Barron’s mentions that the stock initially jumped on earnings, but then plummetted, and brings us an analysis from Citigroup.
Here’s a first take on earnings from Citigroup’s P.J. Juvekar and Eric Petrie:
Chemours adjusted EBITDA of $169mm was below our $179mm estimate and consensus of $196mm. The delta compared to our model was driven by lower earnings in Titanium Technologies (TiO2) partially offset by lower corporate expense. However, adjusted EPS of 40c was better than our 20c estimate driven by lower interest expense and FX gains. In Fluoroproducts, EBITDA increased by 27% Y/Y to $89mm in line with our estimate driven by growth in Opteon refrigerants.
Management delivered $60mm of cost savings during the quarter, partially offset by FX headwinds and lower TiO2 prices (-13% Y/Y). Plus, a strategic review of Chemical Solutions was initiated and is expected to result in asset sales, site shutdowns and other measures to improve profitability
Of course, Chemours has dropped another $1 per share since that article was published on November 5. The company had run up significantly into earnings, but is now back at its mid-October lows. It took fellow Titanium Dioxide manufacturer Tronox(TROX) less than three years after its spinoff from Kerr-McGee to declare bankruptcy; at the current rate, Chemours may get there sooner.
At the same time, former parent DuPont made interim CEO Edward Breen permanent chairman and CEO. Breen, as CEO of Tyco from 2002 to 2012 “oversaw a highly successful restructuring, including two break-ups of the company resulting in the spin-offs of Covidien, Tyco Connectivity, ADT Corporation and the merger of Tyco Flow Control with Pentair.” Breen is thought to have the support of Nelson Peltz’s Trian, a major shareholder which clashed repeatedly with former CEO Ellen Kullman. Breen’s appointment and spinoff experience increase the likelihood that DuPont will follow Trian’s plan and split the company in two.
Disclosure: The author holds no position in any stock mentioned