Earnings Call: Q2 2018

Aug 3, 2018

Good morning. My name is Lisa, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Chemours Company Q2 twenty eighteen Earnings Conference Call. All lines have been placed on mute to prevent any background noise After the speakers' Thank you. Jonathan Locke, you VP, Corporate Development And Investor Relations, you may begin your conference. Thank you, and good morning, everyone. Welcome to the Chemours Company's 2nd quarter 20 earnings conference call. I'm joined today by Mark Bertnano, President and Chief Executive Officer and Mark Newman, Senior Vice President and Financial Officer. Provided in our presentation and on our website contain forward looking statements that involve risks and uncertainties including those described in the documents Chemours has filed with the SEC. 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. At results may differ and Chemours undertakes no duty to update any forward looking statements as a result of future developments or new information. During the course of this evaluating the company's performance. A reconciliation of non GAAP terms and adjustments end of this presentation. I will now turn the call over to Mark Vergnano, who will review the highlights from the second quarter. Mark? Thanks, Jonathan. Good morning, everyone, and thank you for joining us today. Q2 2018 was another solid quarter for Kevors. As our teams continue to execute and build upon the strong start to the year we reported last quarter. We delivered year over year gains on each of our key financial metrics, an achievement I am particularly proud of given the strong results from the same period We also pure titanium dioxide franchise. Today well ahead of the 2020 authorization timeline. Following the completion of that authorization, our Board of Directors has approved and an increase to the Chemours dividend of 47 percent, from $0.17 per share to $0.25 per share. Mark Newman will speak to these 2 programs in more detail shortly, but taken together, they are a tangible representation of our commitment to return meaningful capital to our investors over time. This quarter marks another strong chapter in the history of Chemours. Looking ahead for the full year, we expect to deliver adjusted EBITDA in the top end of our guidance range of 1.7 to $1,850,000,000 share, as in our end quarter built a fundamental from earlier this year, resulting in higher revenue and adjusted EBITDA for all our segments. Net sales rose by $228,000,000 or 14 percent from the same period a year ago, with our 2 largest segments, delivering double digit revenue growth. In comparison to last year's second quarter, GAAP net income grew roughly 75% and over 90% on an adjusted basis. This drove similar year over respectively. Adjusted EBITDA of $497,000,000 increased 38% while our adjusted EBITDA margin expanded nearly 500 basis points year over year to 27.4%. Despite the normal seasonal use of cash and approximately $90,000,000 in cash interest payments, We generated over $200,000,000 in We also continue to invest in our portfolio through high return projects, resulting in a pretax ROIC of 42 percent this quarter. Turning to the next dioxide and increased price across all businesses in our Fluoroproducts segment delivered over $140,000,000 of adjusted EBITDA and chemical solutions products. Currency was a modest benefit in the quarter providing an additional $26,000,000 in comparison to last Materials and process water treatment costs at our Fayetteville facility, which partially offset some of the price and volume gains achieved. In total, we achieved $136,000,000 improvement to adjusted EBITDA for the second quarter of 2018. Moving to the 18 and 3 year targets. We continued the momentum built during the first quarter with adjusted EPS nearly doubling to $1.71 per share. Our improved operating earnings drove the majority items of $0.04 per share. Our effective tax rate in the quarter was 13% versus 28% for last year's 2nd quarter. Reflecting our geographic mix of earnings, the impact of discrete items and the impacts of U. S. Tax reform. The impact of our share repurchases contributed $0.07 per share. We expect the benefit of share repurchases completed in the 1st half of 2018 to become more meaningful in future quarters. The delta between adjusted EPS of 1.71 and GAAP EPS of $1.53 can largely be attributed to costs related to our refinancing during the quarter. Which ability that our balance sheet provides. Of approximately $1,200,000,000, utilizing our cash position shareholders, strengthen our balance sheet and reinvest to drive organic growth. We are confident that these 3 investments will create value for our was primarily driven by strong business and a $44,000,000 increase in working capital. Free cash flow improved over $100,000,000 versus last year's second quarter even with increased capital expenditures versus last year. We completed our $500,000,000 share repurchase authorization during the quarter, In total, our authorization allowed us to repurchase over 10,000,000 shares since its inception in December. Reducing our total share count We continue to enhance our liquidity while adding flexibility to our company's balance sheet. During the quarter, we raised EUR450 million through senior unsecured notes. The proceeds were used to fully redeem our in euro 2023 notes as well as a portion of our U. S. Dollar 2023 notes. These transactions resulted in a debt extinguishment payment of approximately $29,000,000 with an expected reduction in interest expense of approximately $16,000,000 annually. Including the new savings annually. Our total liquidity is approximately $2,000,000,000 as of June 30, taking into account our $2,800,000,000, which translates into a net leverage ratio of approximately 1.6 times on a trailing 12 month basis. One of the things that we have consistently set as a company is that our capital allocation strategy would include meaningful return of capital to shareholders over time. Through both quarter by 47% and authorized a new $750,000,000 share repurchase plan. The new dividend reflects our confidence in our ability to execute on Thai pure value stabilization, while growing each of cash flows we can generate as a company with Thai PR TiO2, Opteon refrigerant and Fluoropolymers products leading the way. Following the completion of our previous Our board has approved a new and larger program. The new share repurchase authorization of $750,000,000 is valid through 2020. Free cash flow to shareholders through 2020. Demonstrate the board's confidence in the sustainability of our company's earning power and belief in our long are getting on more of an annual basis. And now with that, I'll turn the call back to Mark to review our segment results. Thanks, Mark. Beginning with Fluor products on the next slide, sales in the quarter rose 13% to over $800,000,000. Opteon continues to be a growth engine for floral products, while the entire segment benefited from higher average selling prices in the quarter. Adjusted EBITDA of $230,000,000 improved 17% as adjusted EBITDA margin grew to approximately 29%. The cost of temporary process water treatment as well as higher maintenance and distribution costs, partially offset our double digit revenue growth. I want to provide a bit more color For the full year 2018, we expect to spend approximately process water treatment at our Fayetteville facility in addition to associated remediation and legal costs. We believe that these expenses The adjusted EBITDA margins on this slide include the portion of these expenses, which were incurred in the second quarter. Let's review the Fluoroproducts performance drivers in the quarter in more detail. Within Opteon refrigerants, this transition to our low global warming HFO technology continues in both the EU and the U. S. This quarter, higher prices for our low GWP stationary blends more than offset the impact of contractual price reductions phased downs of HFCs and conversion to Opteon blends within the EU, as well as some impact from a seasonally cooler spring. This was partially offset by same time, we saw prices on base refrigerants also move higher in Europe. In total, base refrigerant revenue is flat on a year over year basis. Shifting now to Fluoropolymers, Q2 revenue and profitability benefited from previously announced price increases. Demand for our Fluoropolymer products remains strong with some product lines sold out. Due to supply constraints, volume was slightly lower in comparison to last year Looking ahead to the full year, we remain optimistic our ability to support Given robust demand in the first driven by increased adoption of Opteon blends for stationary refrigeration in the EU and continued conversion within the U. S. Mobile air conditioning market. On the polymer side, we anticipate GDP like volume growth, given our supply constraints, along with percentage of our volume to come from our higher margin fluoropolymer product lines. The unique characteristics of our Fluoropolymer product make them ideally suited for use in demanding applications, including automotive, consumer electronics and energy storage. Moving to our Chemical Solutions segment on the next slide. We generated $153,000,000 of sales in the quarter, a 3% year over year improvement. 2nd quarter adjusted EBITDA of $16,000,000 to last year, a result of higher volume for most product lines and lower costs. Demand for mining solutions products remains strong, and we expect that to remain the case throughout the rest of 2018. Performance Chemicals and intermediate saw increased demand in the quarter across most product lines, while price was slightly lower on a year over year basis. During the quarter, we announced price increases across a number of our product lines, including methylmines, glycolic acid, vasoproducts and sodium cyanide. We expect to realize some impact from these price increase toward so remain suspended. Our current mining solutions facility is sold out and we expect it to remain so given strong demand in the Americas. Turning to Slide 11, to review our Titanium Technology segment. Sales increased 18 percent to $862,000,000 versus last year's second quarter. Driven by higher global average prices for Ti Pure Titanium dioxide, up 16% year over year. We recently communicated price increases to customers who have not signed type pure value stabilization contracts. Because the price increases only apply to those who do not have value stabilization contracts, we anticipate modest impacts in the fourth quarter. Volume in the quarter came in slightly lower when compared to a very strong second quarter of 2017. We believe that our customers This is entirely consistent with our Adjusted EBITDA improved 53 percent to $295,000,000 when compared to last year's second quarter. Translating into nearly 800 basis points of margin expansion. Higher global average prices were partially up offset by increased raw material and freight and logistics Full year, we expect 2018, up 8% personalization framework. As a result, we are We continue to see end market growth and are committed to meeting our customers increasing pigment needs over time. We are pleased with the progress This capacity is expected to come online over the next few years and is roughly equivalent to the volume associated Let's review our 2018 outlook on the next slide. Now halfway through the year and with a solid Q1 and Q2 behind us. We are on track to achieve our 2018 guidance. We anticipate adjusted EBITDA will be in the top end of our range of one point $7,000,000,000 to $1,850,000,000 driven by solid execution and inclusive of the headwinds from process water treatment costs in fluoropolymers and continued raw material and distribution increases. We also expect adjusted EPS to $5 per share. 2018 free cash flow is anticipated to be in excess of $700,000,000. Finally, 2018 capital expenditures are on track to be within a range of $475,000,000 2018 lays that we laid out for you on our Investor Day back in 2017, supported by our commitment to our ability to assist customers We've updated this slide to reflect our increased capital allocation plan, including the increased dividend and new share repurchase authorization. Turning to the next chart, I'd like to take a moment to discuss the investment thesis for Chemours. Add some strategic context to the 3 year targets and give you my insights of why we're excited about the Chemours story. Both short term and long term. This is not your typical commodity chemical story. We plan Growth in Opteon refrigerants, the strength of our Fluoropolymers franchise and the implementation of Ti Pure Value Stable as they all will lead the way and one that's in its early chapters. We are executing against our long term plan today, and we are energized by its potential. Second, we expect to drive high returns and margins through our industry leading process technology, which continues to give us durable portfolio. Like our current Titanium Technologies debottlenecking program and opteon expansion in Corpus Texas. With opportunities like these, we would expect total capital expenditures to be similar to our current levels going forward. 3rd, we plan to use targeted M and A to grow our existing businesses with a view to maximizing shareholder value over time. We expect As part of a disciplined approach to capital allocation flow to our shareholders and lastly, do not underestimate the energy and passion of our workforce. They are more than ready to turn the same focus and resolve that we brought to the transformation plan toward our growth imperative. With every passing month, we are becoming a more nimble dynamic culture rooted in our values, guided by our long term strategy and focus on the right outcomes We see it and feel it at our plant sites, our labs and our offices, the world over. That energy and resolve are truly the backbone this company. I'm excited about the progress we've made so far, and I look forward to unlocking even more shareholder value in the years ahead. With that, we'll And our first question comes from the line of Arun Viswanathan from RBC Capital Markets. Your line is open. Arun your line is open. Hi, I'm sorry. Could you just give us an update about, how much of your contracts are contracted now for, under the long term value stabilization proposition and where you expect that number to go over the next 12 months or so? Hi, Arun. We're real pleased with the progress we have with our customers right now. We really haven't talked about the percentage there. But I'd say our key customers and our major customers are all lined up around value stabilization. And as we've always talked about, This isn't just good for us. It's good for them as well, because not only can they predict, their year ahead, but also it allows them to know and feel confident that the supply for their growth is going to be there. So we're real happy with where we are right now. And then, as a follow-up, maybe you can comment on your outlook for, titanium dioxide for the rest the year. We've had some conversations with folks who believe that North American prices could rise on the chloride side, supported by the raw material increases. And then we've also seen some softness in European sulfate. Yeah, I would just love to get your thoughts on the trajectory from here. Thanks. I don't think our thoughts have really changed since we've talked to everyone. We've said in the second half of the year, we see low to single digit kind of price increases going through. For the most part, in the value stabilization play, a lot of those pieces are done from that standpoint. So we're talking about, increases for the non value stabilized customers from that standpoint. As we look at the rest of the year, we see volumes still very strong, but we're seeing a little bit of adjustment as people are adapting to to our strategy. And I know we'll get the question from others, but I would say that that adjustment is in weeks of inventory. So it's it's minimal in our mind. And then lastly, if I may, just on fluoro, maybe you can just give me an update on adoption, you think, was it better than expected from F Gas or, what are you seeing on that side? Thanks. Yes. Real happy with the adoption levels. I'd say we're very strong in Europe right now. It's maybe a little bit stronger than we had originally anticipated. That's because a lot, a lot of folks have transitioned over HFOs a little bit faster. Now, that's part of the plan of the EU of how they set their photos, but at the same time, I think a lot of people have shifted and gone into new equipment a little bit faster than we thought, which is a positive. Our next question comes from the line of Duffy Fischer from Barclays. Your line is open. Yes. Good morning, Fellas. First question is just around the floral gases. With all the noise on Trump, maybe walking back on some of the miles per gallon regulations in the U. S. Pushing back on tariffs and stuff like that. Do you see any talk that any of your products will be hindered in their adoption, from any of the noise around this stuff? Hey, Duffy. You know, the CAFE standards that are in place right now really drive mile per gallon through 2021. That's going to be really the fundamental driver in the mobile air conditioning market in the U. S. And we don't see that fundamentally being changed. You know, many of us have talked with folks at the EPA trying to understand where their heads are around some of these, but I think that 21 of the U. S. Auto market is still in play. That's our assumption. I don't think that's really going to change. I think the story attached to that, which is really about U. S. Ingenuity, U. S. Facilities being put to play, and also U. S. Job. So we think that there's a value story there that besides the product going into the marketplace is good for the U. S. Great. And then just, on the two plants under construction, the one in Mexico that stalled, what's the outlook there? Do we need to come up with a plan B and write that offer? Are we still confident we can go forward there? And then on the floral gas, Are we still on track for the completion there in the ramp early next year? Yes, we are on track, on our Corpus Christi facility for Opteon. That'll be mechanically complete this year. So we're right on track to be able to bring that on. For the mining solutions facility in so. As I mentioned in my comments, we're stalled right now. We are confident that we're going to be able to get the approvals back. We had a little bit of snappers. The elections were occurring in Mexico, but now we're on the other side of that. So we, we hopefully will have an update, for everyone in our next quarter call. Great. Thanks fellows. Our next question comes from the line of John McNulty from BMO Capital Markets. Your line is open. Good morning and thanks for taking my question. So there is a growing concern, I guess, on the raw material front that raws are going to push higher. And I know you have long term contracts that help to at least mute the volatility of that. But I guess as we look into 2019, and then I guess go to the condition of what you think the market is right now. Do you think you can get through whatever raw material headwinds you may come across in 2019? Through in price between your locked in on some of the stabilization side and also just thinking about what what's not locked in there? I guess, can you keep up with the raw material inflation next year? Hey, John. If you look across the board in Chemours, with all three of our business lines, we are seeing raw materials come at us with higher prices across, right, across were. And our job and the job of the president is to keep the rights in front of that. I think they've done an excellent job of, of keeping that and obviously, our job of our purchasing team, our crack purchasing team is to limit those raw material increases where they can. So we feel very comfortable where we are and what we going into 'nineteen that we're going to be able to stay ahead of that. Specifically on the TiO2 side, you know, our value stabilization contract and the way we put it those in place contemplate the raw materials that are coming into that. So we have that sorted out from our standpoint in terms of how we're setting up our contracts with our suppliers as well as we set up our contracts with our customers. So we feel confident that, that we can maintain our margins going through this. Great. And then just one question with regard to the Arcama announcement, I guess, during the quarter and your partnership with them, for Europe. I guess, can you give us an update on that? Have you started delivering for that? Did it have much of an impact on the quarter and how can we think about that going forward? Yes, we really like that agreement. It's a distribution agreement. So it allows more access of our Opteon products into the European marketplace. At some point, especially when you get into stationary refrigeration stationary HVAC. You eventually get these are blends, right? So you're taking your existing products blending them at times with HFOs. So at times you sort of get ham strong if your quota amount isn't high enough. Well, with the Arcama distribution agreement, that allows us to utilize basically their quota, so we can get more product into the marketplace. So this is good because Arcama is allowed to get into the HFO marketplace with their customers. So they could be serviced, but it's great for us as well because can get more product, not just more HFO, but also utilizing Arcimoto's quarter to be able to do that. Talk about a win win. This is a pure win win from that standpoint. Our next question comes from the line of Lawrence Alexander from Jefferies. Your line is open. Hi. You mentioned passing on raw material costs through price hikes. I was wondering if there's a lag effect involved and how long it is? Yes. Well, we try to anticipate, right? So we're trying to stay ahead of that. But, you know, you're absolutely right that we keep our eye on that all the time, but that's why we've been very aggressive with price increases you heard on the chem solution side as things have tightened up. That team has been very aggressive with price. Some of that is raw material base, but a lot of it is just market conditions. And Ed and the team have been very aggressive around that. You know, Paul's team on the Fluoro side, especially on the Fluoro Palmer side, been ahead of this. In fact, we announced it earlier. So our job is to get ahead of that and not wait for those to come at us. Okay. And then if we think about floral products to the auto industry and Apteon, obviously you're having good success there, but I was wondering if fluctuations in production volumes or having any effect at all or if it's just changing the demand outlook at all and what your outlook is for the rest of the year and into 2019? On the Opteon side, no, we are in good shape. We did have maintenance outages, which we talked about during last quarter's call during this past quarter. That has limited the amount of supply that we have in the place that's made it a little bit tighter. We hope to get those production facilities, but their full potential, you know, go from now for the rest of the year. So I would say we're a little bit to blame the shorting that the demand is there. It's our job to make sure we can make the supply meet that demand. Thank you very much. Our next question comes from the line of Jim Sheehan from SunTrust. Your line is open. Could you talk about what the impact was in the quarter from planned maintenance and Fluoroproducts? And what are your expectations for the rest of the year? Welcome, Jim. On plant maintenance, we had, as we mentioned before, our normal TAR shutdown in multiple facilities. As I mentioned, that was limited a bit of supply. We haven't been explicit on, on that, but it limited a bit of supply. Going forward, you know, the we have, another tar scheduled one of our other facilities through the rest of the year, but we feel very confident that we're going to be able to meet the supply for what we have going forward. So I'd say that from a cost perspective, that's spread across because that gets, basically amortized, more of an issue on the supply side to make sure we have enough product to get to to or inflation, can you help quantify what the headwind was in the 2nd quarter, either the percent increase or the dollar impact from higher or cost year over year? We've talked in the past, most of our take on ours are long term contracts that we have fairly well laddered. So for the most part, we haven't had a huge impact from that piece of it. And again, we are contemplating the other side of equation, our pricing to match up with any increases that come off across an ore. As many people know, we basically are the the market for chloride ilmenite. So those are very aggressive contracts that we have with our suppliers. And on a high grade ore, we contemplate, as I mentioned, multiyear contracts, that don't have any cliff so that we can spread that across all our suppliers. Our next question comes from the line of Matthew Deel from Vertical Research. Your line is open. So results of beat kind of again and you're lowering interest expense on the year, also introducing the new buyback program. Yet guidance is kind of staying relatively flat towards the high end. Would you say that's a sign of maybe incremental bearishness towards the second half or is that more just increased conservatism towards the outlook? Well, when we hang set up the guidance in the beginning of the year, I think what is a little bit different from the what we contemplated. We have as we talked about the process water costs at CFO, which we shared with you, that we think is going to be about 35,000,000 year. We are seeing raw materials come at us. As I mentioned, we're trying to stay ahead of that with price, but we continue to see raw materials. And as I'm sure you've talked to others, transportation costs have been significant and higher than we had originally anticipated. So we're just being prudent as we look toward the rest of the year around that. As we said, we believe we'll be at the high end of that range, but we're just trying to be prudent with the rest of the year and what we see. Sure. I mean, can you quantify what the headwinds for water treatment and legal word to the quarter itself? No, we haven't dropped it to the quarter. What we said is for the water itself, the water treatment costs itself for the year are 35 dollars. Obviously, what occurred in the quarter was contemplated inside of the results that you saw. Okay. But it was all right. That's helpful. I was looking to share if it was all kind of 2nd half related or whether you had already based some of that in the margins for 2Q. Yes, that's it for me. Thanks. Our next question comes from the line of Vincent Andrews from Morgan Stanley. Your line is open. Good morning. This is Brian Scott on for Vincent. I was just hoping you could help us understand the volumes over the balance of the year. It seems like the flat guidance for the balance of the year or the flat guidance for 2018 would imply negative volumes in the second half. I'm just trying to understand with Ultomira fully ramp now, you just walk into the dynamic there? Yes. So we're, let me give you a couple of angles on that. One is the first half is really the strength of our floral chemical business. When you think about an air condition season, especially, you're going to see that strong, and that's typical for us. You're going to see that stronger in the second quarter first quarter timeframe than you are for the rest of the year. Despite the transition of HFOs, from HFCs, that's just very tip of us. You normally would see that same kind of a balance on, at least in North America on the coating season, but value stabilization from a TiO2 perspective is also playing into that because as I mentioned, I think our customers are now seeing and now able to clearly see what our pricing policy is going to be for the remainder of this year and into next year. And I think that eases some of the pressure for them around, jumping ahead on inventory. So from that standpoint, I think this is all contemplated in how we look at the year and we feel very confident about where we're going from here. Right. Okay. And then I think this is the 1st quarter in TiO2 and maybe the last eight quarters where your margins were actually down sequentially. Can you just kind of walk us through Was that the lower utilization of the plants? Was that the raw materials versus pricing? Can you give us a sense of what's driving that? Versus raw materials. And again, it is intent, right, because it's part of what we're driving with value stabilization. As we had mentioned after April, we were you would see low to mid single digit kind of price increases for the rest of the year. And that's exactly what we have contemplated in terms of our guidance. Our next question comes from the line of P. J. Juvekar from Citi. One more follow-up on TiO2. I know you have a flexible raw materials slate. So what percent of your raw materials are seeing price increases? I don't know how to answer that P. J, because I'm not sure. I would say that there's a percentage of our laws that have that, but it's really based on where our contracts are and how those contracts play. So give you that number off the top of my head because it's not sitting on the top of my head, but there is a piece that we're seeing that. But your point is, is right. As we adjust to anything, right, we have the ability in our circuit to be able to operate our facility is different than most because of the way we could bring our ore blends through. So whether that is the price point of our ore blends or the volume we want to put out the back door, it allows us that flexibility, that's maybe a little bit different than others. Thank you. And then second question on Opteon, where do we stand in terms of auto penetration in the U. S? I think we're supposed to get to 100% by 2020. But just just tell us where do we stand? And then as you mentioned that this Apti on contracts get adjusted downwards in the mobile market, So, if that's the case, where do you think price increases will come in the future from? Is it based refrigerants? Is it European? Stationary opportunity, where do you think pricing will come from? Thank you. Yes. So if you think about the refrigerant segment, overall, first of all, to your first question, what about 50% penetration into the U. S. Automotive? Market at least the OEM side. Obviously, over time, that's going to grow when you get into the the refill side of things, but it's 50% in the OEM. That'll get to about 100% but as we have always said by 2021, especially driven by the CAFE standards. You're right, in terms of the way OEM price goes. But if you look at it as a balance, the reason we feel good about our price points overall in terms of our pricing increases. Stationary refrigeration, stationary HVAC, not just in Europe, but also in the U S, will give us pricing power from that standpoint and base refrigerants as a quota drops, your price points go up there as well. So those are the offset to the to the OEM price down. Next question comes from the line of Bob Koort from Goldman Sachs. Your line is open. Hey, good morning, everyone. It's Chris Evans on for Bob. So open you could give us some more specifics on how the value stabilization efforts are going. Are you on pace to get 50% of sales under contract in 2018? And also you mentioned a price increase for some spot customers. Curious, do value stabilization customers also see higher prices as a result of cost inflation in your basket? So from a standpoint, Chris, as I we're really happy with the progress we're making on the value stabilization contracts and discussions that we're having with customers you know, we haven't, and we're not going to really talk about a percentage of how many of those contracts, but we're on our pace that we want to see as we go into next year of what that should be. Your point is right. We're having price increases with the customer that are not on value stabilization contracts. Those have gone out and going into effect now, in August. And most of our value stabilization customers are not seeing that price increase because we've already negotiated what those prices would be over time. And they contemplated what we believe our raw material costs would be. So we feel comfortable and confident that we're covering the cost of the flaws as we execute those contracts with those customers. Great. And then maybe just on your multiple, the market seems to be completely disregarding your specialty cans exposure. And instead valuing you as a pure play, TiO2 company, would like to get your thoughts here. Just do you continue to allocate lots of cash for share repurchase to take advantage of this low valuation? Or do you think something maybe more strategic is available to better highlight the valuation connect. So Chris, this is Mark. Mark Newman, we obviously think given our current valuation, the reloading of the buyback makes a lot of sense. Obviously, we completed the first authorization relatively quickly. And so as we think of return of capital to shareholders, we think first a meaningful portion of it through the buyback. 2nd, given the confidence that we have in value stabilization and our earnings power over time, we made a fairly meaningful 50% almost increase in our dividend. So we see this as a way of returning the majority of our free cash flow to shareholders over the next 3 years, but in a way that we think will be very accretive. We also believe that there is significant reinvestment potential in the business. So we believe in our top growth story statement by the actions that we're taking on the share buyback and all the actions like we have in terms of our reduced interest costs. So we think this is really great story with meaningful top line growth, operating income growth, and compounding that with even more EPS growth over time given the strong free cash flow generation of the company. Chris, we completely agree with the thesis that doesn't really make sense for the kind of company we are and the kind of company that we're growing to be. So over the, as Mark said, in our 3 year plan, I think, those top line and bottom line and cash generation numbers warrant something a little bit different. And as Mark said, our board is very confident of that. And that's why we came out with not only a share buyback, but our share buyback plan, but also a significant increase in the it in because we want to give everyone confidence that we have confidence of what we're going to deliver over the next 3 years. Our next question comes from Thanks very much. When you look at your Opteon product line, what's the percentage of auto of auto mobile applications versus non auto mobile applications? Is it, I don't know, 90%, 10% something like that? And is are the mobile applications growing at faster than a 10% volume rate this year or at a slower than 10% rate? So, Jeff, right now as we start up Opteon, obviously, you're going to have a lot more auto, but it's more than 50 but it's nowhere near 90. So I would say we're probably in this 60%, 65%, 70% range. That's automotive and the rest stationary, but stationary because of the F gas regulation in Europe is growing very fast. So that's why you're seeing the offset is you will, to P. J. Earlier question of why our price points or why our price growth is significant is because the station area is starting to come in significantly, especially with the F gas side. So we feel comfortable in terms of the balance, but the higher level of growth because we had so much growth on European Automotive to start. We're seeing this as we mentioned 50% to 100% growth in the U. S. Side. It's the stationary side. That's really the growth engine going forward over the next few years. Right. I guess as my follow-up, in roughly which year do you expect a new entrant into the HFO market that is for how long do you think it can be maintained as a market with 2 major participants because of the patents. And, you know, in in very rough terms, or when do you think a new, competitor would emerge when the patents expire? Our job, Jeff, is to continue to drive IP to give ourselves protection, longer and longer. And I would say our team is doing a fantastic job of that. You know, we also have, you know, one of the, aspects of our agreement with Arkama was to allow more product to get into the marketplace, as I mentioned. So, we believe customers have access to what they need from an FFO perspective. You know, Arcama adds some of that ability to be able to do that, in the European marketplace. But on top of that, we are continuing to work hard at protecting our IP and adding protection over the top. So I really can't give you a time because our job is to continue to keep that protected for as long as possible. Our next question comes from the line of Don Carferson from Susquehanna. Your line is open. Yes, Mark, I want to go back to kind of your view of the cycle as previous question you mentioned, we've seen Q3 EU contract settling down. An increased local supply and higher Chinese imports. So I guess the issue for investors is, is this a pause in the cycle or are we at a cyclical peak And related to that, when you're seeing prices stabilize in the past, for what period do customers tend to destock? Because presumably they accumulated a lot of inventory as prices were rising over the last 18 months. Yes, Don. It's a good question and I think it's probably the question that's probably on everyone's mind from that standpoint. I guess our view on this is that one is we are trying to do something dramatically different than a typical TiO2 cycle than that, we're giving an opportunity to our customers to be able to lock in on on value with our value stabilization play. On top of it, if you recall in the past, a lot of capacity would come on stream that really drove a different behavior. We just don't see that right now. And so I know that there more Chinese imports into Europe. But fundamentally, a lot of that is still filling for a void that the Pori facility was filling primarily on the ink side. We're not seeing any of that product intercept us in the market that we serve and don't see a significant increase in capacity over the next 3 years. I mean, just to keep things in line, you're going to need about 200,000 tons a year of new TiO2 capacity to be able to just keep up with the demand. And that's one of the reasons why we're driving the debottlenecking work that we're doing, is to over that period of to try to bring in at least half of that. So from our perspective, we just see some, a very different dynamic. Yes, we're seeing some, inventory adjustments by some of our customers. But as I mentioned, I think that's in weeks not months of inventory because I don't think there was a lot built up, but in a rising price environment when you're sure of where those prices endpoint, you're going to see a little bit back off. But again, I think that's a matter of weeks of inventory. So we just don't see it being massively significant at this point of side. Our next question comes from the line of John Roberts from UBS. Your line is open. Thank you. In your 10% TiO2 expansion program, Are you expanding anywhere other than Altamira? Really across the board for the most part. So it's are 3 large facilities that really have the opportunity to be able to expand. And so it's not just one facility, John. Al Tamara, we have actually ramp, up fully. It's probably one of the best ramp ups we've ever had in the history of our plant startups, but the work that we're doing is fundamentally across multiple locations. Okay. And is there any update on your search for bolt on deal opportunity As we've said in the conversation before, we're targeting our M and A right at the existing businesses that we have. We have looked, we've scoured the world around opportunities. And I think from our standpoint, where we've come back to saying, we want things that sort of connect into our business. Ichor, I know, was small, but Ichor is a great example of that. That acquisition gives us distribution power that we didn't have especially with HFOs coming into the U. S. Marketplace. That's just gonna help us get more product out. You're gonna those are the kind of things are going to see from us are things that enhance our current portfolio. You shouldn't worry about seeing something that isn't is going to be disconnected from anything else that we're doing. That's not our goal. Our next question comes from the line of Roger Spitz from Bank of America Merrill Lynch. You talked about higher freight. Would you be able to provide the impact of the higher freight on the quarter and or the half? We have not broken that out. So we know, Roger, we wouldn't be bringing those numbers specifically out. Maybe I'll just add to that. When you look at the cost delta in the quarter, I'd say think of freight and raws being the predominant factor. In addition to the water treatment costs. Okay. And, in Fluor Products you mentioned higher raw materials. Can you mention, which were the particular Fluoroproducts raw materials that were you were facing pressure on? Yes, I'd say distribution probably is a bigger, bigger number than raws. We don't have a significant amount of raws that aren't our own from in the fluoro side. The biggest single raw is fluorspar and we're not seeing significant increases in that Got it. And, in chemical solutions, you're referred to an adverse mix shift. Was that a shift away from an ACN? So say methylamines or aniline or was what was that adverse mix shift? That was inside the performance chemicals and intermediate side. Now we on the mining solutions side, we have very, very strong demand, right now. Well and our job is to supply all that demand out of our idiots where we saw a little bit of that shift. It wasn't significant. But we saw a little bit of that shift. Okay. And lastly, for working capital outflow inflows, over the next two quarters. Can you talk about, any guidance there in terms of the amount and or pace of, say, inflows? No, I think our free cash flow guidance is kind of what we would stand behind, which is on a full year basis, greater than 7 it. We always guide folks to understand that we build working capital in the first half given the nature of our business. And so I think if you look at that, that would suggest that there's higher free cash flow generation in the second half of the year. Got it. Thank you very much. Thank you. I'll now turn the call over to Mark Bergano for closing remarks. Listen, we really thank you all for your time and your interest in the company. As you can tell, we continue to be excited about our future. And our 3 year plan in front of us and our job is to execute off of that. So again, thanks for your time and your continued interest in Chemours. This concludes today's conference call. You may now disconnect