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 "DuPont" refer to E. I. du Pont de Nemours and Company, which is now a subsidiary of Corteva, Inc., a Delaware corporation, unless the context otherwise requires.

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, 2019.

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, 2019, and as otherwise discussed in this report, particularly as it pertains to the current novel coronavirus disease ("COVID-19"). 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 chemicals products for markets, including plastics and coatings, refrigeration and air conditioning, general industrial, electronics, mining, and oil refining. Our principal products include refrigerants, industrial fluoropolymer resins, sodium cyanide, performance chemicals and intermediates, and titanium dioxide ("TiO2") pigment. We manage and report our operating results through three reportable segments: Fluoroproducts, Chemical Solutions, and Titanium Technologies. Our Fluoroproducts segment is a leading, global provider of fluoroproducts, including refrigerants and industrial fluoropolymer resins. Our Chemical Solutions segment is a leading, North American provider of industrial chemicals used in gold production, industrial, and consumer applications. 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.

We are committed to creating value for our customers and stakeholders through the reliable delivery of high-quality products and services around the world. To achieve this goal, we have a global team dedicated to upholding our five core values: (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.

Additionally, our Corporate Responsibility Commitment focuses on three key principles - inspired people, a shared planet, and an evolved portfolio - in an effort to achieve, among other goals, increased diversity and inclusion in our global workforce, increased sustainability of our products, and becoming carbon positive. We call this responsible chemistry - it is rooted in who we are, and we expect that our Corporate Responsibility Commitment will drive sustainable, long-term earnings growth.






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Recent Developments


Coronavirus Disease 2019 ("COVID-19")

The COVID-19 pandemic has, to date, resulted in millions of confirmed infections, over 200,000 deaths, and continues to spread throughout the world. As a global provider of performance chemicals that are key inputs in end-products and processes in a variety of industries, a pandemic presents obstacles that can adversely impact our supply chain effectiveness and efficiencies, our manufacturing operations, customer demand for our products, and ultimately, our financial results. Throughout the outbreak and subsequent stages of the COVID-19 pandemic that have occurred thus far, above all, we have remained steadfast in our commitment to the health, safety, and well-being of our employees and their families, while serving our customers, and conserving cash to ensure the continuity of our business operations into the future.

Specific to the first quarter of 2020, we experienced minimal disruption in our operations and business-related activities as a result of the COVID-19 pandemic. We are taking a number of measures to promote the safety and security of our employees, including requiring remote working arrangements for employees where practicable, the imposition of travel restrictions, limiting non-essential visits to plant sites, performing health checks before every shift, and providing personal protective equipment for our "essential" operations employees at our sites and labs. Due to reduced consumer demand for certain of our customers' end-products, we have witnessed the initial negative impact of COVID-19 in our results of operations, specific to certain of our businesses and certain markets in which we operate. As many of our products are key inputs for our customers' uses in end-products, many of which are used by consumers, we anticipate that weakened consumer demand will continue to have a negative impact on our financial results in the future. Refer to the "Segment Reviews" and "2020 Outlook" sections within this MD&A for further considerations regarding the quickly evolving market dynamics that are impacting our businesses and our associated response. We cannot predict with certainty the potential impact of the COVID-19 pandemic on our customers' ability to manufacture their products, as well as any potential future disruptions in our supply chain due to restrictions on travel and transport, regional quarantines, and other social distancing measures. The risks and uncertainties posed by this significant, widespread event are enumerable and far-reaching, including but not limited to those described in Item 1A - Risk Factors in this Quarterly Report on Form 10-Q.

Despite the health and safety, business continuity, and macroeconomic challenges associated with conducting business in the current environment, we remain committed to anticipating and meeting the demands of our customers, as they, like us, navigate uncharted territory. As a precautionary measure in light of macroeconomic uncertainties driven by COVID-19, we drew $300 million from our revolving credit facility on April 8, 2020. We continue to anticipate that our available cash, cash from operations, and existing debt financing arrangements will provide us with sufficient liquidity through at least May 2021. Additionally, we continue to engage in scenario planning, and, as further discussed in the "2020 Outlook" and "Liquidity and Capital Resources" sections of this MD&A, we are implementing a range of actions aimed at temporarily reducing costs and preserving liquidity, including exercising careful discretion in our near-term operating and capital spending decisions. If the macroeconomic situation deteriorates or the duration of the pandemic is extended, we will evaluate additional cost actions, as necessary, as the operational and financial impacts to our Company continue to evolve.

Accounts Receivable Securitization Facility

In March 2020, through a wholly-owned special purpose entity, we entered into an amended and restated receivables purchase agreement (the "Amended Purchase Agreement") under our accounts receivable securitization facility ("Securitization Facility"). The Amended Purchase Agreement amends and restates, in its entirety, the receivables purchase agreement dated as of July 12, 2019 (the "Original Purchase Agreement"). Under the Amended Purchase Agreement, we no longer maintain effective control over the receivables that have been transferred to the bank, and such transfers are considered true sales of receivables. As a result, on March 9, 2020, we repurchased the then-outstanding receivables under the Securitization Facility through repayment of the secured borrowings under the Original Purchase Agreement, resulting in net repayments of $110 million for the three months ended March 31, 2020, and sold $125 million of our receivables (the "Aggregate Purchase Limit") to the bank. The receivables were sold at 100% of face value and were derecognized from our consolidated balance sheets.





2020 Restructuring Program



In an effort to better align our cost structure with our financial objectives, we recorded estimated severance costs of $8 million during the three months ended March 31, 2020. The majority of the impacted employees are subject to our customary involuntary termination benefits. The majority of the impacted employees will separate from the Company, and the majority of the associated severance payments will be made, by the end of 2020.





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Results of Operations and Business Highlights





Results of Operations


The following table sets forth our results of operations for the three months ended March 31, 2020 and 2019.





                                                    Three Months Ended March 31,
(Dollars in millions, except per share amounts)       2020                2019
Net sales                                         $       1,305       $       1,376
Cost of goods sold                                        1,007               1,080
Gross profit                                                298                 296
Selling, general, and administrative expense                125                 156
Research and development expense                             24                  22
Restructuring, asset-related, and other charges              11                   8
Total other operating expenses                              160                 186
Equity in earnings of affiliates                              8                   8
Interest expense, net                                       (54 )               (51 )
Other (expense) income, net                                 (15 )                40
Income before income taxes                                   77                 107
(Benefit from) provision for income taxes                   (23 )                13
Net income                                                  100                  94
Net income attributable to Chemours               $         100       $          94

Per share data Basic earnings per share of common stock $ 0.61 $ 0.56 Diluted earnings per share of common stock

                 0.61                0.55




Net Sales

The following table sets forth the impacts of price, volume, currency, and portfolio changes on our net sales for the three months ended March 31, 2020, compared with the same period in 2019.





Change in net sales from prior period   Three Months Ended March 31, 2020
Price                                                                   (5 )%
Volume                                                                   3 %
Currency                                                                (1 )%
Portfolio                                                               (2 )%
Total change in net sales                                               (5 )%



Our net sales decreased by $71 million (or 5%) to $1.3 billion for the three months ended March 31, 2020, compared with net sales of $1.4 billion for the same period in 2019. The components of the decrease in our net sales by segment for the three months ended March 31, 2020 were as follows: in our Fluoroproducts segment, price declined 4% and volume was down 8%; in our Chemical Solutions segment, price declined 4%, volume was down 7%, and portfolio change led to a 20% decrease; and, in our Titanium Technologies segment, price declined 8% and volume was up 19%. Unfavorable currency movements also added a 1% headwind to net sales in our Fluoroproducts and Titanium Technologies segments.

The drivers of these changes for each of our 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 $73 million (or 7%) to $1.0 billion for the three months ended March 31, 2020, compared with COGS of $1.1 billion for the same period in 2019. The decrease in our COGS for the three months ended March 31, 2020 was primarily attributable to lower net sales, as well as lower distribution, freight, and logistics expenses. In comparison with the prior year quarter, we also did not incur costs in the first quarter of 2020 associated with unplanned outages at certain of our operating facilities, or costs incurred due to the start-up of our OpteonTM refrigerants facility in Corpus Christi, Texas. Our exit of the Methylamines and Methylamides business at our Belle, West Virginia production facility also contributed to the reduction in COGS.






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Selling, General, and Administrative Expense

Our selling, general, and administrative ("SG&A") expense decreased by $31 million (or 20%) to $125 million for the three months ended March 31, 2020, compared with SG&A expense of $156 million for the same period in 2019. The decrease in our SG&A expense for the three months ended March 31, 2020 was primarily attributable to lower performance-related compensation costs, as well as $18 million incurred in the first quarter of 2019, in connection with the approved final Consent Order to settle certain legal and environmental matters related to our Fayetteville Works site in Fayetteville, North Carolina, which did not recur in the first quarter of 2020.

Research and Development Expense

Our research and development expense was largely unchanged at $24 million and $22 million for the three months ended March 31, 2020 and 2019, respectively.

Restructuring, Asset-Related, and Other Charges

Our restructuring, asset-related, and other charges increased by $3 million (or 38%) to $11 million for the three months ended March 31, 2020, compared with restructuring, asset-related, and other charges of $8 million for the same period in 2019. Our restructuring, asset-related, and other charges for the three months ended March 31, 2020 were primarily attributable to $8 million of employee separation charges incurred in connection with our 2020 Restructuring Program. Our restructuring, asset-related, and other charges for the three months ended March 31, 2019 were primarily attributable to $6 million of decommissioning and dismantling-related charges associated with the demolition and removal of certain unused buildings at our Chambers Works site in Deepwater, New Jersey.

Equity in Earnings of Affiliates

Our equity in earnings of affiliates was largely unchanged at $8 million for the three months ended March 31, 2020 and 2019.





Interest Expense, Net


Our interest expense, net increased by $3 million (or 6%) to $54 million for the three months ended March 31, 2020, compared with interest expense, net of $51 million for the same period in 2019. The increase in our interest expense, net for the three months ended March 31, 2020 was primarily attributable to a $2 million reduction in interest income earned on lower cash and cash equivalents balances held throughout the quarter.





Other Income (Expense), Net


Our other income (expense), net decreased by $55 million to other expense, net of $15 million for the three months ended March 31, 2020, compared with other income, net of $40 million for the same period in 2019. The decrease in our other income, net was primarily attributable to changes in net exchange gains and losses of $30 million, driven by unfavorable movements in several foreign currencies and our foreign currency forward contracts during the quarter ended March 31, 2020. We also experienced a decrease in miscellaneous income, which is primarily attributable to $23 million lower European Union ("EU") fluorinated greenhouse gas ("F-Gas") quota authorization sales.

Provision for (Benefit from) Income Taxes

Our provision for (benefit from) income taxes amounted to a benefit from income taxes of $23 million and a provision for income taxes of $13 million for the three months ended March 31, 2020 and 2019, respectively, which represented effective tax rates of negative 30% and 12%, respectively. The $36 million decrease in our provision for income taxes for the three months ended March 31, 2020 was primarily attributable to decreased profitability and changes to our geographic mix of earnings. We also recorded an income tax benefit of $18 million, which was related to the United States Internal Revenue Service acceptance of a non-automatic accounting method change that allows for the recovery of tax basis for depreciation, which had been previously disallowed. Our benefit from income taxes was partially offset by $7 million of lower income tax benefits related to share-based payments.






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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 component of net periodic pension (income) costs

excluding the service cost component;

• exchange (gains) losses included in other income (expense), net;

• restructuring, asset-related, and other charges;

• asset impairments;

• (gains) losses on sales of assets and businesses; and,

• other items not considered indicative of our ongoing operational performance


      and expected to occur infrequently.



A reconciliation of Adjusted EBITDA to net income attributable to Chemours for the three months ended March 31, 2020 and 2019 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 months ended March 31, 2020 and 2019.





                           Three Months Ended March 31,
(Dollars in millions)       2020                  2019
Fluoroproducts          $         140         $         159
Chemical Solutions                 15                    15
Titanium Technologies             138                   126
Corporate and Other               (36 )                 (38 )
Total Adjusted EBITDA   $         257         $         262





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Fluoroproducts



The following table sets forth the net sales, Adjusted EBITDA, and Adjusted
EBITDA margin amounts for our Fluoroproducts segment for the three months ended
March 31, 2020 and 2019.



                            Three Months Ended March 31,
(Dollars in millions)        2020                  2019
Segment net sales        $         600         $         687
Adjusted EBITDA                    140                   159
Adjusted EBITDA margin              23 %                  23 %



The following table sets forth the impacts of price, volume, currency, and portfolio changes on our Fluoroproducts segment's net sales for the three months ended March 31, 2020, compared with the same period in 2019.





                                                        Three Months Ended March 31,
Change in segment net sales from prior period                       2020
Price                                                                             (4 )%
Volume                                                                            (8 )%
Currency                                                                          (1 )%
Portfolio                                                                          - %
Total change in segment net sales                                                (13 )%




Segment Net Sales

Our Fluoroproducts segment's net sales decreased by $87 million (or 13%) to $600 million for the three months ended March 31, 2020, compared with segment net sales of $687 million for the same period in 2019. The decrease in segment net sales for the three months ended March 31, 2020 was primarily attributable to decreases in volume and price of 8% and 4%, respectively. Volumes declined due to lower demand for our refrigerants and polymers, which was driven by softness in the automotive and other global end-markets. The spread of COVID-19 throughout the first quarter of 2020 drove further reductions in segment net sales volumes, starting in the Asia Pacific region. Towards the end of the first quarter of 2020, the virus had become a global pandemic and led to additional volumes impacts, as original equipment manufacturer ("OEM") shutdowns began to take place in the automotive sector, affecting our customers in the EU and the United States. Prices declined during the three months ended March 31, 2020, driven by illegal imports of legacy hydrofluorocarbon ("HFC") refrigerants into the EU, in violation of the EU's F-gas regulations, and other market dynamics. Unfavorable currency movements added a 1% headwind to the segment's net sales during the three months ended March 31, 2020.

Adjusted EBITDA and Adjusted EBITDA Margin

Segment Adjusted EBITDA decreased by $19 million (or 12%) to $140 million for the three months ended March 31, 2020, compared with segment Adjusted EBITDA of $159 million for the same period in 2019. Segment Adjusted EBITDA margin was unchanged at 23% when compared with the prior year quarter. The decrease in segment Adjusted EBITDA was primarily attributable to the aforementioned decreases in the volume and price and unfavorable currency movements in the segment's net sales. Our F-gas quota authorization sales also decreased by $23 million when compared with the three months ended March 31, 2019. However, segment Adjusted EBITDA margin remained constant with the three months ended March 31, 2019, which was attributable to our resolution of unplanned outages that occurred at certain of our operating facilities in the first quarter of 2019, as well as the cost savings associated with ramping up production at our OpteonTM refrigerants facility in Corpus Christi, Texas.






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Chemical Solutions


The following table sets forth the net sales, Adjusted EBITDA, and Adjusted EBITDA margin amounts for our Chemical Solutions segment for the three months ended March 31, 2020 and 2019.





                              Three Months Ended March 31,
(Dollars in millions)        2020                    2019
Segment net sales        $         92           $           134
Adjusted EBITDA                    15                        15
Adjusted EBITDA margin             16 %                      11 %



The following table sets forth the impacts of price, volume, currency, and portfolio changes on our Chemical Solutions segment's net sales for the three months ended March 31, 2020, compared with the same period in 2019.





                                                        Three Months Ended March 31,
Change in segment net sales from prior period                       2020
Price                                                                             (4 )%
Volume                                                                            (7 )%
Currency                                                                           - %
Portfolio                                                                        (20 )%
Total change in segment net sales                                                (31 )%




Segment Net Sales

Our Chemical Solutions segment's net sales decreased by $42 million (or 31%) to $92 million for the three months ended March 31, 2020, compared with segment net sales of $134 million for the same period in 2019. The decrease in segment net sales for the three months ended March 31, 2020 was primarily attributable to portfolio change, which was driven by our exit of the Methylamines and Methylamides business at our Belle, West Virginia production facility. Segment net sales volumes decreased 7%, driven by the impacts of the COVID-19 pandemic on end-market demand. Average prices decreased 4%, driven by lower raw materials pass-throughs and regional customer mix compared with the prior year quarter.

Adjusted EBITDA and Adjusted EBITDA Margin

Segment Adjusted EBITDA remained constant at $15 million for the three months ended March 31, 2020 and 2019. Segment Adjusted EBITDA margin increased by approximately 500 basis points to 16% for the three months ended March 31, 2020, compared with segment Adjusted EBITDA margin of 11% for the same period in 2019. The increase in segment Adjusted EBITDA margin for the three months ended March 31, 2020 was primarily attributable to the cost savings associated with our exit of the Methylamines and Methylamides business at our Belle, West Virginia production facility.






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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 months ended March 31, 2020 and 2019.





                            Three Months Ended March 31,
(Dollars in millions)        2020                  2019
Segment net sales        $         613         $         555
Adjusted EBITDA                    138                   126
Adjusted EBITDA margin              23 %                  23 %



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 months ended March 31, 2020, compared with the same period in 2019.





                                                        Three Months Ended March
Change in segment net sales from prior period                   31, 2020
Price                                                                          (8 )%
Volume                                                                         19 %
Currency                                                                       (1 )%
Portfolio                                                                       - %
Total change in segment net sales                                              10 %




Segment Net Sales

Our Titanium Technologies segment's net sales increased by $58 million (or 10%) to $613 million for the three months ended March 31, 2020, compared with segment net sales of $555 million for the same period in 2019. The increase in segment net sales for the three months ended March 31, 2020 was primarily attributable to a 19% increase in volume. Despite the onset of the COVID-19 pandemic, we experienced steady demand for our products throughout the quarter, delivering increased Ti-PureTM TiO2 net sales volumes in conjunction with share regain. Price declined by 8%, primarily due to customer, regional, and channel mix, as well as targeted price reductions, largely in the plastics market as served through our Ti-PureTM Flex online portal. We also experienced a 1% headwind from unfavorable currency movements.

Adjusted EBITDA and Adjusted EBITDA Margin

Segment Adjusted EBITDA increased by $12 million (or 10%) to $138 million for the three months ended March 31, 2020, compared with segment Adjusted EBITDA of $126 million for the same period in 2019. Segment Adjusted EBITDA margin was unchanged at 23% when compared with the prior year quarter. The increase in segment Adjusted EBITDA was primarily attributable to the aforementioned increase in segment net sales volume and improved fixed cost absorption when compared with the three months ended March 31, 2019, partially offset by the comparative decrease in price and unfavorable currency movements.





Corporate and Other


Corporate and Other costs decreased by $2 million (or 5%) to $36 million for the three months ended March 31, 2020, compared with Corporate and Other costs of $38 million for the same period in 2019. The decrease in Corporate and Other costs for the three months ended March 31, 2020 was primarily attributable to lower external spend.






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2020 Outlook


In light of the COVID-19 pandemic, a tremendous amount of uncertainty has been introduced into global markets and local economies. We believe that we are well-positioned to respond to the rapidly evolving market dynamics that are impacting our businesses. However, in consideration of anticipated, yet uncertain future declines in customer demand driven by COVID-19, we are implementing a range of actions aimed at reducing costs by reducing all discretionary spend, freezing non-critical hiring, and delaying external spend wherever possible. We are also reducing structural plant fixed costs to improve the efficiency of our production units, an initiative that was already in flight at the end of 2019. In addition, where legally permissible, we are making temporary base pay reductions for salaried employees globally, until we see an improvement in demand across the Company. This includes our Chief Executive Officer who is taking a temporary base salary reduction of 40% and the executive team who are taking a temporary base salary reduction of 30%. These actions are expected to reduce our costs for the year ending December 31, 2020 by approximately $160 million. We also plan to reduce our capital spending by $125 million for the year ending December 31, 2020, only proceeding with capital projects considered critical in the near-term. If the macroeconomic situation deteriorates or the duration of the pandemic is extended, we will evaluate additional cost actions, as necessary, as the operational and financial impacts to our Company continue to evolve.

In our Fluoroproducts segment, we anticipate a continued decline in global customer demand, as COVID-19 continues to negatively impact end-market demand from our customers, across several market sectors. In particular, in the automotive sector, OEM shutdowns in the EU and North America continued into the second quarter of 2020, which will further weaken customer demand within the segment. In response to anticipated declines in sales volumes, we are in frequent communication with our customers to fully understand their evolving product needs and to optimize our production volumes. We are also maintaining our investment to prevent the illegal import of legacy HFC refrigerants into the EU, in violation of the EU's F-gas regulations.

In our Chemical Solutions segment, we anticipate that the decline in end-market demand experienced during the first quarter of 2020 will extend into the second quarter, as customer mining operations are impacted by COVID-19. We continue to focus on operations productivity, inventory management, and cash generation in this segment.

In our Titanium Technologies segment, we have yet to experience the material negative effects of COVID-19 on our financial results. However, we expect that the pandemic will negatively impact our typical seasonal growth in sales volumes beyond the first quarter. We continue to collaborate with and remain connected to our customers in meeting their future demands, while mitigating the negative impacts of COVID-19 in certain markets and regions. Given our strong position in ore feedstock supply, we are appropriately positioned to maintain our commitment to our Ti-PureTM Value Stabilization ("TVS") strategy, allowing us to continue to offer our customers a predictable and reliable supply of high-quality TiO2. Through execution of this strategy, our Assured Value Agreements ("AVA") promote net working capital stability, allowing our customers to purchase TiO2 with supply assurance and price predictability once the market recovery begins. Alternatively, our Ti-PureTM Flex online portal provides our customers with the opportunity to log-in from any location and secure their respective product needs and pricing for up to six months. Our third-party agents and distributors also continue to serve markets that we may not reach directly. Through these means of remaining connected with our customers, as well as our strength in ore supply, we anticipate maintaining our market share regained during the first quarter of 2020.

In responding to the COVID-19 pandemic and its subsequent impacts on global markets and local economies, we remain focused on matters that are within our control. Through the underlying strengths of our business operations, financial results and condition, and cash flows, we are fully engaged to protect the health and well-being of our employees and serve our customers.

However, in considering the unpredictability of the duration and magnitude of the impact of the COVID-19 pandemic, which may be material to our operations and end-market demand, we are withdrawing our previously published full-year 2020 financial guidance, as issued on February 13, 2020.






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Liquidity and Capital Resources

Our primary sources of liquidity are cash generated from operations, available cash, receivables securitization, and borrowings under our debt financing arrangements, which are described in further detail in "Note 14 - Debt" to the Interim Consolidated Financial Statements and "Note 20 - Debt" to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2019. 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. We have generated strong operating cash flows through various past industry and economic cycles, evidencing the underlying operating strength of our businesses. As noted in the "2020 Outlook" section within this MD&A, however, significant uncertainty exists concerning both the magnitude and the duration of the impacts to our financial results and condition as caused by the COVID-19 pandemic. Regardless of size and duration, these rapidly evolving challenges will have an adverse impact on our future operating cash flows. However, based on our responses to the COVID-19 pandemic, including the business-related initiatives discussed in our "2020 Outlook", we anticipate that our available cash, cash from operations, and existing debt financing arrangements will provide us with sufficient liquidity through at least May 2021.

At March 31, 2020, we had total cash and cash equivalents of $714 million, of which $328 million was held by our foreign subsidiaries. All of the 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 first quarter of 2020, we received approximately $300 million of cash in the U.S. through intercompany loans and dividends. Traditionally, the cash and earnings of our foreign subsidiaries have generally been used to finance their operations and capital expenditures, and it is our intention to indefinitely reinvest the historical pre-2018 earnings of our foreign subsidiaries. However, beginning in 2018, management asserts that only certain foreign subsidiaries are indefinitely reinvested. For further information related to our income tax positions, see "Note 9 - Income Taxes" to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2019. Management believes that sufficient liquidity is available in the U.S. through at least May 2021, which includes borrowing capacity under our revolving credit facility.

Subsequent to the quarter ended March 31, 2020, as a precautionary measure in light of macroeconomic uncertainties driven by COVID-19, we drew $300 million from our revolving credit facility. There were no borrowings outstanding on the revolving credit facility as of March 31, 2020, although outstanding letters of credit of $101 million offset our borrowing availability from the maximum capacity of $800 million. We do not currently expect to use the proceeds from these borrowings; however, we may use the proceeds in the future for working capital needs or other general corporate purposes. The availability under our revolving credit facility is subject to a maintenance covenant based on senior secured net debt and the last 12 months of consolidated EBITDA, as defined in our amended and restated credit agreement. Based on our forecasts and plans, we anticipate that we will be in compliance with our credit facility covenants through at least May 2021. For further details regarding our debt covenants pursuant to the amended and restated credit agreement of our senior secured credit facilities, see "Note 20 - Debt" to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2019.

We anticipate making significant payments for interest, critical capital expenditures, environmental remediation costs and investments, dividends, and other actions over the next 12 months, which we expect to fund through cash generated from operations, available cash, receivables securitization, and borrowings. 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 May 2021. 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 $160 million per year, and, on April 28, 2020, we announced our quarterly cash dividend of $0.25 per share for the second quarter of 2020. Under our 2018 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 $428 million of our outstanding common stock. In light of the COVID-19 pandemic, we do not currently plan to repurchase additional shares of our outstanding common stock in the near future. 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, although we have no such plans at the current time. 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.






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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 three months ended March 31, 2020 and 2019.





                                                          Three Months Ended March 31,
(Dollars in millions)                                    2020                      2019
Cash provided by (used for) operating activities   $              44         $             (44 )
Cash used for investing activities                              (112 )                    (134 )
Cash used for financing activities                              (155 )                    (324 )




Operating Activities


We generated $44 million in cash flows from and used $44 million in cash flows for our operating activities during the three months ended March 31, 2020 and 2019, respectively. The increase in our operating cash inflows for the three months ended March 31, 2020 was primarily attributable to the $125 million of accounts receivables sold to the bank under the Amended Purchase Agreement of our Securitization Facility, as well as a comparative reduction in cash outflows for our accounts payable and certain other accrued liabilities. These comparative increases in operating cash flows were partially offset by a comparative reduction in cash inflows for our accounts receivable, exclusive of changes for our Securitization Facility.





Investing Activities


We used $112 million and $134 million in cash flows for our investing activities during the three months ended March 31, 2020 and 2019, respectively. Our investing cash outflows for the three months ended March 31, 2020 and 2019 were primarily attributable to purchases of property, plant, and equipment, amounting to $106 million and $133 million, respectively.





Financing Activities


We used $155 million in cash flows for our financing activities during the three months ended March 31, 2020. Our financing cash outflows for the three months ended March 31, 2020 were primarily attributable to the amendment and restatement of the Original Purchase Agreement under our Securitization Facility, resulting in net repayments of $110 million to settle the associated collateralized borrowings. We also returned $41 million to our shareholders in the form of cash dividends paid during the three months ended March 31, 2020.

We used $324 million in cash flows for our financing activities during the three months ended March 31, 2019. Our financing cash outflows for the three months ended March 31, 2019 were primarily attributable to our capital allocation activities, resulting in $297 million of cash returned to shareholders through our 2018 Share Repurchase Program and through cash dividends paid. In addition, we made $30 million in payments for withholding taxes on certain of our vested stock-based compensation awards.






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Current Assets



The following table sets forth the components of our current assets at March 31,
2020 and December 31, 2019.



(Dollars in millions)                 March 31, 2020       December 31, 2019
Cash and cash equivalents            $            714     $               943
Accounts and notes receivable, net                681                     674
Inventories                                     1,114                   1,079
Prepaid expenses and other                         82                      81
Total current assets                 $          2,591     $             2,777



Our accounts and notes receivable, net increased by $7 million (or 1%) to $681 million at March 31, 2020, compared with accounts and notes receivable, net of $674 million at December 31, 2019. The increase in our accounts and notes receivable, net at March 31, 2020 was primarily attributable to the timing of payments from our customers, which was almost entirely offset by $125 million of accounts receivables sold to the bank in accordance with the Amended Purchase Agreement under our Securitization Facility.

Our inventories increased by $35 million (or 3%) to $1.1 billion at March 31, 2020, compared with inventories of $1.1 billion at December 31, 2019. The increase in our inventories at March 31, 2020 was primarily attributable to seasonal build-up of our finished products inventories, and lower sales volumes in our Fluoroproducts segment and the retained businesses of our Chemical Solutions segment.

Our prepaid expenses and other assets were largely unchanged at $82 million and $81 million at March 31, 2020 and December 31, 2019, respectively.





Current Liabilities


The following table sets forth the components of our current liabilities at March 31, 2020 and December 31, 2019.





(Dollars in millions)                            March 31, 2020        December 31, 2019
Accounts payable                               $              841     $               923
Short-term and current maturities of
long-term debt                                                 22                     134
Other accrued liabilities                                     480                     484
Total current liabilities                      $            1,343     $             1,541



Our accounts payable decreased by $82 million (or 9%) to $841 million at March 31, 2020, compared with accounts payable of $923 million at December 31, 2019. The decrease in our accounts payable at March 31, 2020 was primarily attributable to the timing of payments to our vendors.

Our short-term and current maturities of long-term debt decreased by $112 million (or 84%) to $22 million at March 31, 2020, compared with short-term and current maturities of long-term debt of $134 million at December 31, 2019. The decrease in our short-term and current maturities of long-term debt at March 31, 2020 was primarily attributable to the amendment and restatement of the Original Purchase Agreement under our Securitization Facility, resulting in the settlement of $110 million in collateralized borrowings outstanding as of December 31, 2019.

Our other accrued liabilities decreased by $4 million (or 1%) to $480 million at March 31, 2020, compared with other accrued liabilities of $484 million at December 31, 2019. The decrease in our other accrued liabilities at March 31, 2020 was primarily attributable to recognition of customer rebates during the first quarter of 2020, as well as payments of certain accrued expenses. These decreases were partially offset by interest accrued on our senior unsecured notes.





Credit Facilities and Notes



See "Note 14 - Debt" to the Interim Consolidated Financial Statements and "Note 20 - Debt" to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2019 for a discussion of our credit facilities and notes.






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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 6.625% senior unsecured notes due May 2023, the 7.000% senior unsecured notes due May 2025, 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 "Notes"). Each series of the 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 same group of subsidiaries of the Parent Issuer (together, the "Guarantor Subsidiaries"), subject to certain exceptions as set forth in "Note 20 - Debt" to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2019. 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 the other U.S.-based operating subsidiaries as set forth 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 Notes (together, the "Non-Guarantor Subsidiaries"). Pursuant to the indentures governing the 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)                  Three Months Ended March 31, 2020
Net sales                             $                               868
Gross profit                                                          132
Income before income taxes                                             11
Net income                                                             43
Net income attributable to Chemours                                    43




(Dollars in millions)      March 31, 2020       December 31, 2019
Assets
Current assets (1,2,3)    $          1,428     $             1,063
Long-term assets (4)                 4,333                   4,339

Liabilities
Current liabilities (2)   $          1,373     $             1,045
Long-term liabilities                4,800                   4,871


   (1) Current assets includes $385 million and $104 million of cash and cash
       equivalents at March 31, 2020 and December 31, 2019, respectively.


   (2) Current assets includes $330 million and $346 million of intercompany
       accounts receivable from the Non-Guarantor Subsidiaries at March 31, 2020
       and December 31, 2019, respectively. Current liabilities includes $510
       million and $179 million of intercompany accounts payable to the
       Non-Guarantor Subsidiaries at March 31, 2020 and December 31, 2019,
       respectively.


   (3) As of March 31, 2020 and December 31, 2019, $107 million and $176 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 $1.2 billion of intercompany notes receivable
       from the Non-Guarantor Subsidiaries at March 31, 2020 and December 31,
       2019, respectively.



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 global paying services agreements with several financial institutions. Under these agreements, the financial institutions act as our paying agents with respect to accounts payable due to our suppliers who elect to participate in the program. The agreements allow our suppliers to sell their receivables to one of the participating financial institutions at the discretion of both parties on terms that are negotiated between the supplier and the respective financial institution. Our obligations to our suppliers, including the amounts due and scheduled payment dates, are not impacted by our suppliers' decisions to sell their receivables under this program. At March 31, 2020 and December 31, 2019, the total payment instructions from us amounted to $111 million and $106 million, respectively. Pursuant to their agreement with one of the financial institutions, certain suppliers may elect to be paid early at their discretion. 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.



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Contractual Obligations


Our contractual obligations at March 31, 2020 did not significantly change from the contractual obligations previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2019.

On April 8, 2020, as a precautionary measure in light of macroeconomic uncertainties driven by COVID-19, we drew $300 million from our revolving credit facility. The effective interest rate at the date of borrowing was 2.41%. The borrowings were made pursuant to the amended and restated credit agreement, dated as of April 3, 2018, and the revolving credit facility will mature on April 3, 2023.

Off-Balance Sheet Arrangements

In March 2020, through a wholly-owned special purpose entity, we entered into the Amended Purchase Agreement, which amends and restates, in its entirety, the Original Purchase Agreement under our Securitization Facility. See "Note 14 - Debt" to the Interim Consolidated Financial Statements for further details regarding this off-balance sheet arrangement.

Historically, we have not made significant 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, 2019. There have been no material changes to these critical accounting policies and estimates previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2019, except as described below and in "Note 2 - Recent Accounting Pronouncements" to the Interim Consolidated Financial Statements.

Goodwill

The excess of the purchase price over the estimated fair value of the net assets acquired in a business combination, including any identified intangible assets, is recorded as goodwill. We test our goodwill for impairment at least annually on October 1; however, these tests are performed more frequently when events or changes in circumstances indicate that the asset may be impaired. Goodwill is evaluated for impairment at the reporting unit level, which is defined as an operating segment, or one level below an operating segment. A reporting unit is the level at which discrete financial information is available and reviewed by business management on a regular basis. An impairment exists when the carrying value of a reporting unit exceeds its fair value. The amount of impairment loss recognized in the consolidated statements of operations is equal to the excess of a reporting unit's carrying value over its fair value, which is limited to the total amount of goodwill allocated to the reporting unit.

During the first quarter of 2020, due to the potential effects of the COVID-19 pandemic on our expected earnings and future operating cash flows, it was determined that an interim goodwill impairment test was necessary as of February 28, 2020 for our Fluoropolymers, Fluorochemicals, and Mining Solutions reporting units.

The fair values of our reporting units were determined by using a combination of income-based and/or market-based valuation techniques. These valuation models incorporated a number of assumptions and judgments surrounding general market and economic conditions, the projected duration of the COVID-19 pandemic and the timing and rate of the associated macroeconomic recovery, short and long-term revenue growth rates, gross margins, and prospective financial information surrounding future reporting unit cash flows. Projections are based on internal forecasts of future business performance and are based on growth assumptions which exclude business growth opportunities not yet fully realized. Discount rate and market multiple assumptions were determined based on relevant peer companies in the chemicals sector.






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The estimated fair value of the Fluoropolymers reporting unit was determined by utilizing a discount rate of 9.83% and a market multiple of 6.5 times Adjusted EBITDA, resulting in an estimated fair value 18% higher than its carrying value. Fluoropolymers has $56 million of goodwill. Changing the weighting of the market and income approaches used for Fluoropolymers could result in a maximum reduction of the excess of estimated fair value over carrying value to 14%. Assuming all other factors remain the same, a 200-basis point increase in the discount rate would decrease the excess of estimated fair value over carrying value to 5%; a 1% decrease in the long-term growth rate would decrease the excess of estimated fair value over carrying value to 13%; and, a 15% decrease in the market multiple assumption would decrease the excess of estimated fair value over carrying value to 9%. Under each of these sensitivity scenarios, the Fluoropolymers reporting unit's fair value exceeded its carrying value.

The estimated fair value of the Fluorochemicals reporting unit was determined by utilizing a discount rate of 9.83% and a market multiple of 6.0 times Adjusted EBITDA, resulting in an estimated fair value more than 200% higher than its carrying value. Fluorochemicals has $33 million of goodwill.

The estimated fair value of the Mining Solutions reporting unit was determined by utilizing a discount rate of 10.33%, resulting in an estimated fair value 40% higher than its carrying value. Mining Solutions has $51 million of goodwill. Assuming all other factors remain the same, a 200-basis point increase in the discount rate would decrease the excess of estimated fair value over carrying value to 6%; and, a 1% decrease in the long-term growth rate would decrease the excess of estimated fair value over carrying value to 26%.

Our determination of the fair value of the Mining Solutions reporting unit considered further delays and additional costs of construction for our new Mining Solutions facility under construction in Gomez Palacio, Durango, Mexico. The construction-in-process for this facility represents a significant portion of the total carrying value of Mining Solutions, and, in the event that the facility was unable to be completed, the impairment of the related long-lived assets would significantly decrease the carrying value of the reporting unit. As a result, an impairment of the reporting unit's goodwill would become less likely. See "Note 16 - Commitments and Contingent Liabilities" to the Interim Consolidated Financial Statements for further information related to this matter.

Based upon the results of our interim goodwill impairment tests, no adjustments to the carrying value of goodwill were necessary during the quarter ended March 31, 2020. However, in consideration of the COVID-19 pandemic, we note that a lack of recovery or further deterioration in general market conditions, a sustained trend of weaker than anticipated Company financial performance, a lack of recovery or further decline in the Company's share price for a sustained period of time, or an increase in the market-based weighted average cost of capital, among other factors, could significantly impact our impairment analyses and may result in future goodwill impairment charges that, if incurred, could have a material adverse effect on our financial condition and results of operations.

Recent Accounting Pronouncements

See "Note 2 - Recent Accounting Pronouncements" to the Interim Consolidated Financial Statements for a discussion about recent accounting pronouncements.






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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 DuPont and its subsidiaries that we may be required to indemnify pursuant to the Separation-related agreements executed prior to our separation from DuPont on July 1, 2015 (the "Separation").

Our environmental liabilities include estimated costs, including certain accruable costs associated with on-site capital projects, related 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 the Comprehensive Environmental Response Compensation and Liability Act ("CERCLA," often referred to as "Superfund"), the Resource Conservation and Recovery Act ("RCRA"), and similar federal, state, local, and foreign laws. These laws require certain investigative, remediation, and restoration activities at sites where we conduct or once conducted operations or at sites where our generated waste was disposed. At March 31, 2020 and December 31, 2019, our consolidated balance sheets include environmental remediation liabilities of $396 million and $406 million, respectively, relating to these matters, which, as discussed in further detail below, include $196 million and $201 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 DuPont pursuant to the Separation-related agreements, we and DuPont 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, although deemed remote, the potential liability may range up to approximately $540 million above the amount accrued at March 31, 2020. 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.






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Significant Environmental Remediation Sites

While there are many remediation sites that contribute to our total accrued environmental remediation liabilities at March 31, 2020 and December 31, 2019, the following table sets forth the sites that are the most significant.





(Dollars in millions)                                March 31, 2020        December 31, 2019
Chambers Works, Deepwater, New Jersey              $               20     $                 20
East Chicago, Indiana                                              17                       17
Fayetteville Works, Fayetteville, North Carolina                  196                      201
Pompton Lakes, New Jersey                                          42                       43
USS Lead, East Chicago, Indiana                                    13                       13
All other sites                                                   108                      112
Total environmental remediation                    $              396     $                406




The five sites listed above represent 73% and 72% of our total accrued environmental remediation liabilities at March 31, 2020 and December 31, 2019, respectively. For these five sites, we expect to spend, in the aggregate, $119 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

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 fluorochemicals and finished products at Chambers Works. In addition, three tenants operate processes at Chambers Works including steam/electricity generation, industrial gas production, and the manufacture of intermediate chemicals. 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 the fourth quarter of 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.

East Chicago, Indiana

East Chicago is a former manufacturing facility that we previously owned in East Chicago, Lake County, Indiana. The approximate 440-acre site is bounded to the south by the east branch of the Grand Calumet River, to the east and north by residential and commercial areas, and to the west by industrial areas, including a former lead processing facility. The inorganic chemicals unit on site produced various chloride, ammonia, and zinc products and inorganic agricultural chemicals beginning in 1892 until 1986. Organic chemical manufacturing began in 1944, consisting primarily of chlorofluorocarbons production. The remaining business was sold to W.R. Grace Company ("Grace") in early 2000. Approximately 172 acres of the site were never developed and are managed by The Nature Conservancy for habitat preservation.

A comprehensive evaluation of soil and groundwater conditions at the site was performed as part of the RCRA Corrective Action process. Studies of historical site impacts began in 1983 in response to preliminary CERCLA actions undertaken by the U.S. Environmental Protection Agency ("EPA"). The EPA eventually issued an Administrative Order on Consent for the site in 1997. The order specified that remediation work be performed under RCRA Corrective Action authority. Work has proceeded under the RCRA Corrective Action process since that time.





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Subsequent investigations included the preparation of initial environmental site assessments and multiple phases of investigation. In 2002, as an interim remedial measure, two 2,000-foot long permeable reactive barrier treatment walls were installed along the northern property boundary to address migration of chemicals in groundwater. Since that time, the investigation process has been completed and approved by the EPA, and the final remedy for the site was issued by the EPA in July 2018.

On June 29, 2018, we sold the East Chicago, Indiana site to a third party for $1 million. In connection with the sale, the buyer agreed to assume all costs associated with environmental remediation activities at the site in excess of $21 million, which will remain our responsibility. At the time of the sale, we had accrued the full $21 million, of which $17 million remained as of March 31, 2020. We will reimburse the buyer through a series of progress payments to be made at defined intervals as certain tasks are completed.

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 DuPont in 1970, and are bounded to the east by the Cape Fear River and to the west by North Carolina Highway 87. Currently, the site manufactures plastic sheeting, fluorochemicals, and intermediates for plastics manufacturing. A former manufacturing area, which was sold in 1992, produced nylon strapping and elastomeric tape. DuPont sold its Butacite® and SentryGlas® manufacturing units to Kuraray America, Inc. in September 2014. In July 2015, upon our Separation from DuPont, we became the owner of the Fayetteville land assets along with fluoromonomers, Nafion® membranes, and the related polymer processing aid manufacturing units. A polyvinyl fluoride resin manufacturing unit remained with DuPont.

Beginning in 1996, several stages of site investigation were conducted under oversight by the North Carolina Department of Environmental Quality ("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" (perfluoroalkyl and polyfluoroalkyl substances) beginning with "PFOA" (collectively, perfluorooctanoic acids and its salts, including the ammonium salt) in 2006. As a result of detection of the polymerization processing aid hexafluoropropylene oxide dimer acid ("HFPO Dimer Acid," sometimes referred to as "GenX" or "C3 Dimer Acid") in on-site groundwater wells during our investigations in 2017, the NC DEQ issued a Notice of Violation ("NOV") on September 6, 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 16 - Commitments and Contingent Liabilities" to the Interim Consolidated Financial Statements, we and the NC DEQ have filed a final Consent Order that comprehensively addressed various issues, NOVs, and court filings made by the NC DEQ regarding Fayetteville and resolved litigations filed by the NC DEQ and Cape Fear River Watch, a non-profit organization. In connection with the Consent Order, a thermal oxidizer became fully operational at the site in December 2019 to reduce aerial PFAS emissions from Fayetteville.

In the fourth quarter of 2019, we completed and submitted our Cape Fear River PFAS Loading Reduction Plan - Supplemental Information Report and Corrective Action Plan ("CAP") to NC DEQ. The Supplemental Information Report provides information to support the evaluation of potential remedial options to reduce PFAS loadings to surface waters, including interim alternatives. The CAP describes potential remediation activities to address PFAS in on-site groundwater and surface waters at the site, in accordance with the requirements of the Consent Order and the North Carolina groundwater standards, and builds on the previous submissions to NC DEQ. The NC DEQ made the CAP available for public review and comment until April 6, 2020. We are currently awaiting formal response to the CAP from NC DEQ following the conclusion of the public comment period.

In the fourth quarter of 2019, based on the Consent Order, CAP, and our plans, we accrued an additional $132 million related to the estimated cost of on-site remediation. In the first quarter of 2020, we accrued an additional $8 million, of which $5 million related to off-site groundwater testing and remediation.






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The Chemours Company



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 the EPA and the New Jersey Department of Environmental Protection ("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, the 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, Chemours 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 the EPA and NJ DEP in March 2020, and we are currently preparing our response.

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 the EPA on the safe and timely completion of this work. DuPont's former East Chicago manufacturing facility was located adjacent to the site, and DuPont 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, the 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 DuPont entering into an agreement in 2014 with the EPA and the State of Indiana to reimburse the EPA's costs to implement clean-up in Zone 1 and Zone 3. More recently, in March 2017, we and three other parties - Atlantic Richfield, DuPont, and the U.S. Metals Refining Co. ("U.S. Metals") - entered into an administrative order on consent to reimburse the EPA's costs to clean-up a portion of Zone 2. In March 2018, the EPA issued a Unilateral Administrative Order for the remainder of the Zone 2 work to five parties, including us, Atlantic Richfield, DuPont, 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 has been completed, and Zone 2 is nearly complete. There is uncertainty as to whether these parties will be able to agree on a final allocation for Zone 2 and/or the other Zones, and whether any additional PRPs may be identified.

The environmental accrual for USS Lead continues to include 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, relating to modified Zone 1 development, and the EPA has indicated that it is "more likely" that future land use in this area will be commercial/industrial and not residential. We expect that our future costs for modified Zone 1 will be contingent on the development of this area and implementation under the ROD Amendment, as well as any final allocation between PRPs.

New Jersey Department of Environmental Protection Directives and Litigation

In March 2019, the NJ DEP issued two Directives and filed four lawsuits against Chemours and other defendants. Further discussion related to these matters is included in "Note 16 - Commitments and Contingent Liabilities" to the Interim Consolidated Financial Statements.






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Climate Change


In 2018, we issued our inaugural Corporate Responsibility Commitment Report, which expresses our Corporate Responsibility Commitment - an extension of our growth strategy - as 10 ambitious goals targeted for completion by 2030. Built on the principles of inspired people, shared planet, and an evolved portfolio, our shared planet principle 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 shared planet goals are comprised of the following:



  • Reduce greenhouse gas ("GHG") emissions intensity by 60%;


  • Advance our plan to become carbon positive by 2050;


   •  Reduce air and water process emissions of fluorinated organic chemicals by
      99% or more; and,


  • Reduce our landfill volume intensity by 70%.



We are committed to improving our resource efficiency, acting on opportunities to reduce our GHG emissions, enhancing the eco-efficiency of our supply chain, and encouraging our employees to reduce their own environmental footprints. We understand that maintaining safe, sustainable operations has an impact on us, our communities, the environment, and our collective future. We continue to invest in research and development in order to develop safer, cleaner, and more efficient products and processes that help our customers and consumers reduce both their GHGs and their overall environmental footprint. We value collaboration to drive change and commit to working with policymakers, our value chain, and other organizations to encourage collective action for reducing GHGs.







PFOA


See our discussion under the heading "PFOA" in "Note 16 - Commitments and Contingent Liabilities" to the Interim Consolidated Financial Statements.







GenX


On June 26, 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, Chemours 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.

Delaware Chancery Court Lawsuit

In May 2019, we filed a lawsuit in Delaware Chancery Court ("Chancery Court") against DowDuPont, Inc., Corteva, Inc., and DuPont concerning DuPont's contention that it is entitled to unlimited indemnity from us for specified liabilities that DuPont assigned to us in the spin-off. The lawsuit requests that the Chancery Court enter a declaratory judgment limiting DuPont's indemnification rights against us and the transfer of liabilities to us to the actual "high-end (maximum) realistic exposures" it stated in connection with the spin-off, or, in the alternative, requiring the return of the approximate $4 billion dividend DuPont extracted from us in connection with the spin-off. In March 2020, the Chancery Court granted DuPont's Motion to Dismiss, placing the matter in non-public binding arbitration. Chemours has appealed the ruling to the Delaware Supreme Court, and the matter is expected to concurrently proceed in arbitration. Many of the potential litigation liabilities discussed in "Note 16 - Commitments and Contingent Liabilities" to the Interim Consolidated Financial Statements are at issue in the matter.






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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"), and Return on Invested Capital ("ROIC") - 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 components of net periodic pension (income) costs
      excluding the service cost component;


  • exchange (gains) losses included in other income (expense), net;


  • restructuring, asset-related, and other charges;


  • asset impairments;


  • (gains) losses on sales of assets and businesses; and,


   •  other items not considered indicative of our ongoing operational performance
      and expected to occur infrequently.



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 ("EBIT"), divided by the average of our invested capital, which amounts to our net debt, or debt less cash and cash equivalents, plus equity.

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, and ROIC should not be construed as an inference that our future results will be unaffected by unusual or infrequently occurring items. 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, 2019.






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The following table sets forth a reconciliation of Adjusted EBITDA, Adjusted Net Income, and Adjusted EPS to our net income attributable to Chemours for the three months ended March 31, 2020 and 2019.





                                                     Three Months Ended March 31,
(Dollars in millions, except per share
amounts)                                               2020                2019
Net income attributable to Chemours              $            100     $            94
Non-operating pension and other
post-retirement employee benefit income                         -                  (3 )
Exchange losses (gains), net                                   24                  (6 )
Restructuring, asset-related, and other
charges (1)                                                    11                   8
Transaction costs                                               2                   -
Legal and environmental charges (2)                            10                  29
Adjustments made to income taxes (3)                          (19 )                (5 )
Benefit from income taxes relating to
reconciling items (4)                                         (10 )                (8 )
Adjusted Net Income                                           118                 109
Interest expense, net                                          54                  51
Depreciation and amortization                                  79                  76
All remaining provision for income taxes                        6                  26
Adjusted EBITDA                                  $            257     $           262

Weighted-average number of common shares
outstanding - basic                                   164,247,449         167,866,468
Dilutive effect of our employee compensation
plans                                                   1,010,542           4,194,432
Weighted-average number of common shares
outstanding - diluted                                 165,257,991         172,060,900

Per share data
Basic earnings per share of common stock         $           0.61     $          0.56
Diluted earnings per share of common stock                   0.61                0.55
Adjusted basic earnings per share of common
stock                                                        0.72                0.65
Adjusted diluted earnings per share of common
stock                                                        0.71                0.63


   (1) Includes restructuring, asset-related, and other charges, which are
       discussed in further detail in "Note 4 - Restructuring, Asset-related, and
       Other Charges" to the Interim Consolidated Financial Statements.


   (2) Legal charges pertains to litigation settlements, PFOA drinking water
       treatment accruals, and other legal charges. Environmental charges
       pertains to estimated liabilities associated with on-site remediation,
       off-site groundwater remediation, and toxicity studies related to
       Fayetteville. The three months ended March 31, 2020 includes $8 million in
       additional charges for the approved final Consent Order associated with
       certain matters at Fayetteville. The three months ended March 31, 2019
       includes $27 million in additional charges for the estimated liability
       associated with Fayetteville. See "Note 16 - Commitments and Contingent
       Liabilities" to the Interim Consolidated Financial Statements for further
       details.


   (3) 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, historical valuation allowance adjustments,
       unrealized gains and losses on foreign exchange rate changes, and other
       discrete income tax items.


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



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The following table sets forth a reconciliation of FCF to our cash flows
provided by (used for) operating activities for the three months ended March 31,
2020 and 2019.



                                                        Three Months Ended March 31,
(Dollars in millions)                                  2020                      2019
Cash flows provided by (used for) operating
activities                                       $              44         $             (44 )
Less: Purchases of property, plant, and
equipment                                                     (106 )                    (133 )
Free Cash Flows                                  $             (62 )       $            (177 )




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



                                               Twelve Months Ended March 31,
(Dollars in millions)                          2020                    2019
Adjusted EBITDA (1)                       $         1,015         $         1,535
Less: Depreciation and amortization (1)              (313 )                  (289 )
Adjusted EBIT                             $           702         $         1,246

                                                      As of March 31,
(Dollars in millions)                          2020                    2019
Total debt                                $         4,034         $         3,978
Total equity                                          661                     816
Less: Cash and cash equivalents                      (714 )                  (697 )
Invested capital, net                     $         3,981         $         4,097
Average invested capital (2)              $         4,140         $         3,853

Return on Invested Capital                             17 %                    32 %


   (1) Reconciliations of Adjusted EBITDA to net income (loss) attributable to
       Chemours are provided on a quarterly basis. See the preceding table for the
       reconciliation of Adjusted EBITDA to net income attributable to Chemours
       for the three months ended March 31, 2020 and 2019.


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


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