# Chemours Co: Form 10-Q for the period ended Sep 30, 2023

- Company: [Chemours Co](/companies/cc.md) (CIK 1627223)
- Form: 10-Q
- Filed: 2023-10-27
- Accepted by EDGAR: Oct 27, 2023, 16:45 ET
- Period: 2023-09-30
- Accession: 0000950170-23-056036
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1627223/000095017023056036/cc-20230930.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1627223/000095017023056036/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-07-01 to 2023-09-30 | $1.49bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2023-01-01 to 2023-09-30 | $4.67bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2023-07-01 to 2023-09-30 | $1.21bn | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 9 months, 2023-01-01 to 2023-09-30 | $3.61bn | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2023-07-01 to 2023-09-30 | $281.0m | us-gaap:GrossProfit |
| Gross profit | 9 months, 2023-01-01 to 2023-09-30 | $1.06bn | us-gaap:GrossProfit |
| Research and development | 3 months, 2023-07-01 to 2023-09-30 | $28.0m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 9 months, 2023-01-01 to 2023-09-30 | $82.0m | us-gaap:ResearchAndDevelopmentExpense |
| Selling, general and administrative | 3 months, 2023-07-01 to 2023-09-30 | $165.0m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 9 months, 2023-01-01 to 2023-09-30 | $1.07bn | us-gaap:SellingGeneralAndAdministrativeExpense |
| Interest expense | 3 months, 2023-07-01 to 2023-09-30 | $55.0m | us-gaap:InterestExpense |
| Interest expense | 9 months, 2023-01-01 to 2023-09-30 | $145.0m | us-gaap:InterestExpense |
| Income tax | 3 months, 2023-07-01 to 2023-09-30 | $3.0m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2023-01-01 to 2023-09-30 | −$26.0m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-07-01 to 2023-09-30 | $20.0m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2023-01-01 to 2023-09-30 | −$212.0m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-07-01 to 2023-09-30 | $0.13 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2023-01-01 to 2023-09-30 | −$1.42 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-07-01 to 2023-09-30 | $0.13 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2023-01-01 to 2023-09-30 | −$1.42 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-07-01 to 2023-09-30 | 150,185,638 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2023-01-01 to 2023-09-30 | 148,929,580 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2023-01-01 to 2023-09-30 | $72.0m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2023-01-01 to 2023-09-30 | $235.0m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 9 months, 2023-01-01 to 2023-09-30 | $112.0m | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 9 months, 2023-01-01 to 2023-09-30 | $69.0m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2023-09-30 | $852.0m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2023-09-30 | $3.68bn | us-gaap:AssetsCurrent |
| Total assets | at 2023-09-30 | $7.95bn | us-gaap:Assets |
| Current liabilities | at 2023-09-30 | $2.19bn | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2023-09-30 | $7.19bn | us-gaap:Liabilities |
| Long-term debt | at 2023-09-30 | $3.94bn | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2023-09-30 | $23.0m | us-gaap:DebtCurrent |
| Shareholders' equity | at 2023-09-30 | $755.0m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 113,808 characters.

*This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) supplements the unaudited Interim Consolidated Financial Statements and the related notes thereto included elsewhere herein to help provide an understanding of our financial condition, changes in our financial condition, and the results of our operations for the periods presented. Unless the context otherwise requires, references herein to “The Chemours Company”, “Chemours”, “the Company”, “our Company”, “we”, “us”, and “our” refer to The Chemours Company and its consolidated subsidiaries. References herein to “EID” refer to EIDP, Inc., formerly known as E. I. du Pont de Nemours and Company, which is our former parent company and is now a subsidiary of Corteva, Inc. (“Corteva”), a Delaware corporation. References herein to “DuPont” refer to DuPont de Nemours, Inc., a Delaware Corporation.*

*This MD&A should be read in conjunction with the unaudited Interim Consolidated Financial Statements and the related notes thereto included in Item 1 of this Quarterly Report on Form 10-Q, as well as our audited Consolidated Financial Statements and the related notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2022.*

*This section and other parts of this Quarterly Report on Form 10-Q contain forward-looking statements, within the meaning of the federal securities laws, that involve risks and uncertainties. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. The words “believe”, “expect”, “anticipate”, “plan”, “estimate”, “target”, “project”, and similar expressions, among others, generally identify “forward-looking statements”, which speak only as of the date the statements were made. The matters discussed in these forward-looking statements are subject to risks, uncertainties, and other factors that could cause actual results to differ materially from those set forth in the forward-looking statements.*

*Our forward-looking statements are based on certain assumptions and expectations of future events that may not be accurate or realized. These statements, as well as our historical performance, are not guarantees of future performance. Forward-looking statements also involve risks and uncertainties that are beyond our control. Additionally, there may be other risks and uncertainties that we are unable to identify at this time or that we do not currently expect to have a material impact on our business. Factors that could cause or contribute to these differences include, but are not limited to, the risks, uncertainties, and other factors discussed in the Forward-looking Statements and the Risk Factors sections in our Annual Report on Form 10-K for the year ended December 31, 2022, and as otherwise discussed in this report. We assume no obligation to revise or update any forward-looking statement for any reason, except as required by law.*

### Overview

We are a leading, global provider of performance chemicals that are key inputs in end-products and processes in a variety of industries. We deliver customized solutions with a wide range of industrial and specialty chemical products for markets, including coatings, plastics, refrigeration and air conditioning, transportation, semiconductor and consumer electronics, general industrial, and oil and gas. Our principal products include titanium dioxide (“TiO2”) pigment, refrigerants, industrial fluoropolymer resins, and performance chemicals and intermediates. We manage and report our operating results through three reportable segments: Titanium Technologies, Thermal & Specialized Solutions, and Advanced Performance Materials. Our Titanium Technologies segment is a leading, global provider of TiO2 pigment, a premium white pigment used to deliver whiteness, brightness, opacity, and protection in a variety of applications. Our Thermal & Specialized Solutions segment is a leading, global provider of refrigerants, thermal management solutions, propellants, blowing agents, and specialty solvents. Our Advanced Performance Materials segment is a leading, global provider of high-end polymers and advanced materials that deliver unique attributes, including low friction coefficients, extreme temperature resistance, weather resistance, ultraviolet and chemical resistance, and electrical insulation. Our Performance Chemicals and Intermediates business is presented under Other Segment.

We are a different kind of chemistry company, driven by our vision to create a better world through the power of our chemistry. Our world-class product portfolio brings everyday convenience to virtually everything people touch in their daily lives, making our products and the solutions they enable both vital and essential. We are committed to creating value for our customers and stakeholders around the world through innovative and sustainable solutions, environmental leadership, community impact and making Chemours the greatest place to work for every employee. Our global workforce, renowned for its deep and unmatched expertise, bring our chemistry to life, guided by five core values that form the bedrock foundation for how we operate: (i) ***Customer Centricity –*** driving customer growth, and our own, by understanding our customers’ needs and building long-lasting relationships with them; (ii) ***Refreshing Simplicity –*** cutting complexity by investing in what matters, and getting results faster; (iii) ***Collective Entrepreneurship –*** empowering our employees to act like they own our business, while embracing the power of inclusion and teamwork; (iv) ***Safety Obsession –*** living our steadfast belief that a safe workplace is a profitable workplace; and, (v) ***Unshakable Integrity –*** doing what’s right for our customers, colleagues, and communities – always.

We recognize that our responsibility to all stakeholders goes well beyond our Corporate Responsibility Commitment ("CRC") goals, and our commitment to sustainability cannot be separated from our growth strategy or our vision. As a result, in 2023 we are aligning our sustainability focus and actions to the four key strategic pillars that support our Chemours vision: Innovation and Sustainable Solutions, Environmental Leadership, Community Impact, and Greatest Place to Work for All. The four key areas support an effort to achieve, among other goals, increased sustainability of our products, addressing our carbon emissions, and increased diversity and inclusion in our global workforce. We call this responsible chemistry – it is rooted in who we are, and we expect that our CRC will drive sustainable, long-term earnings growth.

Our core values, together with our company purpose and vision, underpin our commitment to our stakeholders to make chemistry as responsible as it is essential. Sustainability is embedded within our growth strategy as a company, with 10 ambitious goals that we aim to achieve by 2030, built on our key strategic pillars of Innovation and Sustainable Solutions, Environmental Leadership, Community Impact, and Greatest Place to Work for All. These goals are designed to promote accountability to our commitment and position us for sustainable, long-term earnings growth. While we utilize environmental, social, and governance ("ESG") issue prioritization and a defined governance framework to manage sustainability, our goal is to embed sustainability into our organization and our business managing processes. We understand that maintaining safe, sustainable operations has an impact on us, our communities, the environment, and our collective future. With this focus, we invest in research and development (“R&D”) in order to develop safer, cleaner, and more efficient products and processes that enable our operations, customers, and consumers to reduce their greenhouse gas ("GHG") emissions, carbon footprint, and overall environmental footprint. We value collaboration to drive change and commit to continue working with policymakers, our value chain, and other organizations to encourage collective action to reduce GHG emissions and encourage lower-carbon forms of energy.

### Recent Developments

### Titanium Technologies Transformation Plan

In line with our strategic priorities for creating long-term shareholder value and building on the legacy of delivering high-quality Ti-PureTM offerings and stable pricing strategy, the Titanium Technologies segment commenced certain transformation initiatives to streamline our workforce and improve other operational costs. We expect these transformation initiatives to deliver an earnings benefit of approximately $100 million. As part of cost optimization efforts, in July 2023, we announced our decision to shut down our TiO2 manufacturing facility in Kuan Yin, Taiwan.

As a result of the Titanium Technologies Transformation Plan, for the period ended September 30, 2023, we recorded a pre-tax charge of approximately $147 million, comprised primarily of cash charges of $31 million related to severance, contract termination, and decommissioning charges, and non-cash charges of approximately $78 million related to asset-related impairments, $28 million related to the write-off of certain raw materials inventory, and $10 million in other charges. We anticipate additional charges of approximately $20 million to $30 million for decommission, dismantling and removal activities.

### Sale of Glycolic Acid Business

On August 1, 2023, we completed the sale of our Glycolic Acid business included in Other Segment for net cash proceeds of approximately $138 million under the definitive agreement entered into with PureTech Scientific Inc. on June 1, 2023 (the “Glycolic Acid Transaction”). As a result of the sale, we recorded a net pre-tax gain on sale of $106 million in other income (expense), net in the consolidated statements of operations.

### Senior Secured Credit Facilities

On August 18, 2023, we entered into an amendment and restatement credit agreement, which amends and restates in its entirety the April 2018 Credit Agreement, that provides for five-year senior secured term loans in an aggregate principal amount equal to $1,070 million and €415 million (collectively, the "New Term Loans"), and a $900 million senior secured revolving credit facility. Proceeds from the New Term Loans were primarily used to prepay, in full, all outstanding amounts under the April 2018 Credit Agreement and fund our portion of the qualified settlement fund per the terms of the U.S. public water system settlement agreement. Refer to "Note 15 - Debt" to the *Interim Consolidated Financial Statements* in this Quarterly Report on Form 10-Q for further details.

### Results of Operations and Business Highlights

### Results of Operations

The following table sets forth our results of operations for the three and nine months ended September 30, 2023 and 2022.

*(Dollars in millions, except per share amounts)*

|  | Three Months Ended September 30, 2023 | 2022 | Nine Months Ended September 30, 2023 | 2022 |
| --- | ---: | ---: | ---: | ---: |
| Net sales | $1,487 | $1,777 | $4,666 | $5,456 |
| Cost of goods sold | 1,206 | 1,345 | 3,607 | 4,042 |
| Gross profit | 281 | 432 | 1,059 | 1,414 |
| Selling, general, and administrative expense | 165 | 140 | 1,067 | 535 |
| Research and development expense | 28 | 32 | 82 | 88 |
| Restructuring, asset-related, and other charges | 124 | (1) | 139 | 10 |
| Total other operating expenses | 317 | 171 | 1,288 | 633 |
| Equity in earnings of affiliates | 13 | 16 | 38 | 44 |
| Interest expense, net | (55) | (41) | (145) | (123) |
| (Loss) gain on extinguishment of debt | (1) | 7 | (1) | 7 |
| Other income, net | 102 | 56 | 100 | 101 |
| **Income before income taxes** | 23 | 299 | (237) | 810 |
| Provision for (benefit from) income taxes | 3 | 59 | (26) | 135 |
| **Net income (loss)** | 20 | 240 | (211) | 675 |
| Less: Net income attributable to non-controlling interests | — | — | 1 | — |
| **Net income (loss) attributable to Chemours** | $20 | $240 | $(212) | $675 |
| **Per share data** |  |  |  |  |
| Basic earnings (loss) per share of common stock | $0.13 | $1.54 | $(1.42) | $4.30 |
| Diluted earnings (loss) per share of common stock (1) | 0.13 | 1.52 | (1.42) | 4.21 |

(1) In periods where we incur a net loss, the impact of potentially dilutive securities is excluded from the calculation of EPS, as their inclusion would have an anti-dilutive effect. As such, with respect to the measure of diluted EPS, the impact of 1,753,788 potentially dilutive securities is excluded from the calculation for the nine months ended September 30, 2023.

### Net Sales

The following table sets forth the impacts of price, volume, currency, and portfolio changes on our net sales for the three and nine months ended September 30, 2023, compared with the same periods in 2022.

| Change in net sales from prior period | Three Months Ended September 30, 2023 | Nine Months Ended September 30, 2023 |
| --- | ---: | ---: |
| Price | (1)% | 2% |
| Volume | (15)% | (16)% |
| Currency | —% | —% |
| **Total change in net sales** | (16)% | (14)% |

Our net sales decreased by $290 million (or 16%) to $1.5 billion for the three months ended September 30, 2023, compared with net sales of $1.8 billion for the same period in 2022. The decrease in our net sales for the three months ended September 30, 2023 was primarily attributable to a decrease in volume of 15% and a decrease in price of 1%. Volume decreases were attributed to our Titanium Technologies and Advanced Performance Materials segments, partially offset by higher volume in our Thermal & Specialized Solutions segment. Price decreases were attributed to our Titanium Technologies and Thermal & Specialized Solutions segments, partially offset by our Advanced Performance Materials segment.

Our net sales decreased by $790 million (or 14%) to $4.7 billion for the nine months ended September 30, 2023, compared with net sales of $5.5 billion for the same period in 2022. The decrease in our net sales for the nine months ended September 30, 2023 was primarily attributable to a decrease in volume of 16%, partially offset by an increase in price of 2%. Volume decreases were attributed to our Titanium Technologies and Advanced Performance Materials segments, partially offset by higher volume in our Thermal & Specialized Solutions segment. Price increases were attributable to our Thermal & Specialized Solutions and Advanced Performance Materials segments.

The key drivers of these changes for each of our reportable segments are discussed further under the “Segment Reviews” section within this *MD&A.*

### Cost of Goods Sold

Our cost of goods sold (“COGS”) decreased by $139 million (or 10%) and $435 million (or 11%) to $1.2 billion and $3.6 billion for three and nine months ended September 30, 2023, respectively, compared with COGS of $1.3 billion and $4 billion for the same periods in 2022. The decrease in our COGS for the three and nine months ended September 30, 2023 was primarily attributable to lower sales volume, partially offset by higher raw material costs due to inflation, lower fixed cost absorption in all our segments, and $28 million of certain raw materials inventory written off related to the Kuan Yin, Taiwan plant shutdown.

### Selling, General, and Administrative Expense

Our selling, general, and administrative (“SG&A”) expense increased by $25 million (or 18%) and $532 million (or 99%) to $165 million and $1.1 billion for the three and nine months ended September 30, 2023, respectively, compared with SG&A expense of $140 million and $535 million for the same periods in 2022. The increase in our SG&A expense was primarily attributable to the approximately $31 million and $675 million of legal charges during the three and nine months ended September 30, 2023, respectively, which includes the $592 million of legal charges during the second quarter of 2023 related to the U.S. public water system settlement agreement. The increase was partially offset by lower long-term performance-related compensation expense relative to the third quarter of 2022, and, during the nine months ended September 30, 2023, lower off-site environmental remediation costs of approximately $126 million at our Fayetteville Works site in Fayetteville, North Carolina ("Fayetteville") relative to the nine months ended September 30, 2022, respectively.

### Research and Development Expense

Our research and development (“R&D”) expense decreased by $4 million (or 13%) and $6 million (or 7%) to $28 million and $82 million for the three and nine months ended September 30, 2023, respectively, compared with R&D expense of $32 million and $88 million for the same periods in 2022. The decrease in our R&D expense for the three and nine months ended September 30, 2023 was primarily attributable to decisions to delay certain projects given current macroeconomic conditions.

### Restructuring, Asset-Related, and Other Charges

Our restructuring, asset-related, and other charges were $124 million and $139 million for the three and nine months ended September 30, 2023, respectively, compared with restructuring, asset-related, and other charges of $(1) million and $10 million for the three and nine months ended September 30, 2022, respectively.

Restructuring, asset-related, and other charges in the three and nine months ended September 30, 2023 were primarily attributable to $119 million of charges related to the Titanium Technologies Transformation Plan, consisting of $78 million of asset-related charges, employee separation charges of $20 million, $7 million of contract termination costs, and $14 million of decommissioning and other charges. In addition, in the three and nine months ended September 30, 2023, charges included $6 million related to our 2023 Restructuring Program and, in the nine months, charges of $16 million resulting from our decision to abandon the implementation of a new enterprise resource planning ("ERP") software platform.

Restructuring, asset-related, and other charges for the nine months ended September 30, 2022 were primarily attributable to $5 million of asset charges resulting from our decision to suspend business with Russian entities due to the conflict between Russia and Ukraine, and $4 million of employee separation charges incurred in connection with our 2022 restructuring programs.

### Equity in Earnings of Affiliates

Our equity in earnings of affiliates decreased by $3 million (or 19%) and $6 million (or 14%) to $13 million and $38 million for the three and nine months ended September 30, 2023, respectively, compared with equity in earnings of affiliates of $16 million and $44 million for the same periods in 2022. The decrease in our equity in earnings of affiliates for the three and nine months ended September 30, 2023 was primarily attributable to lower demand in the region where our investees' operate.

### Interest Expense, Net

Our interest expense, net increased by $14 million (or 34%) and $22 million (or 18%) to $55 million and $145 million for the three and nine months ended September 30, 2023, respectively, compared with interest expense, net of $41 million and $123 million for the same periods in 2022. The increase in our interest expense, net for the three and nine months ended September 30, 2023 was primarily attributable to higher interest rates on our variable rate debt, partially offset by higher interest income.

### (Loss) Gain on Extinguishment of Debt

For the three and nine months ended September 30, 2023, we recognized a net loss on extinguishment of debt of $1 million in connection with the issuance of the New Term Loans.

For the three and nine months ended September 30, 2022, we recognized a net gain on extinguishment of debt of $7 million in connection with the open market repurchases of various portions of our senior unsecured notes.

### Other Income, Net

Our other income, net increased by $46 million (or 82%) and decreased by $1 million (or 1%) to $102 million and $100 million for the three and nine months ended September 30, 2023, respectively, compared with other income, net of $56 million and $101 million for the same periods in 2022.

Our other income, net in the three and nine months ended September 30, 2023, includes a net pre-tax gain on sale of $106 million, associated with the Glycolic Acid Transaction, partially offset by net losses from foreign currency exchanges, primarily driven by devaluation of the Argentine peso and the strengthening of the euro against the U.S. dollar.

Our other income, net in the three and nine months ended September 30, 2022 includes proceeds from a settlement of a patent infringement matter relating to certain copolymer patents associated with our Advanced Performance Materials segment during the third quarter of 2022 and net gains from foreign currency exchanges, primarily due to the devaluation of the euro against the U.S. dollar. For the nine months ended September 30, 2022, we also recognized a net pre-tax gain on sale of $11 million and $18 million, respectively, associated with the sale of land at our former operating site in Beaumont, Texas (the "Beaumont Transaction") and the stock sale of certain of our wholly-owned subsidiaries and the remaining assets at our former Aniline business facilities in Pascagoula, Mississippi (the "Pascagoula Transaction").

### Provision for (Benefit from) Income Taxes

We had a provision for income taxes of $3 million and $59 million for the three months ended September 30, 2023 and 2022, respectively, which represented effective tax rates of 13% and 20%, respectively. The $56 million decrease in our provision for income taxes for the three months ended September 30, 2023 was attributable to decreased profitability, changes in our geographic mix of earnings, and changes to non-recurring items. In the third quarter of 2023, we recognized a $28 million income tax benefit associated with the Kuan Yin, Taiwan plant shutdown, net of a $13 million valuation allowance recorded on certain deferred tax assets of one of our Taiwanese subsidiaries. This income tax benefit was offset by $26 million of income tax expense associated with the Glycolic Acid Transaction that occurred during the quarter.

We had a benefit from income taxes of $26 million and a provision for income taxes of $135 million for the nine months ended September 30, 2023 and 2022, respectively, which represented effective tax rates of 11% and 17%, respectively. The $161 million decrease in our provision for income taxes and lower effective tax rate for the nine months ended September 30, 2023 were primarily attributable to the same factors discussed in the preceding paragraph. Additionally, we recorded $88 million tax benefit associated with the U.S. public water system settlement agreement in the second quarter of 2023.

### Segment Reviews

Adjusted earnings before interest, taxes, depreciation, and amortization ("Adjusted EBITDA") is the primary measure of segment profitability used by our Chief Operating Decision Maker ("CODM") and is defined as income (loss) before income taxes, excluding the following:

- interest expense, depreciation, and amortization;
- non-operating pension and other post-retirement employee benefit costs, which represents the non-service cost component of net periodic pension costs;
- exchange (gains) losses included in other income (expense), net;
- restructuring, asset-related, and other charges;
- (gains) losses on sales of assets and businesses; and,
- other items not considered indicative of our ongoing operational performance and expected to occur infrequently, including certain litigation related and environmental charges and Qualified Spend reimbursable by DuPont and/or Corteva as part of our cost-sharing agreement under the terms of the Memorandum of Understanding (“MOU”) that were previously excluded from Adjusted EBITDA.

A reconciliation of net income (loss) attributable to Chemours to Adjusted EBITDA for the three and nine months ended September 30, 2023 and 2022 is included in the “Non-GAAP Financial Measures” section of this *MD&A.*

The following table sets forth our Adjusted EBITDA by segment for the three and nine months ended September 30, 2023 and 2022.

*(Dollars in millions)*

|  | Three Months Ended September 30, 2023 | 2022 | Nine Months Ended September 30, 2023 | 2022 |
| --- | ---: | ---: | ---: | ---: |
| Titanium Technologies | $69 | $137 | $226 | $559 |
| Thermal & Specialized Solutions | 162 | 162 | 561 | 549 |
| Advanced Performance Materials | 68 | 112 | 233 | 306 |
| Other Segment | 2 | 3 | 18 | 1 |
| Corporate and Other | (54) | (51) | (164) | (174) |
| **Total Adjusted EBITDA** | $247 | $363 | $874 | $1,241 |

54

### Titanium Technologies

The following table sets forth the net sales, Adjusted EBITDA, and Adjusted EBITDA margin amounts for our Titanium Technologies segment for the three and nine months ended September 30, 2023 and 2022.

*(Dollars in millions)*

|  | Three Months Ended September 30, 2023 | 2022 | Nine Months Ended September 30, 2023 | 2022 |
| --- | ---: | ---: | ---: | ---: |
| Segment net sales | $690 | $877 | $2,029 | $2,774 |
| Adjusted EBITDA | 69 | 137 | 226 | 559 |
| Adjusted EBITDA margin | 10% | 16% | 11% | 20% |

The following table sets forth the impacts of price, volume, currency, and portfolio changes on our Titanium Technologies segment’s net sales for the three and nine months ended September 30, 2023, compared with the same periods in 2022.

| Change in segment net sales from prior period | Three Months Ended September 30, 2023 | Nine Months Ended September 30, 2023 |
| --- | ---: | ---: |
| Price | (3)% | —% |
| Volume | (18)% | (27)% |
| Currency | —% | —% |
| **Total change in segment net sales** | (21)% | (27)% |

#### Segment Net Sales

Our Titanium Technologies segment’s net sales decreased by $187 million (or 21%) to $690 million for the three months ended September 30, 2023, compared with segment net sales of $877 million for the same period in 2022. The decrease in segment net sales for the three months ended September 30, 2023 was primarily attributable to a decrease in volume of 18% and price of 3%. Volumes decreased due to softer market demand in all regions. Prices decreased primarily due to pricing in our market exposed customer portfolio. Currency was flat for the three months ended September 30, 2023 when compared to the same period of the prior year.

Our Titanium Technologies segment’s net sales decreased by $745 million (or 27%) to $2 billion for the nine months ended September 30, 2023, compared with segment net sales of $2.8 billion for the same period in 2022. The decrease in segment net sales for the nine months ended September 30, 2023 was primarily attributable to a decrease in volume of 27%. Volumes decreased due to softer market demand in all regions. Prices were flat in comparison with the prior period as contractual price increases offset by decreases in our market exposed customer portfolio. Currency was flat for the nine months ended September 30, 2023 when compared to the same period of the prior year.

#### Adjusted EBITDA and Adjusted EBITDA Margin

For the three months ended September 30, 2023, segment Adjusted EBITDA decreased by $68 million (or 50%) to $69 million and Adjusted EBITDA margin decreased by approximately 600 basis points to 10%, compared with segment Adjusted EBITDA of $137 million and Adjusted EBITDA margin of 16% for the same period in 2022. For the nine months ended September 30, 2023, segment Adjusted EBITDA decreased by $333 million (or 60%) to $226 million and Adjusted EBITDA margin decreased by approximately 900 basis points to 11%, compared with segment Adjusted EBITDA of $559 million and Adjusted EBITDA margin of 20% for the same period in 2022. The decreases in segment Adjusted EBITDA and Adjusted EBITDA margin during the three months ended September 30, 2023, was primarily attributable to the aforementioned decrease in sales volumes and price. The decreases in segment Adjusted EBITDA and Adjusted EBITDA margin during the nine months ended September 30, 2023, were primarily attributable to the aforementioned decrease in sales volumes, the effects of inflation on costs, and lower fixed cost absorption.

### Thermal & Specialized Solutions

The following table sets forth the net sales, Adjusted EBITDA, and Adjusted EBITDA margin amounts for our Thermal & Specialized Solutions segment for the three and nine months ended September 30, 2023 and 2022.

*(Dollars in millions)*

|  | Three Months Ended September 30, 2023 | 2022 | Nine Months Ended September 30, 2023 | 2022 |
| --- | ---: | ---: | ---: | ---: |
| Segment net sales | $436 | $417 | $1,445 | $1,360 |
| Adjusted EBITDA | 162 | 162 | 561 | 549 |
| Adjusted EBITDA margin | 37% | 39% | 39% | 40% |

The following table sets forth the impacts of price, volume, currency, and portfolio changes on our Thermal & Specialized Solutions segment’s net sales for the three and nine months ended September 30, 2023, compared with the same periods in 2022.

| Change in segment net sales from prior period | Three Months Ended September 30, 2023 | Nine Months Ended September 30, 2023 |
| --- | ---: | ---: |
| Price | (1)% | 2% |
| Volume | 5% | 4% |
| Currency | 1% | —% |
| **Total change in segment net sales** | 5% | 6% |

#### Segment Net Sales

Our Thermal & Specialized Solutions segment’s net sales increased by $19 million (or 5%) to $436 million for the three months ended September 30, 2023, compared with segment net sales of $417 million for the same period in 2022. The increase in segment net sales for the three months ended September 30, 2023 was primarily attributable to an increase in volume of 5% partially offset by a decrease in price of 1%. Volumes increased due to the continued adoption of OpteonTM products in stationary and automotive original equipment manufacturers. Prices decreased slightly primarily due to unfavorable regional product mix in legacy refrigerants and lower pricing in our automotive end markets. Favorable currency movements added a 1% tailwind to the segment’s net sales during three months ended September 30, 2023.

Our Thermal & Specialized Solutions segment’s net sales increased by $85 million (or 6%) to $1.4 billion for the nine months ended September 30, 2023, respectively, compared with segment net sales of $1.4 billion for the same period in 2022. The increase in segment net sales for the nine months ended September 30, 2023 was primarily attributable to increases in volume of 4% and price of 2%. Volumes increased due to strong automotive original equipment manufacturer demand and continued adoption of OpteonTM products. Prices increased across the portfolio, excluding automotive end markets, due to changing market and regulatory dynamics and steady value-based pricing growth within our Refrigerants and Foam, Propellants and Other Products portfolio. Currency was flat for the nine months ended September 30, 2023 when compared to the same period of the prior year.

#### Adjusted EBITDA and Adjusted EBITDA Margin

For the three months ended September 30, 2023, segment Adjusted EBITDA was $162 million, which was flat with adjusted EBITDA in the same period in 2022. For the three months ended September 30, 2023, Adjusted EBITDA margin decreased by approximately 200 basis points to 37%, compared with Adjusted EBITDA margin of 39% for the same period in 2022. For the nine months ended September 30, 2023, segment Adjusted EBITDA increased by $12 million (or 2%) to $561 million and Adjusted EBITDA margin decreased by approximately 100 basis points to 39%, compared with segment Adjusted EBITDA of $549 million and Adjusted EBITDA margin of 40% for the same period in 2022. The decrease in segment Adjusted EBITDA margin for the three months ended September 30, 2023 was primarily attributable to lower earnings from our equity affiliates and other income, higher production related fixed costs, and the continued investment in R&D growth initiatives partially offset by lower raw material costs experienced in the current quarter. The increase in segment Adjusted EBITDA for the nine months ended September 30, 2023 was primarily attributable to the aforementioned increase in sales volume and price, partially offset by higher raw material costs and lower earnings from our equity affiliates and other income. The decrease in Adjusted EBITDA margin during the nine months ended September 30, 2023 was primarily attributable to the aforementioned higher raw material costs and lower earnings from our equity affiliates and other income.

### Advanced Performance Materials

The following table sets forth the net sales, Adjusted EBITDA, and Adjusted EBITDA margin amounts for our Advanced Performance Materials segment for the three and nine months ended September 30, 2023 and 2022.

*(Dollars in millions)*

|  | Three Months Ended September 30, 2023 | 2022 | Nine Months Ended September 30, 2023 | 2022 |
| --- | ---: | ---: | ---: | ---: |
| Segment net sales | $343 | $450 | $1,118 | $1,236 |
| Adjusted EBITDA | 68 | 112 | 233 | 306 |
| Adjusted EBITDA margin | 20% | 25% | 21% | 25% |

The following table sets forth the impacts of price, volume, currency, and portfolio changes on our Advanced Performance Materials segment’s net sales for the three and nine months ended September 30, 2023, compared with the same periods in 2022.

| Change in segment net sales from prior period | Three Months Ended September 30, 2023 | Nine Months Ended September 30, 2023 |
| --- | ---: | ---: |
| Price | 2% | 6% |
| Volume | (26)% | (15)% |
| Currency | —% | (1)% |
| **Total change in segment net sales** | (24)% | (10)% |

#### Segment Net Sales

Our Advanced Performance Materials segment’s net sales decreased by $107 million (or 24%) and $118 million (or 10%) to $343 million and $1.1 billion for the three and nine months ended September 30, 2023, respectively, compared with segment net sales of $450 million and $1.2 billion for the same period in 2022. The decreases in segment net sales for the three and nine months ended September 30, 2023 were primarily attributable to a decreases in volume of 26% and 15%, respectively, partially offset by increases in price of 2% and 6%, respectively. Volumes decreased primarily due to demand softening in the Advanced Materials portfolio which serves more economically sensitive end-markets. Prices increased due to increasing sales in high-value end-markets, including advanced electronics and clean energy, in the Performance Solutions portfolio, as well as pricing actions to offset higher raw material costs in our Advanced Materials portfolio. Unfavorable currency movements added a 1% headwind to the segment’s net sales during the nine months ended September 30, 2023.

Our Performance Solutions portfolio’s net sales were $129 million and $413 million for the three and nine months ended September 30, 2023, respectively, and $133 million and $373 million for the same period in 2022. Our Advanced Materials portfolio’s net sales were $214 million and $705 million for the three and nine months ended September 30, 2023, respectively, and $317 million and $863 million for the same period in 2022.

#### Adjusted EBITDA and Adjusted EBITDA Margin

For the three months ended September 30, 2023, segment Adjusted EBITDA decreased by $44 million (or 39%) to $68 million and Adjusted EBITDA margin decreased by approximately 500 basis points to 20%, compared with segment Adjusted EBITDA of $112 million and Adjusted EBITDA margin of 25% for the same period in 2022. For the nine months ended September 30, 2023, segment Adjusted EBITDA decreased by $73 million (or 24%) to $233 million and Adjusted EBITDA margin decreased by approximately 400 basis points to 21%, compared with segment Adjusted EBITDA of $306 million and Adjusted EBITDA margin of 25% for the same period in 2022. The decreases in segment Adjusted EBITDA and Adjusted EBITDA margin for the three and nine months ended September 30, 2023 were primarily attributable to the aforementioned decreases in sales volume driving lower fixed cost absorption, impact of higher raw material costs, and the continued effects of inflation on other costs.

### Corporate and Other

Corporate and Other costs increased by $3 million (or 6%) and decreased by $10 million (or 6%) to $54 million and $164 million for the three and nine months ended September 30, 2023, respectively, compared with Corporate and Other costs of $51 and $174 million for the same periods in 2022. The increase in Corporate and Other costs for the three months ended September 30, 2023, was primarily attributable to higher legacy related legal spend. The decrease in Corporate and Other costs for the nine months ended September 30, 2023, was primarily attributable to lower legacy environmental costs and lower long-term performance-related compensation partially offset by higher legacy related legal spend.

### 2023 Outlook

Our 2023 results will be driven by the following expectations in each of our reportable segments:

- **Titanium Technologies –** Fourth quarter demand is expected to be down sequentially consistent with normal seasonal patterns. Input costs are expected to improve inclusive of the benefits of the Kuan Yin plant closure;
- **Thermal & Specialized Solutions –** Continued OpteonTM adoption in mobile and stationary applications ahead of the next EU and United States hydrofluorocarbons ("HFC") step-down in 2024, paired with uncertainty in the rate of automotive and construction end-market demand recovery. Expect typical seasonality in customer demand trends for the remainder of the year; and
- **Advanced Performance Materials –** Anticipate weaker demand for products in the Advanced Materials portfolio which serves economically sensitive end-markets, paired with continued elevated unit costs, partially offset by strong demand for high-value, differentiated products in the Performance Solutions portfolio.

We expect that our capital expenditures will be approximately $400 million, with approximately $200 million for growth capital expenditures and approximately $200 million for run and maintain, and sustainability.

Our outlook for 2023 reflects our current visibility and expectations based on market factors, such as currency movements, macro-economic factors, and end-market demand. In particular, macro-economic factors may be impacted by factors beyond our control, including the ongoing Russia-Ukraine conflict. Our ability to meet our expectations are subject to numerous risks, including, but not limited to, those described in *Item 1A – Risk Factors* within our Annual Report on Form 10-K for the year ended December 31, 2022 and those updated in *Item 1A – Risk Factors* within this Quarterly Report on Form 10-Q for the period ended September 30, 2023.

### Liquidity and Capital Resources

Our primary sources of liquidity are cash generated from operations and available cash, along with our receivables securitization and borrowings under our debt financing arrangements, which includes borrowing capacity under our revolving credit facility. Our operating cash flow generation is driven by, among other things, the general global economic conditions at any point in time and their resulting impacts on demand for our products, raw materials and energy prices, and industry-specific issues, such as production capacity and utilization. During the third quarter of 2023, we announced our Titanium Technologies Transformation Plan, that includes incremental efforts to streamline our workforce and improve other operational costs designed to yield cost savings and drive improved margins. We expect these transformation initiatives to deliver an earnings benefit of approximately $100 million in 2024. Despite the current challenging market conditions across the industry, we anticipate that through our cost efforts and growth initiatives, our operations will provide sufficient liquidity, together with the availability under our Revolving Credit Facility, to support the cash needs for the businesses. We have a historical pattern of seasonality, with working capital use of cash in the first half of the year, and a working capital source of cash in the second half of the year. We have generated strong operating cash flows through various past industry and economic cycles, evidencing the underlying operating strength of our businesses. The availability under our Revolving Credit Facility of $801 million as of September 30, 2023 is subject to the last 12 months of our consolidated EBITDA and senior secured net debt as defined under the Credit Agreement. Our debt financing arrangements are described in further detail in “Note 15 – Debt” to the *Interim Consolidated Financial Statements* in this Quarterly Report on Form 10-Q and “Note 20 – Debt” to the *Consolidated Financial Statements* in our Annual Report on Form 10-K for the year ended December 31, 2022.

Over the course of the next 12 months and beyond, we anticipate making significant cash payments for known contractual and other obligations, which we expect to fund through cash generated from operations, available cash, receivables securitization, and debt financing arrangements. Such obligations include principal and interest obligations on long-term debt, contractual obligations for operating and finance leases, purchase obligations, legal settlement agreements, and our expectations for capital expenditures, which, except as noted below, did not significantly change from what was previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022. Our contractual and other obligations also include:

- **Principal and interest obligations on long-term debt –** In the third quarter of 2023, we entered into an amendment and restatement credit agreement, which amends and restates in its entirety the April 2018 Credit Agreement, that provides for New Term Loans, and a $900 million senior secured revolving credit facility. Proceeds from the New Term Loans were primarily used to prepay, in full, all outstanding amounts under the April 2018 Credit Agreement and fund our portion of the qualified settlement fund per the terms of the U.S. public water system settlement agreement. For a schedule of our debt principal maturities for the next five years and thereafter, refer to “Note 15 – Debt” to the Interim Consolidated Financial Statements.
- **Environmental remediation –** We, due to the terms of our Separation-related agreements with EID, are subject to contingencies pursuant to environmental laws and regulations that in the future may require further action to correct the effects on the environment of prior disposal practices or releases of chemical substances, which are attributable to EID’s activities before our spin-off. Much of this liability results from Comprehensive Environmental Response Compensation and Liability Act (“CERCLA”), Resource Conservation and Recovery Act (“RCRA”), and similar federal, state, local, and foreign laws. These laws may require us to undertake certain investigative, remediation, and restoration activities at sites where we conduct or EID once conducted operations or at sites where waste generated by us was disposed. At September 30, 2023, our consolidated balance sheets include $605 million for environmental remediation liabilities, of which $138 million was classified as current, and a portion is subject to recovery under the MOU. Of the current environmental liabilities of $138 million, $90 million relates to Fayetteville. Pursuant to the binding MOU that we entered into with DuPont, Corteva, and EID in January 2021, costs related to potential future legacy "PFAS" (perfluoroalkyl and polyfluoroalkyl substances) liabilities arising out of pre-July 1, 2015 conduct will be subject to the cost-sharing arrangement, where we bear half of the cost of such future potential legacy PFAS liabilities, and DuPont and Corteva will collectively bear the other half of the cost of such future potential legacy PFAS liabilities. Through September 30, 2023, aggregate Qualified Spend including settlements, by us, DuPont, and Corteva under the MOU amounted to $467 million. Refer to the “Environmental Matters” section within this *MD&A* for the anticipated environmental remediation payments over the next three years. Refer to “Note 17 – Commitments and Contingent Liabilities” to the *Interim Consolidated Financial Statements* for further discussion of the MOU and Qualified Spend.
- **PFAS escrow funding requirements –** In September 2023, we entered into a supplemental agreement to the binding MOU with DuPont, Corteva, and EID, whereby i) the parties agreed to release funds held in escrow to fund, in part, the qualified settlement fund per the terms of the U.S. public water system settlement agreement, ii) waive the escrow funding obligation of each party due no later than September 30, 2023 and iii) with respect to the escrow funding obligation due no later than September 30, 2024, will be waived by each of the parties under certain conditions as agreed to by the parties. The next escrow payment of $50 million is expected to be made on or before September 30, 2025 and on or before September 30 of each subsequent year through and including 2028. Refer to “Note 17 – Commitments and Contingent Liabilities” to the *Interim Consolidated Financial Statements* for further discussion.
- **U.S Public Water District Settlement Agreement –** In June 2023, we, Corteva/EID, and DuPont, together, entered into the U.S. public water system settlement agreement, under which the parties will collectively establish and contribute a total of $1.185 billion to the qualified settlement fund per the terms of the U.S. public water system settlement agreement. Contribution rates will be consistent with the binding MOU entered into among the parties in January 2021, with us contributing 50% (or approximately $592 million), and DuPont and Corteva collectively contributing the remaining 50%. The settlement amounts were to be funded by the parties in full and deposited into the qualified settlement fund within ten business days following preliminary approval of the settlement by the Court. Preliminary approval of the settlement by the Court was received on August 22, 2023, and on September 6, 2023, we funded $592 million into the qualified settlement fund, using a combination of proceeds from the issuance of the New Term Loans, funds available under the MOU escrow account, and available cash. The qualified settlement fund is recognized as restricted cash and restricted cash equivalents on our consolidated balance sheet at September 30, 2023. Refer to “Note 17 – Commitments and Contingent Liabilities” to the *Interim Consolidated Financial Statements* for further discussion.

We continue to believe our sources of liquidity are sufficient to fund our planned operations and to meet our interest, dividend, and contractual obligations, through at least October 2024. Our financial policy seeks to: (i) selectively invest in organic and inorganic growth to enhance our portfolio, including certain strategic capital investments; (ii) maintain appropriate leverage by using free cash flows to repay outstanding borrowings; and, (iii) return cash to shareholders through dividends and share repurchases. Specific to our objective to return cash to shareholders, in recent quarters, we have previously announced dividends of $0.25 per share, amounting to approximately $150 million per year, and, on October 26, 2023, we announced our quarterly cash dividend of $0.25 per share for the fourth quarter of 2023. Under our share repurchase program, as further discussed in *Item 2 –Unregistered Sales of Equity Securities and Use of Proceeds* in this Quarterly Report on Form 10-Q, we also have remaining authority to repurchase $441 million of our outstanding common stock. The share repurchase program may be suspended or discontinued at any time. Subject to approval by our board of directors, we may raise additional capital or borrowings from time to time, or seek to refinance our existing debt. There can be no assurances that future capital or borrowings will be available to us, and the cost and availability of new capital or borrowings could be materially impacted by market conditions. Further, the decision to refinance our existing debt is based on a number of factors, including general market conditions and our ability to refinance on attractive terms at any given point in time. Any attempts to raise additional capital or borrowings or refinance our existing debt could cause us to incur significant charges. Such charges could have a material impact on our financial position, results of operations, or cash flows.

At September 30, 2023, we had total cash and cash equivalents of $852 million, of which $526 million was held by our foreign subsidiaries. All cash and cash equivalents held by our foreign subsidiaries is readily convertible into currencies used in our operations, including the U.S. dollar. During the nine months ended September 30, 2023, we received approximately $210 million of net cash in the U.S. through intercompany dividends and loans. For further information related to our income tax positions, refer to “Note 9 – Income Taxes” to the *Consolidated Financial Statements* in our Annual Report on Form 10-K for the year ended December 31, 2022.

### Cash Flows

The following table sets forth a summary of the net cash provided by (used for) our operating, investing, and financing activities for the nine months ended September 30, 2023 and 2022.

*(Dollars in millions)*

|  | Nine Months Ended September 30, 2023 | 2022 |
| --- | ---: | ---: |
| Cash provided by operating activities | $72 | $594 |
| Cash used for investing activities | (99) | (219) |
| Cash provided by (used for) financing activities | 179 | (495) |

#### Operating Activities

We generated $72 million and $594 million in cash flows from our operating activities during the nine months ended September 30, 2023 and 2022, respectively. The decrease in our operating cash inflows was primarily attributable to lower earnings, changes in net working capital, primarily due to higher payment of payables due to timing, inventory build and higher cost of raw materials, and higher spend at our Fayetteville site. These decreases were partially offset by lower incentive compensation payment in 2023 compared to 2022 and the one-time payment of the $25 million settlement with the State of Delaware in 2022 that did not recur in 2023.

#### Investing Activities

We used $99 million and $219 million in cash flows for our investing activities during the nine months ended September 30, 2023 and 2022, respectively which were primarily attributable to purchases of property, plant, and equipment amounting to $235 million and $240 million, respectively. Cash outflows from investing activities during the nine months ended September 30, 2023 were partially offset by $138 million of cash proceeds related to the Glycolic Acid Transaction. Cash outflows from investing activities during the nine months ended September 30, 2022 were partially offset by $17 million of cash proceeds related to the Beaumont Transaction and $16 million of cash proceeds related to the Pascagoula Transaction.

#### Financing Activities

We generated $179 million in cash flows for our financing activities during the nine months ended September 30, 2023 which were primarily attributable $367 million of net proceeds received in connection with the issuance of the New Term Loans. We also used cash for capital allocation activities, resulting in $69 million in purchases of our issued and outstanding common stock under our 2022 Share Repurchase Program and $112 million of cash dividends.

We used $495 million in cash flows for our financing activities during the nine months ended September 30, 2022 which were primarily attributable to our capital allocation activities, resulting in $351 million in purchases of our issued and outstanding common stock under our 2022 and 2018 Share Repurchase Programs, $117 million of cash dividends and $64 million in debt repayments, including open market repurchases, partially offset by $51 million in stock option exercises.

### Current Assets

The following table sets forth the components of our current assets at September 30, 2023 and December 31, 2022.

*(Dollars in millions)*

|  | September 30, 2023 | December 31, 2022 |
| --- | ---: | ---: |
| Cash and cash equivalents | $852 | $1,102 |
| Restricted cash and restricted cash equivalents | 595 | — |
| Accounts and notes receivable, net | 846 | 626 |
| Inventories | 1,314 | 1,404 |
| Prepaid expenses and other | 76 | 82 |
| **Total current assets** | $3,683 | $3,214 |

Restricted cash and restricted cash equivalents of $595 million represents cash and cash equivalents deposited in the Water District Settlement Fund, which was classified as a current asset at September 30, 2023 in line with the expected timing of the Final Judgment, as defined in the Settlement Agreement.

Our accounts and notes receivable, net increased by $220 million (or 35%) to $846 million at September 30, 2023, compared with accounts and notes receivable, net of $626 million at December 31, 2022. This increase in our accounts and notes receivable, net at September 30, 2023 was primarily attributable to the timing of collections from our customers and higher sales in the third quarter of 2023 (primarily in our Titanium Technologies and Thermal & Specialized Solutions businesses) driving higher receivables when compared to the fourth quarter of 2022, partially offset by the increased utilization of our Securitization Facility.

Our inventories decreased by $90 million (or 6%) to $1.3 billion at September 30, 2023, compared with inventories of $1.4 billion at December 31, 2022. The decrease in our inventories at September 30, 2023 was primarily attributable to efforts to optimize inventory levels to the current demand environment within our Titanium Technologies business and the write-off of $28 million of certain raw materials inventory from the Kuan Yin, Taiwan plant closure, partially offset by build-up of our finished product inventories within our Advanced Performance Materials business in anticipation of planned plant maintenance during the second half of 2023, a favorable foreign currency translation adjustment of approximately $21 million and an increase in the value of our raw material inventories due to higher raw material costs.

Our prepaid expenses and other decreased by $6 million (or 7%) to $76 million at September 30, 2023, compared with prepaid expenses and other of $82 million at December 31, 2022. The decrease in our prepaid expenses and other was primarily due to decreases in prepaid income tax balances.

### Current Liabilities

The following table sets forth the components of our current liabilities at September 30, 2023 and December 31, 2022.

*(Dollars in millions)*

|  | September 30, 2023 | December 31, 2022 |
| --- | ---: | ---: |
| Accounts payable | $901 | $1,251 |
| Compensation and other employee-related costs | 94 | 121 |
| Short-term and current maturities of long-term debt | 23 | 25 |
| Current environmental remediation | 138 | 194 |
| Other accrued liabilities | 1,039 | 300 |
| **Total current liabilities** | $2,195 | $1,891 |

Our accounts payable decreased by $350 million (or 28%) to $901 million at September 30, 2023 compared with accounts payable of $1.3 billion at December 31, 2022. The decrease in our accounts payable at September 30, 2023 was primarily attributable to the timing of vendor payments and lower purchases due to lower demand (primarily in our Titanium Technologies business).

Our compensation and other employee-related costs decreased by $27 million (or 22%) to $94 million at September 30, 2023 compared with compensation and other employee-related costs of $121 million at December 31, 2022. The decrease in our compensation and other employee-related costs at September 30, 2023 was primarily attributable to decreased accruals for employee performance-based compensation following payout of 2022 employee performance-based compensation during the first quarter of 2023 and lower accruals in 2023 relative to prior year.

Our current environmental remediation decreased by $56 million (or 29%) to $138 million at September 30, 2023 compared with current environmental remediation of $194 million at December 31, 2022. The decrease in our current environmental remediation at September 30, 2023 was primarily attributable to the lower on-site accrual at Fayetteville following completion of the barrier wall and groundwater extraction and treatment systems to meet the requirements of the Consent Order (“CO”) from the North Carolina Department of Environmental Quality (the “NC DEQ”).

Our other accrued liabilities increased by $739 million (or over 100%) to $1 billion at September 30, 2023 compared with other accrued liabilities of $300 million at December 31, 2022. The increase in our other accrued liabilities was primarily attributable to litigation and other legal accruals, including the $592 million accrual related to the U.S. public water system settlement agreement, along with increases in our accrued interest due to the timing of payment under our senior unsecured notes, accrued income taxes, and accrued severance primarily related to the Titanium Technologies Transformation Plan. The increase in our other accrued liabilities at September 30, 2023 was partially offset by payments made for customer rebates during the first quarter of 2023. The litigation matters are further discussed in "Note 17 - Commitments and Contingent Liabilities" to the *Interim Consolidated Financial Statements* in this Quarterly Report on Form 10-Q.

### Credit Facilities and Notes

Refer to “Note 15 – Debt” to the *Interim Consolidated Financial Statements* in this Quarterly Report on Form 10-Q and “Note 20 – Debt” to the *Consolidated Financial Statements* in our Annual Report on Form 10-K for the year ended December 31, 2022 for a discussion of our credit facilities and notes.

### Guarantor Financial Information

The following disclosures set forth summarized financial information and alternative disclosures in accordance with Rule 13-01 of Regulation S-X (“Rule 13-01”). These disclosures have been made in connection with certain subsidiaries' guarantees of the 4.000% senior unsecured notes due May 2026, which are denominated in euros and the 5.375% senior unsecured notes due May 2027 (collectively, the “Registered Notes”), which are registered under the Securities Act of 1933, as amended. Each series of the Registered Notes was issued by The Chemours Company (the “Parent Issuer”), and was fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by the existing and future domestic subsidiaries of the Parent Issuer (together, the “Guarantor Subsidiaries”), subject to certain conditions, which are further discussed in “Note 20 – Debt” to the *Consolidated Financial Statements* in our Annual Report on Form 10-K for the year ended December 31, 2022. The assets, liabilities, and operations of the Guarantor Subsidiaries primarily consist of those attributable to The Chemours Company FC, LLC, our primary operating subsidiary in the United States, as well as certain U.S.-based subsidiaries included in *Exhibit 22* to this Quarterly Report on Form 10-Q. Each of the Guarantor Subsidiaries is 100% owned by the Company. None of our other subsidiaries, either direct or indirect, guarantee the Registered Notes (together, the “Non-Guarantor Subsidiaries”). Pursuant to the indentures governing the Registered Notes, the Guarantor Subsidiaries will be automatically released from those guarantees upon the occurrence of certain customary release provisions.

Our summarized financial information is presented on a combined basis, consisting of the Parent Issuer and Guarantor Subsidiaries (collectively, the “Obligor Group”), in accordance with the requirements under Rule 13-01, and is presented after the elimination of: (i) intercompany transactions and balances among the Parent Issuer and Guarantor Subsidiaries, and (ii) equity in earnings from and investments in the Non-Guarantor Subsidiaries.

*(Dollars in millions)*

|  | Nine Months Ended September 30, 2023 |
| --- | ---: |
| Net sales | $3,109 |
| Gross profit | 622 |
| Loss before income taxes | (320) |
| Net loss | (250) |
| Net loss attributable to Chemours | (250) |

*(Dollars in millions)*

| Assets | September 30, 2023 | December 31, 2022 |
| --- | ---: | ---: |
| Current assets (1,2,3) | $2,129 | $1,553 |
| Long-term assets (4) | 3,250 | 3,485 |
| **Liabilities** |  |  |
| Current liabilities (2) | $1,928 | $1,554 |
| Long-term liabilities | 4,897 | 4,528 |

(1) Current assets includes $325 million and $514 million of cash and cash equivalents at September 30, 2023 and December 31, 2022, respectively. Current assets at September 30, 2023 also includes $595 million of restricted cash and restricted cash equivalents related to qualified settlement funds under the U.S. public water system class action suit settlement.

(2) Current assets includes $386 million and $326 million of intercompany accounts receivable from the Non-Guarantor Subsidiaries at September 30, 2023 and December 31, 2022, respectively. Current liabilities includes $230 million and $318 million of intercompany accounts payable to the Non-Guarantor Subsidiaries at September 30, 2023 and December 31, 2022, respectively.

(3) As of September 30, 2023 and December 31, 2022, $126 million and $46 million of accounts receivable generated by the Obligor Group, respectively, remained outstanding with one of the Non-Guarantor Subsidiaries under the Securitization Facility.

(4) Long-term assets includes $210 million and $303 million of intercompany notes receivable from the Non-Guarantor Subsidiaries at September 30, 2023 and December 31, 2022, respectively. Long-term assets at December 31, 2022 also includes $202 million of restricted cash and restricted cash equivalents related to an escrow account as per the terms of the MOU.

There are no significant restrictions that may affect the ability of the Guarantor Subsidiaries in guaranteeing the Parent Issuer’s obligations under our debt financing arrangements. While the Non-Guarantor Subsidiaries do not guarantee the Parent Issuer’s obligations under our debt financing arrangements, we may, from time to time, repatriate post-2017 earnings from certain of these subsidiaries to meet our financing obligations, as well.

### Supplier Financing

We maintain supply chain finance programs with several financial institutions. The available capacity under these programs can vary based on the number of investors and/or financial institutions participating in these programs at any point in time. See "Note 13 – Accounts Payable" to the *Interim Consolidated Financial Statements* for further details regarding supplier financing programs.

### Off-Balance Sheet Arrangements

In March 2023, through a wholly-owned special purpose entity ("SPE"), we entered into the Third Amendment to the Purchase Agreement, as amended, under our Securitization Facility, which among other things, extends the term of the Purchase Agreement, increases the facility limit from $150 million to $175 million, replaces the interest rate benchmark from the London Interbank Offered Rate ("LIBOR") to the Secured Overnight Financing Rate ("SOFR"), and adds a conduit purchaser.

See "Note 15 – Debt" to the *Interim Consolidated Financial Statements* for further details regarding this off-balance sheet arrangement.

Historically, we have not made any payments to satisfy guarantee obligations; however, we believe we have the financial resources to satisfy these guarantees in the event required.

### Critical Accounting Policies and Estimates

Our significant accounting policies are described in our *MD&A* and “Note 3 – Summary of Significant Accounting Policies” to the *Consolidated Financial Statements* in our Annual Report on Form 10-K for the year ended December 31, 2022. There have been no material changes to the critical accounting policies and estimates previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022, except as described in “Note 2 – Summary of Significant Accounting Policies” to the *Interim Consolidated Financial Statements.*

### Recent Accounting Pronouncements

See “Note 2 – Summary of Significant Accounting Policies” to the *Interim Consolidated Financial Statements* for a discussion about recent accounting pronouncements.

### Environmental Matters

Consistent with our values and our *Environment, Health, Safety, and Corporate Responsibility* policy, we are committed to preventing releases to the environment at our manufacturing sites to keep our people and communities safe, and to be good stewards of the environment. We are also subject to environmental laws and regulations relating to the protection of the environment. We believe that, as a general matter, our policies, standards, and procedures are properly designed to prevent unreasonable risk of harm to people and the environment, and that our handling, manufacture, use, and disposal of hazardous substances are in accordance with applicable environmental laws and regulations.

### Environmental Remediation

In large part, because of past operations, operations of predecessor companies, or past disposal practices, we, like many other similar companies, have clean-up responsibilities and associated remediation costs, and are subject to claims by other parties, including claims for matters that are liabilities of EID and its subsidiaries that we may be required to indemnify pursuant to the Separation-related agreements executed prior to our separation from EID on July 1, 2015 (the “Separation”).

Our environmental liabilities include estimated costs, including certain accruable costs associated with on-site capital projects. The accruable costs relate to a number of sites for which it is probable that environmental remediation will be required, whether or not subject to enforcement activities, as well as those obligations that result from environmental laws such as CERCLA, RCRA, and similar federal, state, local, and foreign laws. These laws may require certain investigative, remediation, and restoration activities at sites where we conduct or EID once conducted operations or at sites where our generated waste was disposed. Our consolidated balance sheets at September 30, 2023 and December 31, 2022 include environmental remediation liabilities of $605 million and $668 million, respectively, relating to these matters, which, as discussed in further detail below, include $399 million and $465 million, respectively, for Fayetteville.

As remediation efforts progress, sites move from the investigation phase (“Investigation”) to the active clean-up phase (“Active Remediation”), and as construction is completed at Active Remediation sites, those sites move to the operation, maintenance, and monitoring (“OM&M”), or closure phase. As final clean-up activities for some significant sites are completed over the next several years, we expect our annual expenses related to these active sites to decline over time. The time frame for a site to go through all phases of remediation (Investigation and Active Remediation) may take about 15 to 20 years, followed by several years of OM&M activities. Remediation activities, including OM&M activities, vary substantially in duration and cost from site to site. These activities, and their associated costs, depend on the mix of unique site characteristics, evolving remediation technologies, and diverse regulatory requirements, as well as the presence or absence of other Potentially Responsible Parties (“PRPs”). In addition, for claims that we may be required to indemnify EID pursuant to the Separation-related agreements, we and EID may have limited available information for certain sites or are in the early stages of discussions with regulators. For these sites, there may be considerable variability between the clean-up activities that are currently being undertaken or planned and the ultimate actions that could be required. Therefore, considerable uncertainty exists with respect to environmental remediation costs, and, under adverse changes in circumstances, we currently estimate the potential liabilities may range up to approximately $730 million above the amount accrued at September 30, 2023. This estimate is not intended to reflect an assessment of our maximum potential liability. The estimated liabilities are determined based on existing remediation laws and technologies and our planned remedial responses, which are derived from environmental studies, sampling, testing, and analyses. Inherent uncertainties exist in such evaluations, primarily due to unknown environmental conditions, changing governmental regulations regarding liability, and emerging remediation technologies. We will continue to evaluate as new or additional information becomes available in the determination of our environmental remediation liability.

In general, uncertainty is greatest and the range of potential liability is widest in the Investigation phase, narrowing over time as regulatory agencies approve site remedial plans. As a result, uncertainty is reduced, and sites ultimately move into OM&M, as needed. As more sites advance from Investigation to Active Remediation to OM&M or closure, the upper end of the range of potential liability is expected to decrease over time. Some remediation sites will achieve site closure and will require no further action to protect people and the environment and comply with laws and regulations. At certain sites, we expect that there will continue to be some level of remediation activity due to ongoing OM&M of remedial systems. In addition, portfolio changes, such as an acquisition or divestiture, or notification as a PRP for a multi-party Superfund site, could result in additional remediation activity and potentially additional accrual.

Management does not believe that any loss, in excess of amounts accrued, related to remediation activities at any individual site will have a material impact on our financial position or cash flows for any given year, as such obligation can be satisfied or settled over many years.

### Significant Environmental Remediation Sites

While there are many remediation sites that contribute to our total accrued environmental remediation liabilities at September 30, 2023 and December 31, 2022, the following table sets forth the liabilities of the five sites that are deemed the most significant, together with the aggregate liabilities for all other sites.

*(Dollars in millions)*

|  | September 30, 2023 | December 31, 2022 |
| --- | ---: | ---: |
| Chambers Works, Deepwater, New Jersey | $30 | $30 |
| Fayetteville Works, Fayetteville, North Carolina | 399 | 465 |
| Pompton Lakes, New Jersey | 41 | 41 |
| USS Lead, East Chicago, Indiana | 13 | 17 |
| Washington Works, West Virginia | 22 | 17 |
| All other sites | 100 | 98 |
| **Total environmental remediation** | $605 | $668 |

The five sites listed above represent 83% and 85% of our total accrued environmental remediation liabilities at September 30, 2023 and December 31, 2022, respectively. For these five sites, we expect to spend, in the aggregate, $187 million over the next three years. For all other sites, we expect to spend $63 million over the next three years.

#### Chambers Works, Deepwater, New Jersey (“Chambers Works”)

The Chambers Works complex is located on the eastern shore of the Delaware River in Deepwater, Salem County, New Jersey. The site comprises the former Carneys Point Works in the northern area and the Chambers Works manufacturing area in the southern area. Site operations began in 1892 when the former Carneys Point smokeless gunpowder plant was constructed at the northern end of Carneys Point. Site operations began in the manufacturing area around 1914 and included the manufacture of dyes, aromatics, elastomers, chlorofluorocarbons, and tetraethyl lead. We continue to manufacture a variety of fluoropolymers and finished products at Chambers Works. In addition, two tenants operate processes at Chambers Works. As a result of over 100 years of continuous industrial activity, site soils and groundwater have been impacted by chemical releases.

In response to identified groundwater contamination, a groundwater interceptor well system (“IWS”) was installed in 1970, which was designed to contain contaminated groundwater and restrict off-site migration. Additional remediation is being completed under a federal RCRA Corrective Action permit. The site has been studied extensively over the years, and more than 25 remedial actions have been completed to date and engineering and institutional controls put in place to ensure protection of people and the environment. In 2017, a site perimeter sheet pile barrier intended to more efficiently contain groundwater was completed.

Remaining work beyond continued operation of the IWS and groundwater monitoring includes completion of various targeted studies on site and in adjacent water bodies to close investigation data gaps, as well as selection and implementation of final remedies under RCRA Corrective Action for various solid waste management units and areas of concern not yet addressed through interim measures. Discussions are ongoing with the U.S. Environmental Protection Agency (the “EPA”) and the New Jersey Department of Environmental Protection (the “NJ DEP”) relating to such remaining work as well as the scope of remedial programs and investigation relating to the Chambers Works site historic industrial activity as well as ongoing remedial programs.

#### Fayetteville Works, Fayetteville, North Carolina

Fayetteville is located southeast of the City of Fayetteville in Cumberland and Bladen counties, North Carolina. The facility encompasses approximately 2,200 acres, which were purchased by EID in 1970, and are bounded to the east by the Cape Fear River and to the west by North Carolina Highway 87. Currently, we manufacture fluorinated monomers, fluorinated vinyl ethers, NafionTM membranes and dispersions, and polymerization aids at the site. A former manufacturing area, which was sold in 1992, produced nylon strapping and elastomeric tape. EID sold its Butacite® and SentryGlas® manufacturing units to Kuraray America, Inc. in September 2014. In July 2015, upon our Separation from EID, we became the owner of the Fayetteville land assets along with fluoromonomers, NafionTM membranes, and the related polymerization aid manufacturing units. A polyvinyl fluoride resin manufacturing unit remained with EID.

Beginning in 1996, several stages of site investigation were conducted under oversight by NC DEQ, as required by the facility's hazardous waste permit. In addition, the site has voluntarily agreed to agency requests for additional investigations of the potential release of PFAS beginning with “PFOA” (collectively, perfluorooctanoic acids and its salts, including the ammonium salt) in 2006. As a result of detection of GenX in on-site groundwater wells during our investigations in 2017, NC DEQ issued a Notice of Violation (“NOV”) in September 2017 alleging violations of North Carolina water quality statutes and requiring further response. Since that time, and in response to three additional NOVs issued by NC DEQ and pursuant to the Consent Order (as discussed below), we have worked cooperatively with the agency to investigate and address releases of PFAS to on-site and off-site groundwater and surface water.

As discussed in “Note 17 – Commitments and Contingent Liabilities” to the *Interim Consolidated Financial Statements*, we, along with NC DEQ and Cape Fear River Watch (“CFRW”), a non-profit organization, have filed a final CO that comprehensively addressed various issues, NOVs, and court filings made by NC DEQ regarding Fayetteville and resolved litigations filed by NC DEQ and CFRW. In connection with the CO, a thermal oxidizer became fully operational at the site in December 2019 to reduce aerial PFAS emissions from Fayetteville. The CO requires us to provide permanent replacement drinking water supplies, via connection to public water supply, whole building filtration units and/or reverse osmosis units, to qualifying surrounding residents, businesses, schools, and public buildings with private drinking water wells.

In 2020, we, along with NC DEQ and CFRW, reached agreement on the terms of an addendum to the CO (the “Addendum”). The Addendum establishes the procedure to implement specified remedial measures for reducing PFAS loadings from Fayetteville to the Cape Fear River, including construction of a barrier wall with groundwater extraction system to be completed by March 15, 2023, or an extended date in accordance with the Addendum. In June 2023, we completed the construction of the barrier wall with a groundwater extraction and treatment system in accordance with the requirements under the CO, subject to receipt of final quality assurance samples, engineers certification and NC DEQ’s review.

Further discussion related to Fayetteville is included under the heading “Fayetteville Works, Fayetteville, North Carolina” in “Note 17 – Commitments and Contingent Liabilities” to the *Interim Consolidated Financial Statements.*

#### Pompton Lakes, New Jersey

During the 20th century, blasting caps, fuses, and related materials were manufactured at Pompton Lakes, Passaic County, New Jersey. Operating activities at the site were ceased in the mid-1990s. The primary contaminants in the soil and sediments are lead and mercury. Groundwater contaminants include volatile organic compounds. Under the authority of EPA and NJ DEP, remedial actions at the site are focused on investigating and cleaning-up the area. Groundwater monitoring at the site is ongoing, and we have installed and continue to install vapor mitigation systems at residences within the groundwater plume. In addition, we are further assessing groundwater conditions. In September 2015, EPA issued a modification to the site’s RCRA permit that requires us to dredge mercury contamination from a 36-acre area of the lake and remove sediment from two other areas of the lake near the shoreline. The remediation activities commenced when permits and implementation plans were approved in May 2016, and work on the lake dredging project is now complete. In April 2019, we submitted a revised Corrective Measures Study (“CMS”) proposing actions to address on-site soils impacted from past operations that exceed applicable clean-up criteria. We received comments on the CMS from EPA and NJ DEP in March 2020, and we responded to their comments in June 2020 and continue to seek resolution with EPA.

#### U.S. Smelter and Lead Refinery, Inc., East Chicago, Indiana

The U.S. Smelter and Lead Refinery, Inc. (“USS Lead”) Superfund site is located in the Calumet neighborhood of East Chicago, Lake County, Indiana. The site includes the former USS Lead facility along with nearby commercial, municipal, and residential areas. The primary compounds of interest are lead and arsenic which may be found in soils within the impacted area. The EPA is directing and organizing remediation on this site, and we are one of a number of parties working cooperatively with EPA on the safe and timely completion of this work. EID’s former East Chicago manufacturing facility was located adjacent to the site, and EID assigned responsibility for the site to us in the Separation Agreement.

The USS Lead Superfund site was listed on the National Priorities List in 2009. To facilitate negotiations with PRPs, EPA divided the residential part of the USS Lead Superfund site into three zones, referred to as Zone 1, Zone 2, and Zone 3. The division into three zones resulted in Atlantic Richfield Co. (“Atlantic Richfield”) and EID entering into an agreement in 2014 with EPA and the State of Indiana to reimburse EPA’s costs to implement clean-up in Zone 1 and Zone 3. In March 2017, we and three other parties – Atlantic Richfield, EID, and the U.S. Metals Refining Co. (“U.S. Metals”) – entered into an administrative order on consent to reimburse EPA’s costs to clean-up a portion of Zone 2. In March 2018, EPA issued a Unilateral Administrative Order for the remainder of the Zone 2 work to five parties, including us, Atlantic Richfield, EID, U.S. Metals, and USS Lead Muller Group, and these parties entered into an interim allocation agreement to perform that work. As of the end of 2019, the required work in Zone 3 had been completed, and Zone 2 was nearly complete by the end of 2020. The determination of a final allocation for Zone 2 and/or the other Zones is ongoing, and additional PRPs may be identified.

The environmental accrual for USS Lead includes completion of the remaining obligations under the 2012 Record of Decision (“ROD”) and Statement of Work, which principally encompasses completion of Zone 1. The EPA released a proposed amendment to the 2012 ROD (the “ROD Amendment”) for a portion of Zone 1 in December 2018 (following its August 2018 Feasibility Study Addendum), with its recommended option based on future residential use. The EPA’s ROD Amendment for modified Zone 1 was released in March 2020, and selects as the preferred remedy one which requires a clean-up to residential standards based on the current applicable residential zoning. The ROD Amendment for modified Zone 1 also sets forth a selected contingent remedy which requires clean-up to commercial/industrial standards if the future land use becomes commercial/industrial. In November 2019, a Letter of Intent was executed by the City of East Chicago, Indiana and Industrial Development Advantage, LLC ("IDA"), relating to modified Zone 1 development, and EPA has indicated that it is “more likely” that future land use in this area will be commercial/industrial and not residential.

In 2021, we resolved the claims asserted by EPA related to past indirect costs associated with the 2012 ROD as amended, and the 2014 agreement entered into with EPA and the State of Indiana. In September 2022, EPA confirmed the selection of remedial actions for modified Zone 1 and provided notice to all relevant parties, including IDA, to cause the agreements between EPA, DOJ, the State of Indiana, us and other PRPs to become effective. We expect that our future costs relating to the USS Lead site will be contingent on implementation of these agreements, resolution of EPA’s costs as well as any final allocation between PRPs.

#### Washington Works, Parkersburg, West Virginia (“Washington Works”)

The Washington Works complex is located on the eastern shore of the Ohio River south of Parkersburg, West Virginia. The facility encompasses approximately 400 acres, which were purchased by EID in the late 1940’s. Other nearby land parcels purchased by EID included Blennerhassett Island, and three separate properties where West Virginia Department of Environmental Protection ("WV DEP") permitted landfills were operated. Site operations began in 1948 and included the manufacture of nylon, filaments, and acrylics. In 1949, fluoropolymer manufacturing began, and in 1959, Delrin production was started. Landfill operations occurred from the 1960’s through the early 2000’s when all three were closed according to WV DEP approved closure plans. Beginning in 2014, EID no longer used PFOA as a polymerization aid to manufacture some fluoropolymer resins at Washington Works.

In July 2015, upon our separation from EID, we became the owner of the Washington Works complex. The site has implemented environmental investigations, including Verification Investigation in 1992 and RCRA Facility Investigation ("RFI") in 1999 pursuant to corrective action requirements of its RCRA Part B and HSWA Permit under EPA and the West Virginia Department of Natural Resources oversight. The RFI was approved in 2012 and a CMS was completed in 2015 that recommended certain remedial actions, including capping of the former on-site landfill and ponds, which had already been completed, sitewide groundwater hydraulic control, drinking water supply well treatment via granular activated carbon, and long-term groundwater monitoring. These actions were memorialized in a RCRA final remedy implementation plan approved by the agencies in 2018 and integrated into the updated RCRA permit in August 2020.

The remedial actions required by the RCRA final remedy implementation plan have been completed or are part of routine operations, maintenance and monitoring. Landfill post closure care includes systems to treat surface water, leachate or groundwater, landfill cover or cap maintenance, monitoring and reporting. Additionally, upgrades to the Local landfill cover are being developed. Accruals related to these remedial actions were $22 million and $17 million as of September 30, 2023 and December 31, 2022, respectively.

Chemours Washington Works discharges, through outfalls at the site, wastewater and stormwater pursuant to a National Pollutant Discharge Elimination System ("NPDES") permit issued by the WV DEP. In connection with actions being taken by us to comply with certain NPDES effluent limits, including for PFOA and hexafluoropropylene oxide dimer acid, we submitted a permit modification to WV DEP relating to groundwater abatement for certain process water used at the facility, a temperature reduction project and realigning discharge flows to certain outfalls. In July 2021, EPA provided a specific objection to the draft modification based on Clean Water Act (“CWA”) regulations and requirements. In August 2021, WV DEP issued a NPDES permit modification to provide for the start-up of an abatement unit at the facility and to extend compliance dates for certain limits to December 2021 due to delays from the COVID-19 pandemic. In September 2021, WV DEP issued a further NPDES modification, including for the operation of an abatement unit from the site’s Ranney Well, and the site is taking additional actions to reduce PFAS discharges associated with wet weather flows and continuing to assess future stormwater discharges and permitting. In April 2023, we agreed to an Administrative Order on Consent with EPA that includes additional sampling as well as a compliance analysis and implementation of actions to address PFOA and hexafluoropropylene oxide dimer acid (“HFPO Dimer Acid”) discharge exceedances that occurred following the outfall limits for these compounds coming into effect in January 2022. We expect to make future capital and other operating related expenditures at Washington Works in connection with this Consent Order.

Pursuant to an Order on Consent ("OC"), entered into by EID with EPA since 2006, we provide alternate drinking water supplies, via granular activated carbon ("GAC") treatment or other approved supply, to residential well owners and local public drinking water systems near the Washington Works complex whose PFOA concentration exceeds 70 parts per trillion. We also provide regular sampling and GAC change outs activities as per OC requirements. Accruals related to this matter were $16 million and $15 million as of September 30, 2023 and December 31, 2022, respectively, and were included in Accrued Litigation liability in “Note 17 – Commitments and Contingent Liabilities” to the *Interim Consolidated Financial Statements.*

### New Jersey Department of Environmental Protection Directives and Litigation

In March 2019, NJ DEP issued two Directives, one being a state-wide PFAS Directive, and filed four lawsuits against us and other defendants, including allegations relating to clean-up and removal costs at four sites including Chambers Works. In December 2021, a consolidated order was entered in the lawsuits granting, in part, and denying, in part a motion to dismiss or strike parts of the Second Amended Complaints. In January 2022, NJ DEP filed a motion for a preliminary injunction requiring EID and us to establish a remediation funding source (“RFS”) in the amount of $943 million for Chambers Works, the majority of which is for non-PFAS remediation items. Further discussion related to these matters is included in “Note 17 – Commitments and Contingent Liabilities” to the *Interim Consolidated Financial Statements.*

### Climate Change

Central to our commitment to sustainability are our ten CRC goals that we aim to achieve by 2030. These goals map to the United Nations Sustainable Development Goals. We recognize that our responsibility to all stakeholders goes well beyond our CRC goals, and our commitment to sustainability cannot be separated from our growth strategy or our vision. As a result, in 2023 we are aligning our sustainability focus and actions to the four key strategic pillars that support our Chemours vision: Innovation and Sustainable Solutions, Environmental Leadership, Community Impact, and Greatest Place to Work for All.

The Environmental Leadership pillar underlines our commitment to deliver essential solutions responsibly, without causing harm to the Earth. With a focus on the responsible treatment of climate, water, and waste, our Environmental Leadership 2030 goals are comprised of the following:

- 60% reduction in Scope 1 and Scope 2 absolute GHG emissions;
- 99% or more reduction of air and water process emissions of fluorinated organic chemicals ("FOCs"); and,
- 70% reduction in landfill volume intensity.

In 2021, we announced an update to our climate goals to better align our climate commitment with the Paris Accord and set us on a path to achieve net zero greenhouse gas emissions from our operations by 2050. In 2022, we announced our signed commitment with the Science Based Targets initiative (“SBTi”) to establish science-based targets for scopes 1, 2, and 3 GHG emissions.

As part of the Innovation and Sustainable Solutions pillar, we are reimagining our portfolio to offer solutions that are also safer, healthier, and more resilient for a world that demands more. We believe that climate change is an important global issue that presents both opportunities and challenges for our company, our partners, our customers, and our communities. Climate change matters for our company are likely to be driven by changes in physical and transition risk, such as regulations and/or public policy, and changes in technology and product demand. Our operations and business results are increasingly subject to evolving climate-related legislation and regulations, inclusive of restrictions on GHG emissions, cap and trade emissions trading systems, and taxes on GHG emissions, fuel, and energy, among other provisions. Such regulatory matters have led, and are expected to continue to lead, to subsequent developments in product technology and demand. This helps guide our investment decisions and drive growth in demand for low-carbon and energy-efficient products, manufacturing technologies, and services that facilitate adaptation to a changing climate. Our business segments conduct market trend impact assessments, continuously evaluate opportunities for existing and new products and are well-positioned to take advantage of opportunities that may arise from increased consumer demand for and/or legislation mandating or incentivizing the use of products and technologies necessary to achieve a low-carbon economy.

In our Thermal & Specialized Solutions segment, global regulations driving the phase-down of hydrofluorocarbons ("HFCs"), including the EU’s F-Gas Directive, the EU’s Mobile Air Conditioning Directive, and the recently enacted U.S. American Innovation and Manufacturing Act (“AIM”), promote the adoption and sale of our high performing Opteon™ products, which have lower global warming potential (“GWP”) and zero ozone-depletion footprint. Our Opteon™ portfolio has been developed to meet global regulations while maintaining or improving performance compared to the products they replace in refrigeration and cooling applications, such as food transportation, food and pharmaceutical/medical storage, food manufacturing and retail, automotive air conditioning, and residential and commercial building air conditioning. By the year 2025, we estimate that our low GWP products will eliminate an estimated 325 million tons of carbon dioxide equivalents on a global basis.

We are a proponent of the recently passed bipartisan AIM Act, that went into effect in 2022, and will begin the national phase-down of hydrofluorocarbons. We successfully completed an improvement project to significantly reduce emissions of HFC-23 at our Louisville, Kentucky manufacturing site. The project includes the design, custom-build and installation of proprietary technology to capture at least 99% of HFC-23 process emissions from the site. This project was operational as of October 2022 and we are completing compliance validation of the system under an extension granted by the EPA.

In our Advanced Performance Materials segment, our growth prospects in fluoropolymers are also enhanced by regulation driving the increasing demand for electric vehicles and high-performance, low-emission vehicles. Our fluoropolymers are critical to delivering high performance over a wide range of harsh operating conditions, enhancing passenger safety, improving emission controls and fuel economy, and enabling vehicle electrification and the shift to hydrogen-powered vehicles. We expect the use of our fluoropolymers in vehicles to increase, driven by the automotive industry’s trends toward energy efficiency and clean energy due to evolving emissions performance regulations and increasing adoption of electric vehicles. Our fluoropolymer technology supports growing market demand for clean hydrogen generation using water electrolyzers, energy storage in flow batteries, and hydrogen conversion to power fuel cell vehicles.

In our Titanium Technologies business, we recently unveiled our new Ti-Pure™ Sustainability ("TS") product series, designed to advance our customers’ and company’s sustainability goals through TiO2 innovation. The product series includes enhanced product sustainability designations—including climate impact, circularity, resource efficiency, and health and wellness. The business is aligning its new product development pipeline to the same categories, ensuring all innovations align with critical customer and societal challenges, enable at-a-glance product sustainability comparisons, and ultimately help customers advance their sustainability goals. New TS innovations will be launched across market segments in 2023.

As an energy and emissions intensive company, our costs of complying with complex environmental laws and regulations, as well as internal and external voluntary programs, are significant and will continue to be significant for the foreseeable future. These laws and regulations may change and could become more stringent over time, which could result in significant additional compliance costs, increased costs of purchased energy or other raw materials, increased transportation costs, investments in, or restrictions on, our operations, installation or modification of GHG-emitting equipment, or additional costs associated with GHG emissions. Additionally, significant regional or national differences in approaches to the imposition of such regulations and restrictions could present competitive challenges or opportunities in a global marketplace. Currently, most of our global operating facilities are required to monitor and report their GHG emissions but may or may not be subject to programs requiring trading or emission controls. The EU Emission Trading System applies to our operating sites in that region. Furthermore, U.S. political administration could lead to additional federal regulation with respect to GHG emissions limits and/or other legislation that could impact our operations. By tracking and taking action to reduce our GHG emissions footprint through energy efficiency programs, increased use of renewable energy and focused GHG emissions reduction programs, we can decrease the potential future impact of these regulatory matters.

### PFOA

See our discussion under the heading “PFOA” in “Note 17 – Commitments and Contingent Liabilities” to the *Interim Consolidated Financial Statements.*

### GenX

In June 2019, the Member States Committee of the European Chemicals Agency (“ECHA”) voted to list HFPO Dimer Acid as a Substance of Very High Concern. The vote was based on Article 57(f) – equivalent level of concern having probable serious effects to the environment. This identification does not impose immediate regulatory restriction or obligations, but may lead to a future authorization or restriction of the substance. On September 24, 2019, we filed an application with the EU Court of Justice for the annulment of the decision of ECHA to list HFPO Dimer Acid as a Substance of Very High Concern. In February 2022, the General Court dismissed the annulment action and we have appealed such decision.

### PFAS

Refer to our discussion in “Note 17 – Commitments and Contingent Liabilities” to the *Interim Consolidated Financial Statements.*

In May 2020, ECHA announced that five Member States (Germany, the Netherlands, Norway, Sweden, and Denmark) launched a call for evidence to inform a PFAS restriction proposal to restrict the manufacture, placing on the market and use of PFAS in the EU. In this regulatory process, more than 4,000 substances, including F-gases and fluoropolymers are being considered as part of this broad regulatory action. Companies producing or using PFAS, as well as selling mixture or products containing PFAS, were invited to provide input. This call for evidence closed July 31, 2020. Thousands of substances meet the definition of PFAS as outlined in the call for evidence. This very broad definition covers substances with a variety of physical and chemical properties, health and environmental profiles, uses, and benefits. We submitted information on the substances covered by the call for evidence to the Member State competent authority for Germany, which is the Federal Institute for Occupational Safety and Health (“BAuA”). On July 15, 2021, the countries submitted their restriction proposal, which informs ECHA of the intent to prepare a PFAS restriction dossier for fluorinated substances within a defined structural formula scope, including branched fluoroalkyl groups and substances containing ether linkages, fluoropolymers and side chain fluorinated polymers. The restriction dossier was submitted to ECHA in January 2023, and in February 2023 ECHA published a report and supporting annexes on the restriction proposal, which includes identified concerns for in-scope PFAS and their degradation products and the proposed restriction of a full ban with certain use-specific time-limited derogation periods. The restriction dossier will be reviewed by the ECHA Risk Assessment Committee ("RAC") and Socio-economic Analysis Committee (“SEAC”) and proposals submitted to the EU Commission in 2023. The estimated earliest entry into force of restrictions is 2025, contingent upon timely completion of the remaining steps in the EU Registration, Evaluation, Authorization, and Restriction of Chemicals (“REACH”) restriction process.

### Non-GAAP Financial Measures

We prepare our interim consolidated financial statements in accordance with generally accepted accounting principles in the U.S. (“GAAP”). To supplement our financial information presented in accordance with GAAP, we provide the following non-GAAP financial measures – Adjusted EBITDA, Adjusted Net Income, Adjusted Earnings per Share (“EPS”), Free Cash Flows (“FCF”), Adjusted FCF, Return on Invested Capital (“ROIC”), and Net Leverage Ratio – in order to clarify and provide investors with a better understanding of our performance when analyzing changes in our underlying business between reporting periods and provide for greater transparency with respect to supplemental information used by management in its financial and operational decision-making. We utilize Adjusted EBITDA as the primary measure of segment profitability used by our CODM.

Adjusted EBITDA is defined as income (loss) before income taxes, excluding the following:

- interest expense, depreciation, and amortization;
- non-operating pension and other post-retirement employee benefit costs, which represents the non-service cost component of net periodic pension costs;
- exchange (gains) losses included in other income (expense), net;
- restructuring, asset-related, and other charges;
- (gains) losses on sales of assets and business; and,
- other items not considered indicative of our ongoing operational performance and expected to occur infrequently, including certain litigation related and environmental charges and Qualified Spend reimbursable by DuPont and/or Corteva as part of our cost-sharing agreement under the terms of the MOU that were previously excluded from Adjusted EBITDA.

Adjusted Net Income is defined as our net income (loss), adjusted for items excluded from Adjusted EBITDA, except interest expense, depreciation, amortization, and certain provision for (benefit from) income tax amounts. Adjusted EPS is calculated by dividing Adjusted Net Income by the weighted-average number of our common shares outstanding. Diluted Adjusted EPS accounts for the dilutive impact of our stock-based compensation awards, which includes unvested restricted shares. FCF is defined as our cash flows provided by (used for) operating activities, less purchases of property, plant, and equipment as shown in our consolidated statements of cash flows. ROIC is defined as Adjusted Earnings before Interest and Taxes (“Adjusted EBIT”), divided by the average of our invested capital, which amounts to our net debt, or debt less cash and cash equivalents, plus equity. Net Leverage Ratio is defined as our total debt principal outstanding less cash and cash equivalents, divided by Adjusted EBITDA.

Beginning in the third quarter of 2023, we added a new non-GAAP liquidity measure of Adjusted FCF to exclude the impact of cash inflows/outflows that are significant, unusual in nature and/or infrequent in occurrence that neither relate to the ordinary course of our business nor reflect the ongoing operational performance and underlying cash generation of our businesses. The change was driven by certain PFAS related settlements and legal fees that we believe were unusual in nature or infrequent in occurrence that neither related to the Company’s ordinary course of business nor ongoing operational performance and underlying cash generation of our businesses. We believe that excluding items of this nature provides the Company’s investors with better understanding of, and enables them to compare, the underlying cash generation of our businesses from period to period. Prior year measures have been presented to conform with the current measure of Adjusted FCF for the nine months ended September 30, 2022.

We believe the presentation of these non-GAAP financial measures, when used in conjunction with GAAP financial measures, is a useful financial analysis tool that can assist investors in assessing our operating performance and underlying prospects. This analysis should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. In the future, we may incur expenses similar to those eliminated in this presentation. Our presentation of Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, FCF, Adjusted FCF, ROIC, and Net Leverage Ratio should not be construed as an inference that our future results will be unaffected by unusual or infrequently occurring items. Additionally, FCF or Adjusted FCF should not be used in a manner that inappropriately implies that the measure represents the residual cash flow available for discretionary expenditures, since mandatory debt service requirements or other non-discretionary expenditures are not deducted from these measures. The non-GAAP financial measures we use may be defined differently from measures with the same or similar names used by other companies. This analysis, as well as the other information provided in this Quarterly Report on Form 10-Q, should be read in conjunction with the *Interim Consolidated Financial Statements* and notes thereto included in this report, as well as the *Consolidated Financial Statements* and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2022.

The following table sets forth a reconciliation of our net income (loss) attributable to Chemours to Adjusted Net Income, Adjusted EBITDA, and Adjusted EPS for the three and nine months ended September 30, 2023 and 2022.

*(Dollars in millions, except per share amounts)*

|  | Three Months Ended September 30, 2023 | 2022 | Nine Months Ended September 30, 2023 | 2022 |
| --- | ---: | ---: | ---: | ---: |
| **Net income (loss) attributable to Chemours** | $20 | $240 | $(212) | $675 |
| Non-operating pension and other post-retirement employee benefit cost (income) | 1 | (1) | 1 | (4) |
| Exchange losses (gains), net | 9 | (13) | 21 | (11) |
| Restructuring, asset-related, and other charges (1) | 153 | (2) | 168 | 14 |
| Loss (gain) on extinguishment of debt | 1 | (7) | 1 | (7) |
| Gain on sales of assets and businesses (2) | (106) | — | (106) | (27) |
| Transaction costs (3) | 7 | — | 7 | — |
| Qualified spend recovery (4) | (11) | (14) | (43) | (41) |
| Litigation-related charges (5) | 31 | (23) | 675 | (15) |
| Environmental charges (6) | 8 | 11 | 9 | 182 |
| Adjustments made to income taxes (7) | (1) | (3) | (5) | (9) |
| (Benefit from) provision for income taxes relating to reconciling items (8) | (16) | 8 | (107) | (20) |
| **Adjusted Net Income** | 96 | 196 | 409 | 737 |
| Net income attributable to non-controlling interests | — | — | 1 | — |
| Interest expense, net | 55 | 41 | 145 | 123 |
| Depreciation and amortization | 76 | 72 | 233 | 217 |
| All remaining provision for income taxes | 20 | 54 | 86 | 164 |
| **Adjusted EBITDA** | $247 | $363 | $874 | $1,241 |
| Weighted-average number of common shares outstanding - basic | 148,623,633 | 155,376,422 | 148,929,580 | 157,149,738 |
| Dilutive effect of our employee compensation plans (9) | 1,562,005 | 2,473,700 | 1,753,788 | 3,199,339 |
| Weighted-average number of common shares outstanding - diluted | 150,185,638 | 157,850,122 | 150,683,368 | 160,349,077 |
| **Per share data** |  |  |  |  |
| Basic earnings (loss) per share of common stock (10) | $0.13 | $1.54 | $(1.42) | $4.30 |
| Diluted earnings (loss) per share of common stock (9) (10) | 0.13 | 1.52 | (1.42) | 4.21 |
| Adjusted basic earnings per share of common stock (9) | 0.64 | 1.26 | 2.75 | 4.69 |
| Adjusted diluted earnings per share of common stock (9) | 0.63 | 1.24 | 2.71 | 4.60 |

(1) Refer to "Note 5 – Restructuring, Asset-related, and Other Charges" to the *Interim Consolidated Financial Statements* for further details. In addition, the periods ended in September 30, 2023 include $28 million related to the write-off of certain raw materials inventory from the Kuan Yin, Taiwan plant closure. In 2022, includes asset charges and write-offs resulting from the conflict between Russia and Ukraine and our decision to suspend our business with Russian entities.

(2) Refer to “Note 6 – Other Income (Expense), Net” to the *Interim Consolidated Financial Statements* for further details.

(3) Includes costs associated with the New Senior Secured Credit Facilities entered into during the third quarter of 2023 which is discussed in further detail in "Note 15 – Debt" to the *Interim Consolidated Financial Statements.*

(4) Qualified spend recovery represents costs and expenses that were previously excluded from Adjusted EBITDA, reimbursable by DuPont and/or Corteva as part of our cost-sharing agreement under the terms of the MOU which is discussed in further detail in "Note 17 – Commitments and Contingent Liabilities" to the *Interim Consolidated Financial Statements.*

(5) Litigation-related charges pertains to litigation settlements, PFOA drinking water treatment accruals, and related legal fees. In the periods ended in September 30, 2022, litigation-related charges include proceeds from a settlement in a patent infringement matter. Refer to “Note 17 – Commitments and Contingent Liabilities” to the *Interim Consolidated Financial Statements* for further details.

(6) Environmental charges pertains to management’s assessment of estimated liabilities associated with certain non-recurring environmental remediation expenses at various sites. In 2022, environmental charges include $175 million primarily related to an update to the off-site drinking water programs at Fayetteville and changes in estimates related to the barrier wall constructions. Refer to “Note 17 – Commitments and Contingent Liabilities” to the *Interim Consolidated Financial Statements* for further details.

(7) Includes the removal of certain discrete income tax impacts within our provision for income taxes, such as shortfalls and windfalls on our share-based payments, certain return-to-accrual adjustments, valuation allowance adjustments, unrealized gains and losses on foreign exchange rate changes, and other discrete income tax items.

(8) The income tax impacts included in this caption are determined using the applicable rates in the taxing jurisdictions in which income or expense occurred for each of the reconciling items and represent both current and deferred income tax expense or benefit based on the nature of the non-GAAP financial measure.

(9) In periods where we incur a net loss, the impact of potentially dilutive securities is excluded from the calculation of EPS under U.S. GAAP, as their inclusion would have an anti-dilutive effect. As such, with respect to the U.S. GAAP measure of diluted EPS, the impact of potentially dilutive securities is excluded from our calculation for the nine months ended September 30, 2023. With respect to the non-GAAP measure of adjusted diluted EPS, the impact of potentially dilutive securities is included in our calculation for the three and nine months ended September 30, 2023, as Adjusted Net Income was in a net income position.

(10) Figures may not recalculate exactly due to rounding. Basic and diluted (loss) earnings per share are calculated based on unrounded numbers.

The following table sets forth a reconciliation of our cash flows provided by (used for) operating activities to FCF and Adjusted FCF for the nine months ended September 30, 2023 and 2022.

*(Dollars in millions)*

|  | Nine Months Ended September 30, 2023 | 2022 |
| --- | ---: | ---: |
| Cash provided by operating activities | $72 | $594 |
| Less: Purchases of property, plant, and equipment | (235) | (240) |
| **Free Cash Flows** | (163) | 354 |
| PFAS Litigation Settlements (1) | 37 | 25 |
| **Adjusted Free Cash Flows** | $(126) | $379 |

(1) Represents litigation settlements and fees related to PFAS and PFOA matters.

The following table sets forth a reconciliation of Adjusted EBIT and average invested capital, and their nearest respective GAAP measures, to ROIC for the periods presented.

*(Dollars in millions)*

|  | Twelve Months Ended September 30, 2023 | 2022 |
| --- | ---: | ---: |
| Adjusted EBITDA (1) | $995 | $1,548 |
| Less: Depreciation and amortization (1) | (307) | (294) |
| **Adjusted EBIT** | $688 | $1,254 |
|  | **As of September 30,** |  |
| (Dollars in millions) | **2023** | **2022** |
| Total debt, net (2) | $3,967 | $3,534 |
| Total equity | 757 | 1,285 |
| Less: Cash and cash equivalents | (852) | (1,167) |
| **Invested capital, net** | $3,872 | $3,652 |
| Average invested capital (3) | $3,776 | $3,648 |
| **Return on Invested Capital** | 18% | 34% |

(1) Reconciliations of net income (loss) attributable to Chemours to Adjusted EBITDA are provided on a quarterly basis. Refer to the preceding table for the reconciliation of net income (loss) attributable to Chemours to Adjusted EBITDA for the nine months ended September 30, 2023 and 2022.

(2) Total debt principal minus unamortized issue discounts of $26 million and $4 million and debt issuance costs of $22 million and $24 million at September 30, 2023 and 2022, respectively.

(3) Average invested capital is based on a five-quarter trailing average of invested capital, net.

The following table sets forth a reconciliation of our total debt principal, cash and cash equivalents, and Adjusted EBITDA to Net Leverage Ratio.

*(Dollars in millions)*

|  | As of September 30, 2023 | 2022 |
| --- | ---: | ---: |
| Total debt principal | $4,015 | $3,562 |
| Less: Cash and cash equivalents | (852) | (1,167) |
| **Total debt principal, net** | $3,163 | $2,395 |
|  | **Twelve Months Ended September 30,** |  |
| (Dollars in millions) | **2023** | **2022** |
| Adjusted EBITDA (1) | $995 | $1,548 |
| **Net Leverage Ratio** | 3.2x | 1.5x |

(1) Reconciliations of net income (loss) attributable to Chemours to Adjusted EBITDA are provided on a quarterly basis. Refer to the preceding table for the reconciliation of net income (loss) attributable to Chemours to Adjusted EBITDA for the nine months ended September 30, 2023 and 2022.

## Market risk

As filed, 5,278 characters.

We are exposed to changes in foreign currency exchange rates because of our global operations. As a result, we have assets, liabilities, and cash flows denominated in a variety of foreign currencies. We also have variable rate indebtedness, which subjects us to interest rate risk. Additionally, we are also exposed to changes in the prices of certain commodities that we use in production. Changes in these rates and commodity prices may have an impact on our future cash flows and earnings. We manage these risks through our normal operating and financing activities and, when deemed appropriate, through the use of derivative financial instruments. We do not enter into derivative financial instruments for trading or speculative purposes.

By using derivative financial instruments, we are subject to credit and market risk. The fair values of the derivative financial instruments are determined by using valuation models whose inputs are derived using market observable inputs, and reflect the asset or liability position as of the end of each reporting period. When the fair value of a derivative contract is positive, the counterparty owes us, thus creating a receivable risk for us. We are exposed to counterparty credit risk in the event of non-performance by counterparties to our derivative agreements. We minimize counterparty credit (or repayment) risk by entering into transactions with major financial institutions of investment grade credit ratings.

Our risk management programs and the underlying exposures are closely correlated, such that the potential loss in value for the risk management portfolio described above would be largely offset by the changes in the value of the underlying exposures. Refer to “Note 21 – Financial Instruments” to the *Interim Consolidated Financial Statements* for further information.

### Foreign Currency Risks

We enter into foreign currency forward contracts to minimize the volatility in our earnings related to foreign exchange gains and losses resulting from remeasuring our monetary assets and liabilities that are denominated in non-functional currencies, and any gains and losses from the foreign currency forward contracts are intended to be offset by any gains or losses from the remeasurement of the underlying monetary assets and liabilities. These derivatives are stand-alone and, except as described below, have not been designated as a hedge. At September 30, 2023, we had 11 foreign currency forward contracts outstanding with an aggregate gross notional U.S. dollar equivalent of $268 million, the fair value of which amounted to a net of zero. At December 31, 2022, we had 9 foreign currency forward contracts outstanding with an aggregate gross notional U.S. dollar equivalent of $180 million, the fair value of which amounted to negative $1 million. We recognized net losses of $1 million and $8 million for the three and nine months ended September 30, 2023, respectively, and net gains of $3 million for the three and nine months ended September 30, 2022, respectively, within other income (expense), net related to our non-designated foreign currency forward contracts.

We enter into certain qualifying foreign currency forward contracts under a cash flow hedge program to mitigate the risks associated with fluctuations in the euro against the U.S. dollar for forecasted U.S. dollar-denominated inventory purchases in certain of our international subsidiaries that use the euro as their functional currency. At September 30, 2023, we had 157 foreign currency forward contracts outstanding under our cash flow hedge program with an aggregate notional U.S. dollar equivalent of $193 million, the fair value of which amounted to $6 million. At December 31, 2022, we had 153 foreign currency forward contracts outstanding under our cash flow hedge program with an aggregate notional U.S. dollar equivalent of $180 million, the fair value of which amounted to negative $2 million. We recognized pre-tax gains of $7 million and $5 million for the three and nine months ended September 30, 2023, respectively, and a pre-tax gains of $18 million and $30 million for the three and nine months ended September 30, 2022, respectively, within accumulated other comprehensive loss. For the three and nine months ended September 30, 2023, $1 million of loss and $5 million of gain was reclassified to the cost of goods sold from accumulated other comprehensive loss, respectively. For the three and nine months ended September 30, 2022, $5 million and $11 million of gain was reclassified to the cost of goods sold from accumulated other comprehensive loss, respectively.

We designated our euro-denominated debt as a hedge of our net investment in certain of our international subsidiaries that use the euro as their functional currency in order to reduce the volatility in stockholders’ equity caused by changes in foreign currency exchange rates of the euro with respect to the U.S. dollar. We recognized pre-tax gains of $35 million and $13 million for the three and nine months ended September 30, 2023, respectively, and pre-tax gains of $81 million and $139 million for the three and nine months ended September 30, 2022, respectively, on our net investment hedge within accumulated other comprehensive loss.

## Controls and procedures

As filed, 1,414 characters.

### Disclosure Controls and Procedures

We maintain disclosure controls and procedures designed to provide reasonable assurance that the information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 (“Exchange Act”) is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the U.S. Securities and Exchange Commission (“SEC”). These controls and procedures also provide reasonable assurance that information required to be disclosed in such reports is accumulated and communicated to management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), to allow timely decisions regarding required disclosures.

As of September 30, 2023, our CEO and CFO, together with management, conducted an evaluation of the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) under the Exchange Act. Based on that evaluation, the CEO and CFO have concluded that these disclosure controls and procedures are effective at the reasonable assurance level.

### Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 15,778 characters.

Except for the updated risk factors set forth below, there have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022.

***We are subject to extensive environmental and health and safety laws and regulations that may result in unanticipated loss or liability related to our current and past operations, and that may result in significant additional compliance costs or obligations, which in either case, could reduce our profitability or liquidity.***

Our operations and production facilities are dependent upon attainment and renewal of requisite operating permits and are subject to extensive environmental and health and safety laws, regulations, and enforcements, proceedings or other actions at national, international, and local levels in numerous jurisdictions, relating to pollution, protection of the environment, climate change, transporting and storing raw materials and finished products, storing and disposing of hazardous wastes, and product content and other safety or human rights concerns. Such laws include, but are not limited to:

- U.S.-based regulations, such as the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”, often referred to as “Superfund”), the Resource Conservation and Recovery Act (“RCRA”) and similar state and global laws for management and remediation of hazardous materials, the Clean Air Act (“CAA”) and Clean Water Act (“CWA”) and similar state and global laws for the protection of air and water resources, and the Toxic Substances Control Act (“TSCA”);
- Foreign-based chemical control regulations, such as the Registration, Evaluation, Authorization, and Restriction of Chemicals (“REACH”) in the EU, the Chemical Substances Control Law (“CSCL”) in Japan, MEP Order No. 7 in China, and the Toxic Chemical Substance Control Act (“TCSCA”) in Taiwan for the production and distribution of chemicals in commerce and reporting of potential adverse effects;
- The EU Emissions Trading System and similar local and global laws for regulating GHG emissions; and,
- Numerous local, state, federal, and foreign laws, regulations, and enforcements governing materials transport and packaging.

If we are found to be in violation of these laws, regulations, or enforcements, which may be subject to change based on legislative, scientific, or other factors, we may incur substantial costs, including fines, damages, criminal or civil sanctions, remediation costs, reputational harm, loss of sales or market access, or experience interruptions in our operations. Our operations and production may also be subject to changes based on increased regulation or other changes to, or restrictions imposed by, any such additional regulations. Any operational interruptions or plant shutdowns may result in delays in production or may cause us to incur additional costs to develop redundancies in order to avoid interruptions in our production cycles. In addition, the manner in which adopted regulations (including environmental and safety regulations) are ultimately implemented may affect our products, the demand for and public perception of our products, the reputation of our brands, our market access, and our results of operations. In the event of a catastrophic incident involving any of the raw materials we use or chemicals we produce, we could incur material costs to address the consequences of such event and future reputational costs associated with any such event.

Our costs to comply with complex environmental laws and regulations, as well as internal and external voluntary programs, are significant and will continue to be significant for the foreseeable future. These laws and regulations may change and could become more stringent over time, which could result in significant additional compliance costs, increased costs of purchased energy or other raw materials, increased transportation costs, investments in, or restrictions on, our operations, installation or modification of emission control equipment, or additional costs associated with emissions control equipment. As a result of our current and historic operations, including the operations of divested businesses and certain discontinued operations, we also expect to continue to incur costs for environmental investigation and remediation activities at a number of our current or former sites and third-party disposal locations. However, the ultimate costs under environmental laws and the timing of these costs are difficult to accurately predict. While we establish accruals in accordance with U.S. generally accepted accounting principles (“GAAP”), the ultimate actual costs and liabilities may vary from the accruals because the estimates on which the accruals are based depend on a number of factors (many of which are outside of our control), including the nature of the matter and any associated third-party claims, the complexity of the site, site geology, the nature and extent of contamination, the type of remedy, the outcome of discussions with regulatory agencies and other Potentially Responsible Parties (“PRPs”) at multi-party sites, and the number and financial viability of other PRPs. We also could incur significant additional costs as a result of additional contamination that is discovered or remedial obligations imposed in the future. Refer to “Environmental Matters” within *Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations* and “Note 17 – Commitments and Contingent Liabilities” to the *Interim Consolidated Financial Statements* for further information.

As discussed in “Note 17 – Commitments and Contingent Liabilities” to the *Interim Consolidated Financial Statements*, we continue to have active dialogue with the North Carolina Department of Environmental Quality (“NC DEQ”) and other stakeholders regarding potential remedies that are both economically and technologically feasible to achieve the objectives of the Consent Order (“CO”) and Addendum (“Addendum”) related to the discharge of HFPO Dimer Acid and PFAS from Fayetteville into the Cape Fear River, site surface water, groundwater, and air emissions. The Addendum establishes the procedure to implement specified remedial measures for reducing PFAS loadings from Fayetteville to the Cape Fear River, including construction of a barrier wall with a groundwater extraction system. The estimated liabilities of achieving the CO and Addendum objectives consist of several components, each of which may vary significantly and may exceed the recorded reserve estimates, which could be material.

There is also a risk that one or more of our manufacturing processes, key raw materials, or products may be found to have, or be characterized or perceived as having, a toxicological or health-related impact on the environment or on our customers or employees or unregulated emissions, which could potentially result in us incurring liability in connection with such characterization and the associated effects of any toxicological or health-related impact. If such a discovery or characterization occurs, we may incur increased costs in order to comply with new regulatory requirements or as a result of litigation. In addition, the relevant materials or products, including products of our customers incorporating our materials or products, may be recalled, phased-out, or banned. Changes in laws, science, or regulations, or their interpretations, and our customers’ perception of such changes or interpretations may also affect the marketability of certain of our products.

In June 2019, the Member States Committee of the European Chemicals Agency ("ECHA") also voted to list HFPO Dimer Acid as a Substance of Very High Concern. The vote was based on Article 57(f) – equivalent level of concern having probable serious effects to the environment. This identification does not impose immediate regulatory restriction or obligations, but may lead to a future authorization or restriction of the substance. In September 2019, we filed an application with the EU Court of Justice for the annulment of the decision of ECHA to list HFPO Dimer Acid as a Substance of Very High Concern. In February 2022, the General Court dismissed the annulment action and we have appealed such decision.

In May 2020, five European countries began an initiative to restrict the manufacture, placing on the market, and use of PFAS in the EU. In this regulatory process, more than 4,000 substances, including F-gases and fluoropolymers are being considered for potential broad regulatory action. On July 15, 2021, the countries submitted their restriction proposal, which informed ECHA of the intent to prepare a PFAS restriction dossier for fluorinated substances within a defined structural formula scope, including branched fluoroalkyl groups and substances containing ether linkages, fluoropolymers and side chain fluorinated polymers. The restriction dossier was submitted to ECHA in January 2023, and in February 2023 ECHA published a report and supporting annexes on the restriction proposal, which includes identified concerns for in-scope PFAS and their degradation products and the proposed restriction of a full ban with certain use-specific time-limited derogation periods. The restriction dossier will be reviewed by the ECHA Risk Assessment Committee ("RAC") and Socio-economic Analysis Committee (“SEAC”) and proposals submitted to the EU Commission in 2023. The estimated earliest entry into force of restrictions is 2025, contingent upon timely completion of the remaining steps in the EU REACH restriction process.

In the first quarter of 2023, the European Commission, the Parliament, and the Council, each proposed a regulation supporting the phase down of hydrofluorocarbons (“HFC”) by 2050 and multiple bans on HFCs and hydrofluoroolefin (“HFO”) in various applications. The proposed regulation was subject to negotiations and discussions amongst the European Commission, the Parliament, and the Council, that was completed in October 2023. These provisional bans are subject to European Commission review, to be carried out before January 2030. The proposed regulation is subject to final approval from the European Parliament and Council and is expected to be completed in the first quarter of 2024.

The impacts of these various restrictions and regulatory measures in the EU as noted above, individually and in the aggregate, could lead to material adverse effects on our results of operations, financial condition, and cash flows.

In October 2021, EPA released its PFAS Strategic Roadmap, identifying a comprehensive approach to addressing PFAS. The PFAS Strategic Roadmap sets timelines by which EPA plans to take specific actions through 2024, including establishing a national primary drinking water regulation ("NPDWR") for PFOA and perfluorooctanesulfonic acid (“PFOS”) and taking Effluent Limitations Guidelines actions to regulate PFAS discharges from industrial categories among other actions. As provided under its roadmap, EPA also released its National PFAS Testing Strategy, under which the agency will identify and select certain PFAS compounds for which it will require manufacturers to conduct testing pursuant to the Toxic Substances Control Act (TSCA) section 4. Chemours has received various test orders and has formed consortia to jointly manage compliance with the test order requirements. Chemours expects to receive future test orders, however the timing of the remaining test orders is not determinable at this time. Additional costs could be incurred in connection with EPA's actions, which could be material.

Also in October 2021, EPA published a final toxicity assessment for GenX compounds that decreased the draft reference dose for GenX compounds based on EPA’s review of new studies and analyses. On March 18, 2022, we filed a petition to EPA requesting to withdraw and correct its toxicity assessment for GenX compounds, and this petition was denied by EPA on June 14, 2022. The next day, on June 15, 2022, EPA released health advisories for four PFAS, including interim updated lifetime drinking water health advisories for PFOA and PFOS, and final health advisories for GenX compounds, including HFPO Dimer Acid and another PFAS compound (PFBS). On July 13, 2022, we filed a Petition for Review of the GenX compounds health advisory. On March 13, 2023, EPA proposed a NPDWR to establish Maximum Contaminant Levels (MCL’s) for six PFAS, with PFOA and PFOS having MCLs as individual compounds (each proposed as 4 parts per trillion) and four other PFAS compounds, including HFPO Dimer Acid, having a hazard index approach limit on any mixture containing one or more of the compounds. The proposed PFAS NPDWR is subject to public comment until May 30, 2023, and is expected to be finalized in late 2023 or early 2024. No action is required on the proposed NPDWR until it is final. Depending on the ultimate outcome of EPA’s actions, our estimated environmental remediation liabilities and accrued litigation could increase to meet any new drinking water standards, which could have a material adverse effect on our results of operations, financial condition, and cash flows.

***Adverse developments affecting the financial markets, including events or concerns involving liquidity, defaults or non-performance by financial institutions or transactional counterparties, could adversely affect our business, financial condition, or results of operations.***

Certain U.S. and non-U.S. financial institutions experienced crisis in the first quarter of 2023, resulting in disruption in the financial markets. While we do not foresee any concerns around our liquidity, events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional counterparties or the financial services industry generally, or concerns about any events of these kinds or other similar risks, have in the past and may in the future lead to market-wide liquidity problems. Although we assess our banking and customer relationships as we believe necessary or appropriate, our access to funding sources and other credit arrangements in amounts adequate to finance our current and future business operations could be significantly impaired by factors that affect us, the financial services industry or economy in general. These factors could include, among others, events such as liquidity constraints or failures, the ability to perform obligations under various types of financial, credit or liquidity agreements or arrangements, disruptions or instability in the financial markets, or concerns or negative expectations about the prospects for companies in the financial services industry.

In addition, investor, regulatory, or other concerns regarding the U.S. or international financial systems could result in less favorable commercial financing terms, including higher interest rates or costs and tighter financial and operating covenants, or systemic limitations on access to credit and liquidity sources, thereby making it more difficult for us to acquire financing on acceptable terms or at all. Any decline in available funding or access to our cash and liquidity resources could, among other risks, adversely impact our ability to meet our operating expenses, financial obligations or fulfill our other obligations or result in breaches of our contractual obligations. Any of these impacts, or any other impacts resulting from the factors described above or other related or similar factors not described above, could have material adverse impacts on our liquidity and our business, results of operations, financial condition, and cash flows.

Filed Oct 27, 2023.
Source: SEC EDGAR, the filing index for accession 0000950170-23-056036. Last ingested by Listed: Nov 3, 2026, 21:45 ET. No prices; not investment advice.