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Chemours (CC) Down 35% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Chemours (CC - Free Report) . Shares have lost about 35% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Chemours due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Chemours' Earnings, Revenues Trail Estimates in Q1

Chemours 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.

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 TiO2.

Financials

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.

Outlook

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 to execute its strategy including the installation of its Ti-Pure Value Stabilization framework across its entire customer base and driving the adoption of Opteon.
 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -13.04% due to these changes.

VGM Scores

Currently, Chemours has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Chemours has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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