. Additionally, as anticipated, we closed the sale of the final parcel of land associated with our former manufacturing facility in Kuan Yin, delivering the remaining approximate $56 million of consideration from the transaction. This land sale, completed earlier than anticipated, marks the conclusion of a multi-year effort by our team and underscores our ability to right-size our operational footprint, drive smart cost-cutting initiatives, maximize the value of our non-core assets, and deploy proceeds in a responsible fashion. Going forward, we will continue to prioritize debt reduction as a key element of our capital allocation strategy, strengthening the Chemours balance sheet and enhancing our long-term financial flexibility.

Shane Hostetter
Shane Hostetter
SVP and CFO at Chemours

The work to de-risk our balance sheet is foundational to executing the four pillars of our Pathway to Thrive strategy. As we look ahead to 2027, we expect uncertain macroeconomic conditions to persist. We remain focused on controlling what we can control and are confident in the cost measures we have taken and the improvements we are driving across our operational circuit through the Chemours Business System to strengthen our resilience and execution. Even in this challenging environment, we expect Chemours to deliver earnings growth in 2027. With that, I'll turn the call back over to Denise for her closing remarks.

Denise Dignam
Denise Dignam
President and CEO at Chemours

Thank you, Shane. As we move into the second half of our Pathway to Thrive strategy, we continue to make progress across all four pillars: operational excellence, enabling growth, portfolio management and strengthening the long term. Run rate cost savings, improved operational stability and strong growth in TSS Opteon low GWP refrigerants, PT and APM Performance Solutions all reflect our focus on execution over the course of Pathway to Thrive. We also recently completed the sale of our former Kuan Yin site, strengthened our balance sheet through debt reduction, and reduced our litigation exposure through the North Carolina settlement and the final approval of the New Jersey Judicial Consent Order supported by our MOU partners. Importantly, the related payments are expected to occur over decades under the MOU framework. We will continue to take a disciplined approach to addressing legacy matters in a way that protects our balance sheet.

Denise Dignam
Denise Dignam
President and CEO at Chemours

Additionally, we have strengthened the long term of Chemours through sustainability actions. As highlighted in our 2025 Sustainability Report published this past August, we have reduced air and water process emissions of fluorinated organic chemicals by 80% since 2018, keeping us on track toward our goal of 99% or greater reduction by 2030. This progress reflects our continued investment in advanced emissions detection and abatement technologies and our commitment to responsible manufacturing, which protects our privilege to operate and positions Chemours to thrive for the long term. Over the same period, we have also reduced our Scope one and two greenhouse gas emissions by 57%, nearing our goal of a 60% reduction by 2030, which highlights our innovation.

Denise Dignam
Denise Dignam
President and CEO at Chemours

I also would like to highlight the launch of the Faizeon product portfolio, our two-phase liquid cooling fluids designed to help meet the rapidly growing cooling requirements of AI infrastructure in a new valuable end market for Chemours. We created the Faizeon brand to give our growing portfolio a clear, dedicated identity in the liquid cooling data center market, bringing together years of fluid development, technical expertise and industry collaboration under one brand. Looking ahead, I remain excited about our trajectory and the future value we will create. Our strength lies in our three market-leading businesses, differentiated solutions and attractive end markets. Building on the progress we have made under Pathway to Thrive, we are well-positioned to deliver the long-term shareholder returns while extending our leadership in data center, semiconductor and related AI infrastructure markets and realizing our potential in growth markets such as liquid cooling and critical minerals.

Denise Dignam
Denise Dignam
President and CEO at Chemours

Finally, we believe the future for Chemours is one of growth and exciting possibility, and none of it would be possible without our employees around the world who live our values every day. I want to thank them for their continued focus, humility, transparency and tenacity. With that, I'd like to open the line for your questions.

Operator

Thank you. At this time, we'll conduct a question-and-answer session. As a reminder, to ask a question, you'll need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of John McNulty of BMO. Your line is now open.

Analyst at BMO

Hey, good morning. This is Kale on for John. Denise, you mentioned earlier that you saw higher input costs in TSS. Was that higher R-32, or was that something else? Maybe just looking to next year, what are your expectations for TSS input costs through the year and what that looks like with R-32 pricing in China and India looking like it's stepped up decently throughout the year? Thank you.

Denise Dignam
Denise Dignam
President and CEO at Chemours

Sure. I mean, the primary input cost increase that we see, it is really sulfur. That is the beginning of the supply chain for our TSS business. We have been really able to overcome that with our pricing efforts, with the excellent commercial work of the team. We do not see any further changes in those raw material inputs.

Analyst at BMO

Got you. Okay, thank you. For APM, with the Q4 guide at $40 million-$45 million, that is above the historical range you have talked about for business at $30 million-$40 million. Should we assume that that $40 million-$45 million range is kind of like the fair normalized run rate that you expect in 2027?

Shane Hostetter
Shane Hostetter
SVP and CFO at Chemours

Hey, Kale. Thanks. As we look at Q4, there is definitely strength in the Performance Solutions that is driving that business, and there is a little pent-up demand given some of the operational items that happened in Q2 and Q3. Looking ahead, we still feel confident in that $30 million-$40 million range per quarter going into next year.

Analyst at BMO

Okay, thank you. I will turn it over.

Operator

Thank you. One moment for our next question. Our next question comes from the line of Aleksey Yefremov of Barclays. Your line is now open.

Ryan Weiss
Ryan Weiss
Analyst at Barclays

Thanks, and good morning. This is Ryan Weiss on for Aleksey. I just wanted to maybe dig into TSS a little bit more. I just get an understanding of, you talked about less favorable seasonality. How much of that kind of reflects normal seasonality that you see kind of 3Q to 4Q versus the distributor destocking that you're seeing? When do you kind of expect the channel inventory to clear? Thanks.

Denise Dignam
Denise Dignam
President and CEO at Chemours

Yeah. I think first of all, maybe I'll just remind us, this is a one-time transition. It's really the first time this has been done and kind of transitioned overnight. When we look into, as you get into the fourth quarter, that's when the market seasonality really start to see the aftermarket as a pretty low demand. We have seen signs, some positive signs of orders have been coming in in the fourth quarter, which gives us some confidence that the market has stabilized, the inventory has stabilized. But it's really going to take us till we get into the first quarter, I would say, towards the end of the first quarter, as we see the cooling season, in particular in the Northern Hemisphere, for us to really understand, get a better line of sight of demand, in particular in the aftermarket.

Shane Hostetter
Shane Hostetter
SVP and CFO at Chemours

Just to add on from a financial perspective, right, to your question around seasonality, if you look at legacy seasonality in past quarters from third quarter to fourth quarter, the drop in earnings is really aligned to what we're seeing here. As Denise mentioned, I think it's less on the destocking, more just seasonality.

Ryan Weiss
Ryan Weiss
Analyst at Barclays

Great. Thanks. Denise, question for you. One of the trade rags flagged increasing Chinese imports of TiO2 flowing into the U.S. following some of the anti-dumping duties that have been placed in other countries. Have you guys seen any pressure from this to date? Do you think that pursuing an ADD in the U.S. would be something if current tariff protections aren't enough? Thank you so much.

Denise Dignam
Denise Dignam
President and CEO at Chemours

Sure. Thanks for the question. Imports into the U.S. are still pretty modest relative to places around the world. I can tell you, we take a very, very serious stance on protecting our fair trade, the fair trade markets. There's been, and I think it's been very successful. You see when the trade barriers come up, the Chinese exports into the regions really weaken. There's just a lot of trade actions going on. Japan and Australia have put an ADD investigation in. The India ADD rates have been approved. There's strong ADD in the U.K. EU is reevaluating the effectiveness, and we have production in Mexico, and that's certainly an area where we are focused. The Trump administration in 2019 put in trade tariffs on the imports of TiO2 into the U.S., and just to reinforce, we will aggressively defend the U.S. market.

Operator

One moment for our next question. Our next question comes from the line of Pete Osterland of Truist Securities. Your line is now open.

Pete Osterland
Pete Osterland
Analyst at Truist Securities

Hey, good morning. Thanks for taking the questions. First, just on the formal launch of the liquid cooling portfolio, curious as to the timing for announcing that now. Is this an indication that you're expecting a meaningful ramp for sales of these products near term? Maybe across the five products that you outlined on slide 11, where are you seeing the most customer interest right now, and how do you see that evolving over time?

Denise Dignam
Denise Dignam
President and CEO at Chemours

Hey, thanks for that, for the question. First of all, we're really excited about the launch of this brand. This is the first brand that Chemours has launched. We see this as a very strategic new market for us with significant long-term growth. We definitely see the momentum building as you see more advanced chips. As you look at what's going on in the market, there's definitely been a transition to single-phase direct-to-chip. As you get higher rack densities, that is going to become an inefficient solution for the more advanced chips. You're going to need more water, more treatment of water, different size tubing. It's not going to be the most efficient. We think that there is, possibly in 2027, it's something clearly that we're working on with our customers, that there could be a data center architecture designed for two-phase in 2027.

Pete Osterland
Pete Osterland
Analyst at Truist Securities

Very helpful. Thanks. Then, just as a follow-up, I wanted to ask on Pathway to Thrive. Could you share the run rate of the $250 million that you expect to have achieved exiting 2026? For the rest of it, what are the major areas where you still have work to do to get to that target by the end of 2027?

Shane Hostetter
Shane Hostetter
SVP and CFO at Chemours

Hey, thanks. Appreciate the question. Yeah, we feel very confident in achieving those savings, and we're ahead on that side. As you think about what is driving that, it's really operational excellence. We introduced Chemours Business System, which I think is really being helpful from a lean mindset in driving out cost locally at the manufacturing sites. Also, this is a global, company-wide area where we've done a lot of perspectives around cost-cutting and thinking through making sure from a lean perspective, it's not just in manufacturing, but it's across all BUs for the company.

Operator

Thank you.

Pete Osterland
Pete Osterland
Analyst at Truist Securities

Great. Thanks a lot.

Operator

Thank you. One moment for our next question. Our next question comes from the line of John Roberts of Mizuho. Your line is now open.

John Roberts
John Roberts
Analyst at Mizuho

Thank you. On APM, have you caught up with the delayed orders from the outage that you had earlier in the year, or when do you think you will get caught up, and how is that affecting the mix in that segment?

Denise Dignam
Denise Dignam
President and CEO at Chemours

Yeah, I mean, I am just going to say, across the semicon space and data center space, the demand is so robust. I think for most people, it is hard to get caught up, right? It is just a tremendous demand. So, what we see is that we are running our assets extremely well, and that we are taking advantage of every opportunity. And we have a lot of strategic partners in this area, and it is incredibly important for us to meet their needs and to fulfill the demand. So, this idea of catching up, I do not think that going into 2027, there is just a huge pent-up demand. If you think about these AI chips and the need for memory, it really is kind of out of control. I do not really see us necessarily catching up in some of these spaces next year. It is going to be continued strong demand.

John Roberts
John Roberts
Analyst at Mizuho

All right. Thank you.

Operator

Thank you. One moment for our next question. Our next question comes from the line of Duffy Fischer of Goldman Sachs. Your line is now open.

Duffy Fischer
Duffy Fischer
Analyst at Goldman Sachs

Yeah, good morning. First question, just if you could help us with what you think the right baseline is for TSS in the back half. So last year, you did $322 million of EBITDA, which obviously had some oversell in it. This year, at the midpoint for your Q4, you are $246, which has some undersell. As we go forward, what is the right baseline of EBITDA do you think that we should build off of into 2027 and 2028 for the second half of TSS?

Shane Hostetter
Shane Hostetter
SVP and CFO at Chemours

Hey, Duffy. Thank you very much. Appreciate that. As we think about the baseline stemming off of this, we think about the year ahead of us into 2027. We are looking at the markets from an underlying perspective. We feel very confident in the chillers market with significant growth. Denise just mentioned kind of the AI demand and related areas there. I see modest growth in the auto side, just given just overall vehicle sales, and then flattish residential and commercial. As we look ahead to 2027, we see this as more of kind of a modest top-line growth on that side. But longer term, feel very confident.

Shane Hostetter
Shane Hostetter
SVP and CFO at Chemours

We continue to put forward that this is a GDP-plus type business, with margins above the 30% type range. We really feel confident as we think about the aftermarket growth story, as well as the stable base that we have within the OEMs and other.

Duffy Fischer
Duffy Fischer
Analyst at Goldman Sachs

All right. If we jump to TiO2, two questions. Do you think the India ADD will be durable this time? Some of your peers are quite a bit larger in that market than you are. If it is durable, is that a market that becomes more interesting to you, and will you push harder into that market?

Denise Dignam
Denise Dignam
President and CEO at Chemours

Yeah, I do think that the anti-dumping will be durable. It really was taken off just because of a technicality that they have resolved, so I do think it will be durable. Although when you look at global pricing, India is kind of the lowest pricing in the world. So, we have a very disciplined commercial approach where we are focused on fair trade regions, but also making sure we maximize the value for the company. So, if opportunities arise, absolutely. But I think that remains to be seen if that is a place where we decide to put more volume.

Duffy Fischer
Duffy Fischer
Analyst at Goldman Sachs

Terrific. Thank you, guys.

Operator

Thank you. One moment for our next question. And Chris, on line of Josh Spector of UBS. Your line is now open.

James Cannon
James Cannon
Analyst at UBS

Yeah. Hey, guys. You got James Cannon on for Josh. Thanks for taking my question. I wanted to take another one just on kind of what the underlying run rate in TSS is. If I think about the moving pieces between a stronger first half, weaker second half this year, where do you guys think the full year nets out compared to the underlying stationary HVAC market?

Denise Dignam
Denise Dignam
President and CEO at Chemours

Hey, thanks, James. Maybe I'm going to turn it over to Shane for some of the detail, but I just really want to kind of take us back into really the strength of the TSS business and our longer-term view of this being a GDP-plus business with greater than 30% EBITDA margins. This is a business that's driven by regulatory transitions. We have an advantaged position. There's significant growth still ahead. You can look at the Africa market, but as well as you look at the continued trends that are needed in cooling. We talked about liquid cooling in data centers, but there's also just the cooling needs in areas in the chillers in the data center. So, we're very, very confident in the long-term trajectory of this business. But I'll turn it over to Shane to give a little bit more detail on the next year.

Shane Hostetter
Shane Hostetter
SVP and CFO at Chemours

Yeah, I appreciate it, James. I know you mentioned kind of the run rate in TSS. I think as we looked at 2027, right, we talked about growth in Chemours as this is on the script, but feel very confident in some tailwinds as we looked at each one of the businesses. I mean, TT, if you look at the second half, right, it's $85 million this quarter and then $60 million-$65 million. We think that second half is more representative going into 2027, specific to really strong pricing that we think is going to hold into the year. Then APM, we talked earlier about it being run rate to $30 million-$40 million. So, really a good tailwind as we get in.

Shane Hostetter
Shane Hostetter
SVP and CFO at Chemours

That coupled with modest growth, as I described, given the overall macro changes between significant growth in chillers, slight auto growth and flattest residential, we feel very confident that Chemours is going to grow next year.

James Cannon
James Cannon
Analyst at UBS

Got it. Thank you.

Operator

Thank you. One moment for our next question. Our next question comes from the line of Hassan Ahmed of Alembic Global Advisors. Your line is now open.

Hassan Ahmed
Hassan Ahmed
Analyst at Alembic Global Advisors

Morning, Denise and Shane. Question around TT. Obviously, pricing was decently strong. I mean, you guys were up 10% year-on-year and 4% sequentially. Could you comment a bit about just the sustainability of those sort of pricing moves that you've taken. I know you guys are guiding to sort of high single digits to low sort of teens revenue declines Q4. But as we look at 2027, how sustainable are these pricing levels?

Denise Dignam
Denise Dignam
President and CEO at Chemours

Yeah. Thanks, Hassan. As you know, we don't give forward guidance on pricing, but I will say, we've been very successful with our pricing execution, which we started really December of 2025. So, we've been very successful, and we are very much focused on protecting the progress that we've made. We're very deliberate and disciplined in our commercial efforts. As you pointed out, you can see that in our results. We're also kind of looking around the world and actually pleased to see that the Chinese producers have just recently done another price increase. So, we're just confident in our actions and that what we do to deliver the value for the business.

Hassan Ahmed
Hassan Ahmed
Analyst at Alembic Global Advisors

Understood. As a follow-up, can you comment a bit on the cost curves. I know you guys obviously in 3Q within TT expanded your margins, but how are the marginal guys doing, particularly with sulfur still being an issue, sulfuric acid prices still being high. Part and parcel with that, are you guys seeing any further signs of rationalization in the global TiO2 space?

Denise Dignam
Denise Dignam
President and CEO at Chemours

Yeah. I mean, I would say from a cost curve perspective, certainly the sulfate producers have moved to the right, and we continue to move to the left with all of our efforts. This has been our strategy as we kind of launch all of our efforts in TT in 2023, and we continue to drive and be on that trajectory. We think that's critically important for the business. As far as permanent shutdowns, I mean, it's. We're not really sure. You see things coming back, in particular in Europe. What I will say is, it still remains to be seen how successful those restarts will be. Customers are cautious about relying on those assets, and is the long-term sustainable. So, we just focus on our production, and some of those assets, they were shut down because they're high cost. That's not going to change.

Denise Dignam
Denise Dignam
President and CEO at Chemours

We really think the winning strategy is to continue on the current trajectory of driving our cost to the left-hand side of the curve.

Hassan Ahmed
Hassan Ahmed
Analyst at Alembic Global Advisors

Very helpful. Thank you so much.

Operator

Thank you. One moment for our next question. Our next question comes from the line of Vincent Andrews of Morgan Stanley. Your line is now open.

Justin Pellegrino
Justin Pellegrino
Analyst at Morgan Stanley

Good morning. This is Justin Pellegrino on for Vincent, and thanks for taking the question. I was just hoping you could kind of discuss the drivers of the free cash-flow guidance reduction a little bit more. You mentioned the items that are new for 3Q and 4Q, but 3Q came in a bit ahead of guidance. I was just hoping you could kind of parse out the split between 3Q and 4Q timing, and specifically when the North Carolina settlement is expected, if that was in 3Q and 4Q, and just any other drivers that we should be considering within that guidance. Thank you.

Shane Hostetter
Shane Hostetter
SVP and CFO at Chemours

Yeah, thanks for the question. Couple specifics, right? The North Carolina settlement is expected for the fourth quarter on that side. As I think about just taking a step back in where we're guiding, we're guiding to above 15% free cash flow. That is a reduction given we had settlements for New Jersey with the JCO signing, we had the North Carolina settlement, which would be in the fourth quarter. We have the EPA settlements, which will be in the fourth quarter as well. Then we also paid tax on the Kuan Yin proceeds in the third and fourth quarter. The way I look at this is, without those items, we'd be closer to that 25% that we guided to in the third quarter. Notably, we are seeing a little bit of reduction from free-cash flow in the latter part.

Shane Hostetter
Shane Hostetter
SVP and CFO at Chemours

That is due to really timing as it relates to APM/TSS plant maintenance activities, as well as later sales in the fourth quarter, which we anticipate to collect, call it, in the first quarter. All in all, just leave it as we really feel confident in the free cash-flow characteristics of this business, and we'll look to build off the free cash flow conversion into the next year that we've established this year.

Justin Pellegrino
Justin Pellegrino
Analyst at Morgan Stanley

Then just one more on CapEx, just given the $40 million reduction in guidance. Can you just kind of fill us in on where we are relative to sustaining CapEx, and then if you have any preliminary expectations for 2027? That would be great. Thank you.

Shane Hostetter
Shane Hostetter
SVP and CFO at Chemours

Yeah, I appreciate the question. As we think about CapEx, right, we are obviously looking at what needs to be spent to run and maintain the related assets and operations, and we're not impacting that, right? There's some items around maybe strategic areas that are not yet ready that we might have to spend next year or the years after. As I think about 2027, we won't give specific guidance to CapEx, but I do not believe that it will be a large amount of increase into the given year into next year.

Justin Pellegrino
Justin Pellegrino
Analyst at Morgan Stanley

Fantastic. Thank you.

Operator

We have reached the end of our question-and-answer session. Thank you for joining The Chemours Company Third Quarter 2026 Results Conference Call. You may now disconnect.

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