Earnings Call: Q4 2019

Feb 14, 2020

Ladies and gentlemen, thank you for standing by and welcome to the Kumar's Company 4th Quarter 2019 Earnings Conference Call. At this Please be advised that today's conference is being recorded. I would now like to hand the conference over to Jonathan Locke, Vice President of Corporate Development And Investor Relations. Thank you. Please go ahead, sir. Good morning, and welcome to the Chemours Company's full year 2019 earnings conference call. I'm joined today by Markford, Nio, President and Chief Executive Officer Mark Newman, Senior Vice President And Chief Operating Officer and Samir Rahhan, Senior Vice President And Chief Financial Officer. Before we start, I'd like to remind you that comments made on this call well as the supplemental information provided in our presentation and on our website contain forward looking statements that involve risks and uncertainties. Including those described in the documents, Chemours is filed with the SEC. These forward looking statements are not guarantees of future performance, and are based on certain assumptions and Kamors undertakes no duty to update any forward looking statements as a result of future developments or new information. During the course of this A reconciliation of non GAAP terms and adjustments are included in our release and at the end of this presentation. I will now turn the call over to our CEO, Mark Vergnano, who will review the highlights from the quarter and the year. Mark? Thank you, Jonathan, and thank you, everyone, for joining us on this Valentine's Day 2020. As I look back on 2019, I'm encouraged by the results delivered in the fourth quarter and proud of the resilience we showed as a business throughout the year. These past 12 months have been among the most challenging we've had as a young company. However, as we have done in the past, my fellow colleagues at Chemours pulled together to deliver a solid set of results consistent with our updated guidance of the as well as our the full year 2019, we delivered adjusted EBITDA of $1,020,000,000. Free cash flow conversion was better than anticipated, leading to a full year free cash flow We had a strong 4th Our results reflect the ability of Chemours to generate strong free cash flow despite significant market and operating headwinds. The cost and working capital actions we implemented in 2019 began to have an impact late in the year and point the way to better results as the cycle turns. We've come a long way since our spin in 2015. I believe this resolve is somewhat unappreciated by the market. In the face of changing market conditions. Across the business in 2019, we achieved a number of commercial wins, which I wanted to highlight. It starts with hitting our 50% volume target for ADA contracts in our titanium technology segment. We transitioned from a difficult first half characterized by heavy destocking to a stronger second flex and distribution to work with customers and begin restoring our share position. I'm happy to report another quarter of stable volumes, stable sequential You'll also recall that last quarter, we announced the launch of a new pigment product for ink grades. We are excited to be bringing that product to the market and increasing our participation in specialty TiO2 in the coming years. On the Fluoro Products side, Apteon 17. We expect to reach 100 percent penetration with automotive OEMs in the U. S. By 2021, and in Japan by 2023. On the stationary front, we are increasing our investment in countermeasures to control the flow of illegal imports into Europe, which are depriving the world of the environmental benefits of HFO Technology. We strongly believe that our opteon blends are the refrigerant of the future for stationary applications worldwide. In 2019, we also delivered on First, we completed the startup and commissioning of our Corpus Christi Opteon site. It's a world class World Scale Facility appropriately built in the great state of Texas. 2nd, we completed work on the thermal oxidizer at our facility in Fayetteville North Carolina. It's another unique facility designed to control air emissions of fluorinated compounds at the site. We are confident that the plant will succeed in its mission to allow Chemours to lead on the issue of fluorinated emissions. Finally, we completed work on our new Chemours discovery hub at the University of Delaware Star Campus. Our new R and D lab is a great story, not just for Chemours, but for the state of Delaware. We are committed to reinvesting in our home state and keeping these great R and D jobs close to home. Last but not least, 2019 was a year in which we continued our efforts to refresh the portfolio. In 2019, we acquired Southern Ionics Minerals, a leading mineral sand operator in Georgia. In December, we completed the sale of our Methlamines and Methlamides business to the cornerstone chemical company. While modest inside these deals demonstrate our commitment to taking action As you've just heard, we have positives to build on and we're forging ahead to improve our performance on many fronts. I'll be back at the end of our call Right now, I'll turn things over to Sameer to go over our financial results. Thanks, Mark. I'll begin my comments on slide 4. Full year net sales of $5,500,000,000 were down $1,100,000,000 versus 2018, reflecting volume and price headwinds across the businesses. GAAP net income was negative $52,000,000, while adjusted net income was $419,000,000. GAAP earnings per share was negative $0.32, while adjusted earnings per share was $2.51. GAAP figures include 2 one time charges in the quarter. 1st, a non cash charge of $380,000,000, is related to the transfer This transfer represents the settlement and de risking of our largest pension obligation from the spin. It results in our ability to move the vested non active portion of our Netherlands plan and associated liabilities of the balance sheet. As a result of the transaction, we will also recognize ongoing savings from reduced pension administration costs. We were excited to be able to take advantage of the surplus in the plan to decrease this liability second, a $132,000,000 charge related to on-site remediation at our Fayetteville site. This accrual includes potential cost to address legacy groundwater remediation at the site along with the provision for connected to the consent order with the state of North Carolina and are therefore subject to change. Adjusted EBITDA $1,020,000,000 resulted in EBITDA margin of 18%. Free cash flow generation of $169,000,000 was higher than our updated guidance from the second quarter. This result was driven by stronger operating cash flow in the 4th quarter as a result of improved working capital management. Let's move to Slide 5 to review our 4th quarter results. Net sales of over $1,400,000,000 compared to one $500,000,000 in last year's fourth quarter. The drop in revenue was driven by lower volumes and prices of refrigerants and lower Ti Pure pigment sales. 4th quarter GAAP net income of negative $317,000,000 and GAAP earnings per share of negative $1.94 reflect the charges discussed previously. Adjusted net income came in at $92,000,000 resulting in adjusted earnings Adjusted EBITDA of $227,000,000 was impacted by lower margins across the two main segments. Free cash flow was a bright spot in the quarter, coming in at $304,000,000 compared to $105,000,000 from the fourth quarter of last year. This was driven by solid cash flow from operations of $400,000,000 and CapEx of $96,000,000. Turning to page. 4th quarter adjusted EBITDA was $227,000,000 compared to $341,000,000 from the same period a year ago. Results were driven by lower global refrigerant prices and lower contractual pass through prices in some chemical solutions products. Yeah, two prices declined modestly in the fourth quarter relative to this fourth quarter of 2018, mostly due to channel, customer and product mix. Lower volume accounted for additional $16,000,000 headwind in the quarter. This was primarily due to lower volumes in our Titanium Technology segment on a year over year basis. Cost in other was a $30,000,000 headwind in the quarter impacted by 3 main factors: First, fixed cost under absorption titanium technologies due to lower volumes produced during the year. 2nd, continued impact from loss of gas quota sales due to HFC illegal imports into the EU. And third, increased costs and inventory related the operational issues in fluoroproducts as communicated in the previous quarter. These effects were partially offset by increased productivity on the successful ramp up Komors continues to maintain a strong balance sheet with solid liquidity. We have managed cash and working capital well in the 4th quarter over the course of 2019. Cash at the end of 2019 was $943,000,000, up $249,000,000 from the third quarter of 2019. The business generated $400,000,000 of operating cash flow in the quarter, a combination of seasonal working capital unwind normalizing TiO volumes and strong overall working capital management. CapEx was $96,000,000, primarily related to the completion Free cash flow for the year was $169,000,000,000. Net leverage remained stable at 3.2 times adjusted EBITDA on a trailing basis. Debt net of cash stood at $3,300,000,000 at the end of the year. I continue to have confidence in our balance sheet with well spaced and longer dated maturities. I believe we are well positioned heading into 2020, having weather the tough conditions here in 2019. I'll now turn things over to Mark Newman to cover segment performance. Thanks Sameer. I'd like to start with Fluoro Products on the next slide. As we move through the fourth quarter, we continue to experience a negative impact of illegal HFC imports into the EU, While there have been significant ongoing efforts, this continues to be the end stationery blends in Europe. As we approach the 2021 quota step down, We are working with the EU member states to help accelerate the implementation of mechanisms and enforcement actions to stop illegal imports. This includes stepping up on the ground investigation and enforcement as well as raising public awareness Moving onto the results, net sales in the 4th quarter and full year were $614,000,000 and $2,600,000,000 respectively. Relative to the full year, pricing and volume, were 2% and 4% headwinds respectively as HFC illegal imports slowed Opteon stationary blend adoption and impacted global refrigerant prices. Adjusted EBITDA for $78,000,000 respectively. In the 4th quarter, the benefit from the ramp up of the production of Opteon at our Corpus Christi site was offset by the impact We will drive better operational discipline and execution We continue to build momentum with stationary equipment OEMs. These partnerships are important to enable the full conversion of the stationary market to HFOs. We will continue our drive for adoption across the mobile air conditioning sector, with a focus on Finally, in polymers, we are focusing application development around 5G and membrane technologies where we have proprietary intellectual property and On Chart 9, let's review the results from our Chemical Solutions business. On the Q3 call, I said we were looking to close the year strong in chemical solutions and the team really stepped up in Q4 We delivered record profitability in strong commercial and operating performance from the business. This came despite some top line erosion due to lower contractual pass through pricing in our Performance Chemicals And Intermediates business. 4th quarter and full year revenue were $129,000,000 $533,000,000 respectively, The drop off in these figures from 2018 was primarily due to lower pass through pricing in the performance chemicals and intermediate business as raw material costs came down in 2019. This change was earnings neutral to the business. As such, adjusted EBITDA for the full year was 4th quarter adjusted EBITDA was $25,000,000 up 79% from the prior year period. Adjusted EBITDA margin was 19% in the 4th quarter moving up toward portfolio average and in line with our expectations for the segment. Our world class sodium cyanide technology enables us to efficiently and safely serve customers across the Americas and we continue to see strong demand across the region. Gold prices, which have moved up over the past year, provide an additional tailwind as our customers look to serve rising demand. I'm proud of the investments Ed and the team have made in the business over the past several years. Spending capital wisely to improve productivity and asset quality. Finally, in the quarter, we sold our MAP business to an affiliate of Cornerstone Chemical Company. This was a positive transaction for both sides as Chemours found a great operating partner for the business with significant synergies, while both parties were able to work with the state of West Virginia to save 60 jobs. My sincere thanks to Jonathan Ed and the entire team for forging ahead through the holidays to get On Chart 10, I'll cover $10,000,000 $2,300,000,000 respectively. The team has skillfully leveraged all our channels, including the Flex portal to begin the process of regaining share with our plastics customers. Revenue was stable on a sequential Annual prices for 2019 on a year over year basis were down approximately 1%. A product of our TBS strategy and recognition of the value in use of our Ti Pure pigment. While we don't have all the data to finish the analysis at this point we believe we have regained additional share globally as we exit 2019. On a regional basis, volume and buying patterns were stable Across most of the globe, Europe showed some improvement after a very slow start to the year. Adjusted EBITDA in the fourth quarter and full year came in at $115,000,000 and $505,000,000 respectively. The 4th quarter was down 42% from 2018. Margins of 19% reflect the impact of low fixed cost absorption across the circuit due to low production volumes and raw material inflation. However, we expect these will begin to normalize into the mid-20s as production volumes increase across our Thanks, Mark. Turning to Chart 11. As I said at the beginning of the call, we are moving forward in 2020 with some pockets of momentum and looking to build on between $1,050,000,000 1 $250,000,000 of adjusted EBITDA in 2020. At the midpoint, this represents a 13% improvement over our 2019 result and in our estimation reflects a good midline case for our combined business given the current global market context. CapEx will come down from 2019 levels to $400,000,000. As a result, we project that to greater than $350,000,000. The majority of our As Sameer said earlier, we believe that our leverage remains prudent based on our projections. Turning to Chart 12. As I mentioned on the last chart, our CapEx in 2020 will decline by roughly 20% from 2019 levels as we move past some sustainability and one time work. Our CapEx for 2020 starts with the base capital required to run and maintain and sustainability projects. Finally, we have earmarked $125,000,000 for several high return growth projects focused on Titanium Technologies and Fluoroproducts. We believe that this mix of projects strikes the right balance between returns and growth as well as investment in the near and long term. As a management team We remain focused on efficient capital spend with transparency to our investors on priority uses of capital across the portfolio. Turning to the last 2020, which I previewed with you In addition to growing our top line, we must double down on all the things that are under our control: operating up time costs supply chain inventory, and working capital management. Free cash flow conversion will be the number one priority as we look to highlight on the regulatory issues we face at our sites in the US and with the governments in Europe who are leading the way on climate change and the phase out of legacy refrigerants. Finally we will work diligently to ensure we continue to make progress against our 2030 corporate responsibility commitments. Our investment here is a cornerstone of Chemours and critical to the long term success a better one for Chemours. I have challenged and will continue to challenge everyone across the company to dig deep this year to find ways we can get better. At everything we do. The 3 of us and the entire leadership team have clear targets and are focused on executing this plan. We will make 2020 a great year for the company. Thank And our first question today comes from the line of Duffy Fischer from Barclays. Your line is open. Yes, good morning guys. Just around the PFA S charge that you took down in North Carolina. One, can you talk about what's in that, what's been spent on what's still to be spent. And then can we use that to extrapolate, again, with a wide range What might need to happen at other plants? Yes, sure Duffy. It's Mark. That if you go back and think about the consent order we have with the North Carolina DEQ, there are really 4 elements of that at Fayetteville. 1 was for process water emissions. The second was air emissions. The third was off-site residential water treatment 4th was on-site remediation. Think of that as primarily groundwater. We already had dealt with the process water emissions. So, obviously, we have a charge that we have to keep water from going into the Cape Fear River. Air emissions is our T. O, our thermal oxidizer that we put in place at the end of December. That was $100,000,000 we spent on CapEx to do that. So that's been taken care of. The off-site water treatment was a charge we did earlier in the year in 2019. And that is handled. And the last leg of this was really this on-site remediation. So think of this charge as really pump and treat primarily, operate and maintain So this is a charge that is for 20 years of operating and maintenance cost. So it's not a single charge. You're not going to see that cash flow out. In a single bucket. It's going to be over a 20 year period as we operate that facility. To the second part of your question, so This really covers everything that we have in the current consent agreement with the state. Other sites we already have this already in place at all our other sites. So we already are in compliance with all our other sites. I will say that as you've seen in our CapEx that we're spending, the $75,000,000 on our, what we call our corporate responsibility commitment spend is really well beyond clients. That is the area that we've said we want to eliminate 99% of our air and water missions of our floor operations across the world. That's well beyond compliance because we think that's the right thing to do. But this charge, number 1, we believe, sorts out everything we have in the consent order with the state. And 2, it's not any charges you're going to have to see at the rest of our sites because we're already in compliance. Great. And then maybe one just on the floral gases, primarily in Europe. When you talk to distributors over there, there doesn't seem to be any reductions so far in the Chinese HFC that's making its way in. What's the prognosis for that this year? What are the mile markers we should look for in a year from now? Are we still going to be talking about this as a headwind or what we see an inflection point sometime this year? Do you believe? Hi Duffy, it's Mark Newman. So there's a very concerted effort, with an industry consortium of refrigerant manufacturers, really on raising the game around enforcement and building public awareness on what is really a very negative environmental impact. We are starting to see some indication of traction on enforcement. I think last week, there was a fairly large seizure in Italy by the anti fraud agency OLAF. And, for 2020, our assumption is relatively stable, performance in terms of the underlying fundamentals of Opteon blends. On the basis that, you know, there's not enough enforcement yet to really change the ground game. Remember though, that there will be a fairly significant step down in quarters as we go into 2021. So our view is, you know, a stable year in terms of the underlying business, a year in which, in 2020, there will be limited quarter sales, which is different than what we had in 2019. But as we go into 2021, our view is if there's enough progress in 2020, we'll start to see the inflection point towards the end of this year and as we move into 2021. Obviously, you know, this is a setback to our Opteon franchise but we still see this as a decade long growth play here both on the mobile air conditioning side in the U. S. And Japan in the next, few years. And then there's a lot of work going on with the stationary OEMs around, you know, using our blends in their future products. So, we're encouraged by the long game here. Obviously, we're also encouraged by some of the traction we're seeing on enforcement. And we're going to continue to build public awareness for what is the equivalent of 4 coal fired plants in Europe with all these imported illegal refrigerants? Great. Thank you guys. Our next question comes from the line of John McNulty from BMO Capital Markets. Your line is open. Yeah, good morning. Thanks for taking my question. So with regard to the TiO2 markets, it looks like things are settling down a little bit. You know, we're actually even starting to see some price hike announcements in North America. I guess with that, can you can you speak to the demand that you're seeing for contracts or for customers looking to use your values, your AVA position and locking in long term contracts, is that has the demand for the for that part of your of your portfolio? Has it started to pick up, in a noticeable way yet? So, John, Mark Newman again, we really like where we are on TBS. And from a market perspective, our long lead indicators have been positive in the positive territory for several months now. And we're starting to see more of that across multiple geographies. So I would say we're feeling really positive about the year, from a demand perspective. Obviously, a lot of the work we did in the second half of twenty nineteen was around, you know, regaining share. Recall our Q10 or Q3 volumes were up 10%. And our Q4 volumes are up slightly. In a quarter that is usually seasonally down. So we're really encouraged by the market signs that we're seeing. And we're really encouraged by the response of our customers to our TBS offering, both in terms of our AVA contracts which which represent 50% or more of our volume, as well as our flex, volumes and and response to different programs that we've introduced, being the only producer today with a really great e commerce channel. So overall, I think we're feeling very positive about where we are. Yes. And John, this is Mark. Just to add to Mark's comment, we had said before that we had a lot of traction with our, coding customers around ADA contracts, which continues to be the case. But we're now getting traction with the plastic and laminate customer, where you're seeing us get our market share back with our Flex portal. That portal is really working for them. And we're we're extremely encouraged by the share gain that we believe will we'll be able to demonstrate in the fourth quarter and as we go into 2020. Great. Thanks for the color on that. And then just with regard to to the cash flow. So you clearly unlocked a decent amount of working capital in the fourth quarter. I guess, as you look to, as you look to 2020, how much how much more improvement do you expect to see? Is there a way to quantify how much more free cash flow can be unlocked out of out of working capital as we look through 2020? Yes, John, this is Sameet. I'll take this 1. Clearly, as you saw in Q4, right, as we kind of went through a lot of the payables as the volumes came we took the payables hit in Q3 and Q2 last year and really started unwinding on the inventory and the receivable side in Q4. But from our point of view, we've fully intend to maintain the same kind of working capital operating discipline as we look into, 2020. And, you're going to see strong performance from us on the cash flow side. And that's really reflected in the guide that Mark talked about. Perhaps on from an operational perspective, the biggest area that we've talked about on prior calls is our focus on some of our or inventory. Maybe that probably is another area we'll remain focused as we go through the year. Got it. Thanks very much for the color. And our next question comes from the line of Don Carson from Susquehanna Financial. Your line is open. Yes. Thank you. You know, with customer destocking apparently coming, to a close in TiO2, how do you see the year over year shipment to comparisons evolving in Q1 and the rest of 2020? And once you eat through your higher cost finished goods inventory. Do you see margins getting back to that 30% plus level in the second half of the year? Yes, Don, as we as we look at the year, I think we're going to see normal seasonality Smita, I think we're going to see normal seasonality across the company, but especially in Tiara too. I think we're back to the normal seasonality kind of a look. I will say that the first quarter will probably be our weakest quarter primarily because we still have some high cost inventory flowing through. So remember, our rates were not very high as we finished 2019. So that cost is going to be carried through. But that'll pass through in the first quarter. And I think you'll see it returning to mid-20s, as the year progresses and eventually beyond that going forward. So yeah, we see ourselves heading to our higher margin area, but probably mid-20s by the middle of the year. And then just, given the situation in China, are you seeing any issues in exporters getting TiO2, out of China and into Europe in particular and could that tighten up the market as we get into Q2? Yes, it's a real hard one for us to call right now. I'd say that, it's it's hard for us to see that specifically, obviously, from our perspective. We're not necessarily seeing customers getting nervous about that so far. But we are seeing some solid volume coming into the books right now. So I can't tell you it's related to that. But we are very happy with the order book that we're seeing in the first quarter. Our next question comes from the line of Lawrence Alexander from Jefferies. Your line is open. Hi guys. This is Dan Rizzo on for Lawrence. I just want to know within titanium technologies, if the rebound you're expecting or is predicated upon a rebound in macro trends, particularly in Europe, are we expecting the environment to get better to kind of hit these targets? Yes. It's Mark Newman again. As I said earlier, I think, you know, the indicators that we look at are are both, you know, have been positive for a while and are more widespread And we did feel like Europe started in 2019 a lot weaker than it finished the year. So I'd say, in particular, we're encouraged there. Okay. And then you mentioned, before that there stepped down in Opteon in 2021, I'm sorry, could you just provide a little color on what you're referring to? You said it was going to reflect at the end of the year and then grow from there, but I was just wondering what you meant by step down. I'm sorry, for the confusion? Yes, there's an F gas quota arrangement in Europe and the next quota step down takes effect in calendar year 2021. And it's about a 20% step down. So a fairly meaningful step down, in terms of, from a CO2 quota perspective. And Dan, just to give you the color around that a little bit. Is that the mechanism that the F gas regulation has is it moves down quotas, HFC quotas, if you will, at periods of time, the next step down being beginning of 2021, as Mark mentioned. And that sort of drives a half faster adopted adoption of the HFO technology. So that's just the mechanism that the European Union uses in their F gas regulation. Yes. And I said it wrong. It's a 30% step down in 2021, not 20. Okay. Thank you for that. I appreciate it. Our next question comes from the line of Arun Viswanathan from RBC. Your line is open. Great, thanks. Good morning. I'm just curious, you know, there has been some announcements on the, TiO2 side of price increases. Maybe you can just characterize what you're seeing on the inventory side from both your perspective and your customer's perspective. Do you think, we've reached the bottom. And then also, could you highlight, the, the agent export situation as well? Has there been any disruption in export out of China, post coronavirus. I guess we've been reading that, exports out of China were elevated going into, the beginning of the year. Just wanted to get your thoughts on that. Thanks. Yes, I think as we've said before, we think that the destocking side obviously is over with our customers. Obviously, I'd say inventories are fairly low levels or to normal levels. Remember, the whole pulling of our ADA contracts was so for our customers not to have to worry about destocking, restocking, right? That's one of the value propositions of our AVA contracts is to give them maturity from that standpoint. But we would expect that an uptick in the market will create a pull that probably is a little bit higher than the normal growth that you're seeing in the marketplace. In terms of the Asia side, again, from a corporate point of view, about 10% of our revenues in China most of our production, is really in China is really fluoropolymer production. That is used for China. So that production is used in country. So we're not seeing a whole lot of disruption in our supply chains from that standpoint. And again, our TiO2 production that goes into China is primarily coming out of Taiwan. So from that standpoint, we see we feel that we're insulated, if you will, from that some ways. So we're not seeing any disruption as a as a Chemours company and it's hard for us to see anything else from others, to be honest with you. So we just don't have that kind of visibility at this point. Okay, great. And then just maybe I can get your thoughts on Morrow, has there been any impact from the production slowdown in automotive or maybe what's been the impact there? On your Fluor business? Thanks. Yes. And then Mark can add any color to this. But yeah, we've seen, I'd say on our Fluoropolymers business, we are to a bit of a slow start, that continued from the end of 2019 in 2 major segments, automotive as well as semicon. Those are the 2 areas, 2 large areas for us from a marketplace standpoint. Automotive continues to be weak We expect semicon to pick up as we come out of the first quarter. But right now, I'd say those markets are definitely weak, both of them. Our next question comes from the line of Josh Spector from UBS. Your line is open. Yes. Hey, guys. Just a couple of questions on some of the puts and takes in fluoro going into first half next year. So, I mean, I imagine there's still a headwind from the quota sales. And if I look at first half of twenty, it was maybe a $40,000,000 benefit do you assume that all goes away in 20? And kinda on an offsetting factor, opteon ramp, was that around the $20,000,000 benefit in the quarter? That maybe offset some of those quota sales? How do you think about those as you look at 2020? So it's Martin Newman again. Obviously, quota sales are easy to track as we report them in our other income, so they're fully disclosed. And their episodic. And so, yes, I would say that's a headwind for the full year. And based on the timing, will be a headwind in a particular quarter. We don't sort of give guidance of our individual product lines, but the way I think about our Fchem business is Opteon will continue to grow on a volume basis. We do have committed price downs. And we are also in a very weak Afghan market on both blends as well as our base Afghan business as a result of illegal imports, which we will have all year. On the plus side of the ledger, as we go through the year, obviously, we had some operational issues last year that we don't plan to repeat this year. And then, we'll have the ramp up of our Corpus Christi facility, which will provide a real benefit from a cost perspective this year, but a lot of that benefit is really being offset by weaker F CAM prices across the portfolio. Okay. Thanks. Yeah. That's helpful. And just coming back to the TiO2 volume side, I mean, you talked about normal seasonality. Where would you say your current operating rates are at? Are they kind of in the mid-seventy percent range. And I guess if that's right, are you kind of happy with that level into 2020 or do you expect that to tick up more over the next couple of years? Yes, we've had, as we said, we were operating at we don't obviously, we don't disclose our rates specifically, but we're operating at lower rates as we ended 2019. Those will ramp up throughout the year. We're very confident that as we get into the first quarter here in the second quarter, we'll see our ramp, we'll see the ramp up in our rates. That'll make a very significant difference on our costs. I think that's one of the things that people were a little bit surprised at last year is when we were down in terms of our rates, how much that really added to the cost of the business. So these assets are made to run at higher rates and we're going to get them back there as we move through the year. Okay. Thanks. Our next question comes from the line of Jeff Zekauskas from JP Morgan. Your line is open. Thanks very much. Did your Opteon volumes or sales grow about 5% in 2019 or do they grow more or less or how do you do? So, Jeff, I think we've always said that our opt in, our opt in YF, the mobile air conditioning, part of our business is growing at double digit rates from a volume perspective. With the automotive OEMs, obviously, we've we've alluded to it before, we have price downs, a contractual price downs. And as we've said, the overall tone of the market with the illegals, you know, is depressing price, on the blend side. So I'd say the way you ought to think about it is volume is growing double digit or certainly was in 2019. You know, that will start to taper down lower as we get fuller saturation in the mobile market, and price is probably mid single digits headwind in the year. Okay, great. And in you've made progress in getting 50 percent of your titanium dioxide volume over to AVA contracts. So, like, my understanding of the theory of the contracts is that you get some kind of normal positive inflationary pricing. So why aren't your average prices going up if you've signed so many contracts? Is it that 50% of your portfolio is going up 2% and the other 50% is going down 5% or is there a turning point? Do we see positive pricing in 2020 because of the nature of the contracts? Yes, I think it's a combination, Jeff, is Mark again, a combination of one, we have twice a year when the ADA contract pricing gets reset based on PPI And then you're also seeing on the other side, our flex pricing, right, which has been counter to that. So I think as you go through the year, you'll see probably a net price improvement going forward. But remember, these price resets happen at very specific times twice a year on the 8 day contracts. And then the flex pricing moves daily, right, in terms of what we see the market look like at the time. Okay, great. Thank you so much. Our next question comes from the line of Vincent Andrews from Morgan Stanley. Your line is open. Hey, Vincent. You're breaking up, Vincent. We can't really hear the question I'm sorry. Hi, this is Steve on for Vincent Premier, a little better now. Okay. A little better. Yes, if you're on speaker, you might want to jump off. Yeah. No. I'm on on my headset. I don't I but anyway, so there there was, on the cash side of things, you had a receivables securitization facility that you entered into the third quarter. So I just wanted to clarify, on the working capital side, is this benefiting your working capital at all. And then are you expecting any further benefit in 2020 in your cash bridge from from this facility? Yeah. No, the AR securitization facility is on balance sheet. So it does not impact the free cash flow, the way it would traditionally look like. You know, I think I just want to make a distinction, right, off balance sheet, we'll do it, but our, yeah, our securitization facility is on balance sheet facility. Okay. All right. Thank you guys. And our next question comes from the line of P. J. Juvekar from Citi. Your line is open. Hi, good morning. It's Eric Petrie on for P. J. You earmarked a $125,000,000 for growth CapEx of that. Does that include, expenses for your 10% circuit expansion in TiO2 as well as any additional pigment grades that you intend to introduce to market. Yeah, if you look at the growth CapEx that we have, just a couple of features around that. One is it's a good balance between floor products and TTi. It's a good balance between top line growth opportunities as well as improving cost position. And all of these projects are well above 20% IRR. So they're all good projects. And yes, they do include, some of the capacity work that we've talked about in the past moving that along. So that is part of the portfolio of capital projects we have within the TT side. And for my follow-up question, earlier, the share you announced that you were gonna halt a few grades of high GWP refrigerants of those customers that were within the EU, how many of those have converted to Opteon substitutes? Yes. Well, obviously, that was the intent there. That's that's I mean, this was a very small product line from that standpoint. It was the highest GWP product line we have. In the portfolio. So most of those customers have already made the bridge over, to to Opteon and HFOs going forward. So I don't believe this is going to hurt anyone from that standpoint. And obviously, it's just part of the the pruning we continue to do on our portfolio as high GWP refrigerants become dinosaurs and move out of the portfolio. Great. Thank you. And our final question today will come from the line of Jim Sheehan from SunTrust. Your line is open. Thank you. Good morning. Could you please provide an update on the litigation with DuPont, is the process going as expected and any sense of timing for, when that might be resolved? Yes. So Jim, obviously, we don't comment a whole lot on on legal issues. I will say we did have our time with the with the magistrate. We thought we presented a very strong point of view and strong case. And that is now in his hands. And we're hopeful that in the next couple of months, we'll hear back from him. Thank you. And on chemical solutions, you really executed well in 2019. Your margins have moved up. You obviously had record performance. How sustainable is your second half in your fourth quarter margin level? What kind of margins do you expect to generate in 2020? Yes, we've been working, to really get this business back to closer to our portfolio of business and, you know, Ed and his team have really done a nice job there. And, you know, we expect to stay with a double digit EBITDA margins as we ended the year, as we go into 'nineteen, really on the basis of our continued growth in our mining solutions business as we approach the year. And I just want to remind you and everyone that, you know, when we spun, we talked about this portfolio and we said that, you know, with with hard work focusing on the growth of mining solutions and really looking at the other parts of the portfolio that weren't additive in terms of margin that we would get this segment, to be up to the, average of the rest of the company. And, you know, we booked a 20% EBITDA margin you saw in the 4th quarter, we think that's the right margin for this business going forward. Lots of hard work to do that. And the sale of the mezzanines business was part of that. That was not additive to us from an EBITDA perspective. And so that helped there. So the pruning of the portfolio and the focus on growing the mining solutions play really is something we've talked about for the last several years and now you see the results of a lot of hard work by that team. Great. If I could ask one more thing about there's a competitor talked about rationalizing some sulfate TiO2 capacity in Europe at at the end of the year. What kind of impact do you think that might have on supply demand in the region? Yes, hard for us to give a sense. Obviously, there's certain of those end users we intercept and some of those we don't. Obviously less capacity in the anywhere is going to probably make the market conditions a little bit tighter, but, really, we haven't seen any impact personally around that. Maybe I'll just add. We really like the market where we see it this year. And as we said earlier, I think we fully intend to continue to regain our capacity share as we see market conditions improve. So we're really encouraged with what we see here. Thank you. I would now like to turn the call back over to Mark Vergnano, President and CEO of Chemours. Well, thank you, Lisa. And to everyone, as I mentioned throughout the call, we're all very encouraged by our progress as we ended 2019. Our leadership team is fully dedicated to deliver the commitments that we've set for 2020. So for all of you, happy Valentine's Day, and as always, Thank you all for Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.