Chemours anticipates double-digit Opteon growth and $5.7B–$5.8B sales in 2025 as TSS segment outpaces expectations

Earnings Call Insights: The Chemours Company (CC) Q3 2025

MANAGEMENT VIEW

* Denise Dignam, President, CEO & Director, reported that "we exceeded our adjusted EBITDA expectations despite the persisting macroeconomic weakness that affected some economically sensitive sectors of our business." She highlighted that "stronger earnings were driven through diligent commercial execution in stationary aftermarket sales of Opteon Refrigerants under the backdrop of the 2025 U.S. AIM Act stationary equipment transition, further supported by lower corporate costs."
* Dignam shared, "Opteon Refrigerants now account for 80% of total refrigerant sales, an increase from 58% in the previous year," and this business segment achieved a "35% adjusted EBITDA margin."
* The company completed the shutdown of the SPS Capstone product line in APM and announced an agreement with SRF Limited in India to support essential applications, aiming for operational flexibility and a robust footprint.
* Dignam noted, "TT delivered overall results below our expectations, primarily due to sustained macro weakness across the global TiO2 market," but pointed to ongoing efforts to minimize future disruptions and a recent global pricing increase for TiO2.
* Shane Hostetter, Senior VP & CFO, stated, "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." He added, "TSS' adjusted EBITDA is expected to decrease sequentially, ranging between $125 million and $140 million."

OUTLOOK

* The company expects consolidated fourth quarter net sales to decrease 10% to 15% sequentially, with adjusted EBITDA between $130 million and $160 million.
* Full year 2025 sales are anticipated between $5.7 billion and $5.8 billion, with adjusted EBITDA ranging from $745 million to $770 million, and capital expenditures at $220 million. Free cash flow conversion is expected to be between 50% and 70% for the fourth quarter.
* Dignam indicated, "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 R-454B in the U.S."
* Product development costs are projected at approximately $40 million for 2025 and $20 million in 2026.
* Hostetter commented, "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."

FINANCIAL RESULTS

* The TSS segment reported Opteon sales with double-digit growth of 80% compared to the prior year quarter, marking a third quarter record.
* APM delivered solid top-line performance and completed the shutdown of the SPS Capstone product line.
* TT's results were below expectations, impacted by macro weakness, but included some sequential pricing strength in Western markets and volume strength in non-Western markets.
* The company reported $22 million in one-time production-related costs for TSS product development in Q3.

Q&A

* John McNulty, BMO Capital Markets: Asked about TSS not experiencing the volume slowdown some OEMs are reporting and how Chemours is managing. Denise Dignam explained, "We, as a business, are focused always on maximizing value of our quota... We expect double-digit growth going into the fourth quarter and as we start 2026."
* McNulty also questioned Chemours' ability to manage multiple initiatives. Dignam responded, "We actually feel really good about the things that we're working on and really aligned with our Pathway to Thrive strategy."
* Peter Osterland, Truist Securities: Inquired about operational improvements in TT. Dignam said, "Many of the issues that we faced were onetime distinct issues. We've put contingency plans in place around those issues."
* Osterland followed up on the TiO2 price increase. Dignam expressed confidence, stating, "We've seen -- throughout the year, we've actually seen price stability in these markets... We're confident that our customers are going to be restocking in the first quarter."
* Joshua Spector, UBS: Sought clarification on liquid cooling investment. Hostetter confirmed the $22 million flowed through EBITDA and was a noncash item.
* Patrick Fischer, Goldman Sachs: Asked about opportunities from market exits and capacity shifts. Dignam said, "We expect about 800 kilotons around, if you think about all those areas, Europe, India, Brazil. So yes, it's a great opportunity for us, and we expect to be focused on growing share."

SENTIMENT ANALYSIS

* Analysts displayed a neutral to slightly positive tone, focusing on sustainability of recent outperformance, the ability to manage multiple growth initiatives, and confidence in TT cost-out and operational improvements.
* Management maintained a confident tone, especially during prepared remarks, emphasizing operational excellence, commercial execution, and strategic flexibility. In Q&A, Dignam and Hostetter reiterated confidence in growth, cost controls, and risk mitigation, with statements such as, "We feel confident in our commercial capabilities" and "We're confident moving forward."
* Compared to the previous quarter, management's tone was more assured regarding operational fixes and the potential for margin and earnings growth, while analysts' skepticism around demand and execution risks remained but was somewhat tempered by recent segment outperformance.

QUARTER-OVER-QUARTER COMPARISON

* Guidance narrowed for full year 2025 adjusted EBITDA to $745 million–$770 million from $775 million–$825 million, reflecting greater caution amid ongoing demand weakness and one-time costs.
* Opteon growth accelerated, rising from 75% to 80% of total refrigerant sales, and TSS margins held strong.
* TT's performance fell below expectations due to persistent macro headwinds, contrasting with a stronger sequential performance in Q2.
* Management's confidence in operational improvements and cost-out delivery increased, with a shift toward highlighting strategic opportunities in critical minerals and global pricing actions.
* Analysts continued to probe sustainability, risk of demand slowdowns, and ability to execute on large initiatives.

RISKS AND CONCERNS

* Management cited ongoing macroeconomic weakness, continued TiO2 market oversupply, and destocking as key risks.
* One-time production costs and market volatility were acknowledged, particularly in TT and TSS.
* Analysts questioned demand sustainability, the effect of competitive dynamics, and the company's ability to manage multiple growth projects simultaneously.
* Management outlined mitigation strategies including cost controls, operational excellence, and portfolio optimization.

FINAL TAKEAWAY

Chemours management emphasized that the company is positioned to deliver continued double-digit Opteon growth and robust segment margins, supported by cost-out initiatives and strategic execution under the Pathway to Thrive strategy. Despite persistent macro headwinds in the TiO2 market and one-time production costs, management expressed confidence in their ability to capitalize on regulatory transitions, operational improvements, and portfolio optimization to drive long-term shareholder value and growth into 2026.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/cc/earnings/transcripts]

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