Why Is Chemours (CC) Down 2.1% Since Last Earnings Report?

A month has gone by since the last earnings report for Chemours (CC). Shares have lost about 2.1% 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 the most recent earnings report in order to get a better handle on the important catalysts.

Chemours’ Earnings Beat, Revenues Miss Estimates in Q1

Chemours logged profits of $52 million or 34 cents per share in first-quarter 2024, down from the year-ago quarter's profit of $145 million or 96 cents.

Barring one-time items, earnings came in at 32 cents per share. It beat the Zacks Consensus Estimate of 25 cents.

The company reported net sales of $1,350 million in the first quarter, down roughly 12% year over year. It fell short of the Zacks Consensus Estimate of $1,360.3 million. The downside was primarily attributed to a 23% decline in the Advanced Performance Materials unit, a 7% decrease in Titanium Technologies and an 8% fall in the Thermal & Specialized Solutions Segment. Volumes in the quarter fell 6% while prices declined 5%.

Segment Highlights

The Titanium Technologies division recorded revenues of $588 million in the quarter, marking a 7% decline compared to the previous year. This was below our estimate of $592.5 million. The downside was due to a 7% decline in price, with volume and currency remaining relatively stable.

In the Thermal & Specialized Solutions segment, revenues saw an 8% year-over-year decline, reaching $449 million in the reported quarter. It fell short of our estimate of $458.1 million. The downside was attributed to a 6% volume decrease and a 2% price decline.

Revenues in the Advanced Performance Materials unit amounted to $299 million, marking a decline of 23% year over year. It surpassed our estimate of $290 million. The decline was primarily driven by an 18% drop in volumes and a 5% decrease in pricing.

Financials

Chemours ended the quarter with cash and cash equivalents of $746 million, down around 9% year over year. Long-term debt was $3,968 million, up roughly 10% year over year.

Cash used in operating activities was $290 million in the reported quarter.

Outlook

Moving ahead, the company expects Titanium Technologies to achieve sequential net sales growth of around 15% in the second quarter of 2024, reflecting the earlier communicated improvement in its TiO2 order book. Adjusted EBITDA growth is forecast to be in line with the growth in net sales. Higher volumes and improved fixed-cost absorption are projected to be partly offset by the shift in the timing of higher-cost ore consumption, much of which is expected for the second quarter.

For the second quarter, Chemours sees consolidated net sales to rise around 15% sequentially. Consolidated adjusted EBITDA is expected to increase roughly 15% on a sequential comparison basis.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

The consensus estimate has shifted -22.32% due to these changes.

VGM Scores

Currently, Chemours has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. 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 these revisions indicates a downward shift. It's no surprise Chemours has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.

Performance of an Industry Player

Chemours belongs to the Zacks Chemical - Diversified industry. Another stock from the same industry, Olin (OLN), has gained 0.4% over the past month. More than a month has passed since the company reported results for the quarter ended March 2024.

Olin reported revenues of $1.64 billion in the last reported quarter, representing a year-over-year change of -11.3%. EPS of $0.40 for the same period compares with $1.16 a year ago.

For the current quarter, Olin is expected to post earnings of $0.72 per share, indicating a change of -36.3% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.

Olin has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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