Why Chemical Company Chemours Shares Are Plunging Premarket Today

The Chemours Company CC shares are trading lower after the company disclosed the completion and result of an internal review by the Audit Committee of the Board of Directors.

The Audit Committee determined the delayed payments of up to around $100 million until the first quarter of 2024 to certain vendors that were originally due to be paid in the fourth quarter of 2023.

The Committee also stated the collection of up to about $260 million of receivables originally not due to be received until the first quarter of 2024 were accelerated into the fourth quarter of 2023. 

Overall, the Audit Committee determined that there was a lack of transparency with the Board of Directors by three former members of senior management. 

The company also revealed material weaknesses in financial reporting. The material weaknesses did not result in any material misstatements of the company’s financial statements or disclosures but did result in immaterial revisions to the March 31, 2023, June 30, 2023, and September 30, 2023, financial statements and a revision to the Balance Sheet as of December 31, 2022, and the Statement of Cash Flows for each of the years ended December 31, 2022, and 2021.

Related: Chemours Stock Tumbles As Company Reveals Management Shakeup And Financial Struggles

Q4 Results: In a separate release, the company reported fourth-quarter FY23 net Sales of $1.36 billion (+2% Y/Y), beating the consensus of $1.32 billion.

The company witnessed volume growth of 3% in the quarter. Net sales increased primarily due to a 7% increase in TT and a 17% increase in TSS.

Adjusted EBITDA improved 47% Y/Y to $176 million, led by demand in TSS and lower input costs and impact from operating expense savings from the Titanium Technologies Transformation Plan.

Adjusted EPS of $0.31 surpassed the consensus of $0.25.

As of December 31, 2023, Chemours had cash and equivalents of $1.8 billion and gross debt was $4.1 billion.

Outlook: The company expects first quarter 2024 net sales to be flat to slightly down Q/Q, and Adjusted EBITDA down around 10% Q/Q.

Also, Chemours projects first quarter 2024 operating cash flow to be an outflow of roughly $400 million.

On February 26, 2024, the company received court approval for the previously announced comprehensive settlement of PFAS-related drinking water claims of a defined class of U.S. public water systems, of which Chemours’ share totals $592 million. 

Related: PFAS’s Forever Problem: Ohio Lawsuit Against Chemical Companies Fizzles Out

Investors can gain exposure to the stock via ProShares Smart Materials ETF TINT and Amplify ETF Trust Amplify Natural Resources Dividend Income ETF NDIV.

Price Action: CC shares are down 10.66% at $25.80 premarket on the last check Thursday.