Good morning, and welcome to the Chemours Company First Quarter 2023 Earnings Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the call over to Jonathan Lock, SVP and Chief Development Officer. Thank you. Please go ahead..

Thanks, Julianne, and good morning, everybody. Welcome to the Chemours Company's First Quarter 2023 Earnings Q&A Conference Call. I'm joined today by Mark Newman, President and Chief Executive Officer; and Sameer Ralhan, Senior Vice President and Chief Financial Officer.

Before we start, I'd like to remind you that comments made on this call as well as in the supplemental information provided in our presentation and on our website contain forward-looking statements that involve risks and uncertainties as described in our SEC filings.

These forward-looking statements are not guarantees of future performance and are based on certain assumptions and expectations of future events that may not be realized. Actual results may differ, and Chemours undertakes no duty to update any forward-looking statements as a result of future developments or new information.

During the course of this call, management will refer to certain non-GAAP financial measures that we believe are useful to investors evaluating the company's performance. A reconciliation of non-GAAP terms and adjustments are included in our release and at the end of our presentation.

As a reminder, our prepared remarks, a full transcript plus our earnings deck have been posted to our website alongside our earnings release. This morning's call will focus purely on Q&A. With that, I'll turn the call over to our CEO, Mark Newman.

Mark?.

Thank you, Jonathan, and thank you all for joining us this morning. Our strong performance in the first quarter is a testament to our secular growth thesis at work and the strength of our overall portfolio. TSS and APM continue to deliver products the world needs and which underpin many strategic as well as emerging technologies.

Despite the challenges faced by our TT segment, we remain confident in a gradual recovery throughout the year with improvements in margins, moderating raw material costs and cost optimization measures implemented across the portfolio.

With a strong first quarter, we are reaffirming our full year guidance but we acknowledge the uncertainty of the macro environment and its potential impact on the second half of the year. We're closely monitoring the situation, and we are prepared to adapt as necessary. With that, Julianne, let's move to questions..

[Operator Instructions] Our first question comes from Duffy Fischer from Goldman Sachs..

First question just on TSS. With the step-down or the pending step down, can you go through how much of the price benefit you've seen over the last year has come from the HFO side kind of the mix shift? And how much has come from HFC just kind of getting squeezed on volume? And what's your expectation this year in the U.S.

kind of what the market share being HFC and HFO will be for the market?.

Yes. So Duffy, as you recall, great question, the step down of 10% last year continues at that level through the end of this year where there's a 30% step down. So there's -- our view would be there will be folks buying ahead in the second half of the year potentially of that step down.

And obviously, in a market with constrained supply, that will continue to support prices. We did not expect significant year-over-year price increases like we saw last year, but we do expect the market to remain dynamic.

And then on your question on HFO volumes, clearly, volume growth in our portfolio, which you saw in the first quarter is tied to both HFO adoption as well as a strong auto OEM market, which really benefited us. So I'm going to ask Sameer to make a couple more comments, but I think those are the big headlines..

Thanks, Mark. And Duffy, the only other comment I would add is, as you kind of think about the pricing, you should really think about the realization.

As the quota steps down, we think about pricing, not just from just one product point of view, think about the optimization across the portfolio just to make sure we can meet all the needs of the customers and really maximize on the pricing side as well.

So think about an optimization problem across the product portfolio rather just focusing on product by product..

Fair enough. And then on TiO2, again, another quarter where your sell-in to customers is significantly lower than what their sell-out has been again. Again, you go back a year ago, there didn't seem to be any TiO2 inventory in the system anywhere.

So can you just kind of triangulate the math of how did we build as much inventory, maybe over last summer as it seems like we've destocked from the fall through today? And what gives you confidence that -- or when do you think we'll get back to where your sell-in and their sell-out is somewhat even on the TiO2 side?.

Yes. So the year started off relatively slowly. We predicted what we expect to be a gradual recovery. Sequentially, our volumes were up 1% but down year-over-year. As we look at the market, what we're seeing is signs of the destocking is over in Europe and to some extent, China.

And then we're seeing a little bit more cautious behavior here in North America with some of the recent news flow. As we look to the whole year, we are expecting a gradual recovery. Our expectation sequentially going into Q2 would be for a double-digit sequential growth.

But we're not sort of basing our year on sort of a rapid volume recovery, given some of the sentiment here in North America. I'll ask Sameer to comment further, but I'd say those are the main stories for now..

Yes. I think Mark you covered all the key points. So Duffy, I think as you're going to think about from the demand perspective, really, if you look into the guide, as we kind of think about the guide affirmation, TiO2 is going to be a little weaker than what we thought at the beginning of the year.

But from a sequential perspective, we should expect a double-digit volume improvement as we get into the second quarter..

Our next question comes from Hassan Ahmed from Alembic Global Advisors..

Just wanted to sort of touch on TiO2 as well. I mean, look, as I take a look at sequential volumes, they were just up 1%. And as I take a look at the landscape, one of your large competitors had sort of significantly higher volume gain sequentially.

So I'm just trying to understand in terms of market share, globally, are you guys seeing any losses? How should we think about that?.

Yes. So listen, when we look at -- I think you're probably referring to Tronox. So when I look at the year-over-year comparison, we're down 30% or 35% from last year. They're down 30%. So on a relative basis, there is some delta. I would admit that. And I would attribute that mainly to where people are strong regionally.

I would also tell you that we are very focused on adjusting our circuit against market demand and a focus on -- being more focused on running the business for cash over the full year. And so I think we are playing our cards well. And again, as I said in my earlier comment, we'd be looking for double-digit volume growth starting in the next quarter.

But we're very, very thoughtful about how we approach the market. And then the last point I would make is a lot of our business is on long-term contracts, which, in many cases, are tied to share of requirements. So I'm quite confident that this doesn't represent a significant share shift by any means.

It's really more of a regional mix between us and some of our other MNC competitors..

Very helpful, Mark. And just a quick question on the guidance -- the full year guidance.

You guys obviously handily beat the Q1 estimates, and you're already sort of run-rating annualized at $1.2 billion EBITDA, right? And I'd like to think through the course of this year, demand improves, China reopening, all of those wonderful things and obviously, I'd like to think that TiO2 results improve as well.

So I mean, don't you think the $1.2 billion to $1.3 billion reiteration seems a bit conservative?.

So Hassan, I think we are kind of a team that under-promises and over-delivers. And I think as we sat here with a good 1Q in hand, our view was, given all of the global macro uncertainties and particularly some of the banking uncertainties here in the U.S., it made sense at this point in the year to be careful.

And so I think it's with that view that we have reaffirmed our full year guide. Clearly, there are some aspects in the second half, which could go either way. And so I think our perspective at this point is to reaffirm our full year guide. But I'll ask Sameer to make a few comments as well..

Thanks, Hassan. Fair point from your side. But as we kind of think about the guide, what we gave at the beginning of the year and where we are, there's a lot of moving pieces, as Mark said, from a macroeconomic perspective that we kind of reflected into this.

But overall, if you look at from the business to business perspective, as I said earlier, TiO2 is probably a little weaker than what we thought at the beginning of the year.

And TSS, of course, given the performance we saw in Q1, it's going to be at a better place than what we had when we gave the guide at the beginning of the year, and APM generally in line from where we were at the beginning of this year.

So that's how you should think about the three businesses where they were at the beginning of the year when we gave the guide and now when we are reiterating the guide..

Our next question comes from John McNulty from BMO Capital Markets..

So Mark, maybe the first one or so on TSS. You kind of mentioned in passing that you kind of expected some really strong demand in the second half of the year going into that 2024 step-down in HFCs. Your volumes are pretty darn strong actually in the first quarter.

I guess, are you seeing any -- or earlier pull than expected for Opteon in some of your HFOs ahead of that step down? Or is this something else?.

Yes. John, I think what's driving volume -- what's helping to drive volume in Q1 was the strong automotive SAAR that we saw. Auto volumes were strong in both Europe and the U.S.

And so I think as we think of the full year, one question for us would be where do auto volumes go? Clearly, the automotive companies are building cars with the supply chain more normalized.

The question is with higher interest rates, does that continue throughout the year? So I'd say our record Q1 performance in TSS is in part driven by strong auto, but it's also being driven by continued adoption of Opteon in the stationary side. And then as we said earlier, strong HFCs based on an effective AIM and F-gas framework working as well.

So listen, as Sameer said, TSS is really, out of the starting block, very strong. And we expect TSS to have a great year. TT, I think, is starting a little weaker than expected.

But with the focus on cost reduction in that business and a gradual volume recovery, our expectation would be that we could get this business back to 20% EBITDA margins as we exit the year. So the team's really working on both the growth side of the business in TSS and APM as well as the cost side of the business in TT..

Got it. Okay. And then maybe just as a follow-up on the TSS business. So the margin snapped back really nicely from the 4Q kind of the dip that we saw. I guess when I think about this business, normally, 1Q isn't the strongest kind of margin quarter just because you've got a little bit more auto, a little bit less kind of stationary.

Is that the right way to think about it? And should we be expecting the margins to push higher here just given the strength in autos, which is kind of a constant price degradation story and the lack of like big refrigerant demand in the first quarter? So should we be seeing margin improvement as we kind of go through the year here? Is that the right way to think about it?.

Yes. So listen, I think as it relates to the comparison to Q4, I think we had taken you and our investors through the fact that there were a number of factors that made Q4 more of an aberration than pointing for anything to come. As I look at the full year in TSS, I would expect it to be somewhat comparable to our last year.

Clearly, as you saw in the quarter, our margins are down slightly year-over-year based on higher input costs.

But no, I think this is a business that has top line growth in low double digits with EBITDA margins -- very attractive EBITDA margins, which we expect all year, Sameer?.

Yes. Thanks, Mark. John, I think, as Mark said, you should, from a full year perspective, look at the margin almost on a comparable basis to last year. I just want to point out that in Q4 last year, we had some one-offs. But overall, if you kind of think about the Q4, we always have the seasonality impact, which impacts the margins.

As you know, in that part of the time, we have more sales in the Southern Hemisphere and some of the automotive slowdown happen as well, which impacts the Q4 margins. But overall, if you look at the first 3 quarters of the year, you should expect the margins comparable -- on a comparable basis..

Our next question comes from Josh Spector from UBS..

This is James Cannon on for Josh. I just wanted to hit a little -- drill in a little more on the TSS segment and just also on the volume side. It seems like you came in even ahead of where auto builds were in the year.

I'm wondering, is that a channel fill impact? Or anything else that made 1Q particularly strong? And how we should think about kind of the sequentials as we move through the year there?.

Yes, I'd say auto is a component of the growth. But clearly, as I said earlier, James, there is continued adoption on the stationary side. Recall that we had told in a previous call that many stationary OEMs have adopted our Opteon refrigerants -- our Opteon blends for their equipment.

So we're seeing that impact of adoption on the stationary side as well, as well as some of our other specialty HFO chemistry on the foam side. So the growth is pretty broad-based. But clearly, in terms of versus expectations, the strong auto build certainly was quite helpful in Q1..

Yes. James, the only other color I would add to, this is Sameer, is as you kind of think about Opteon Solutions, we are the Tier 1 supplier. So we have a pretty much direct line of sight into the bills, and there's a limited inventory. So we see that demand pick up or slow down pretty quickly in our business..

Okay. Yes.

And just as a follow-up to that, if I think about OEMs kind of pulling forward adoption into the first quarter, does that offset maybe what I would think of as a normal seasonal uplift in the second quarter?.

So clearly, in our full year guide, we're being very thoughtful here not to project out Q1 overage as a full year concept. We tend to stick closer to the IHS forecast in terms of our auto outlook. So clearly, the rate of auto builds beyond Q1 could either be a positive or a negative factor relative to what we would expect in normal seasonality..

Our next question comes from Arun Viswanathan from RBC Capital Markets..

I guess I have a similar question to some of those others. So first off, if you just think about Q1 north of $400 million, obviously, you can't annualize that. But Q2 and Q3 seasonally should be higher.

What are some of the differences this year that you're seeing that would kind of affect the normal seasonality? And could you just remind us what was the total of, say, the onetime items in Q4 that led to that lower number?.

Yes. I think we've gone through the Q4 deltas. And obviously, if you want to talk to the IR team, they'll be happy to give you more color. I think we went through it in some detail on the last call. But clearly, I think the main delta that we're seeing as we start the year is stronger auto builds in Q1. We'll see if those persist in Q2.

Europe is clearly better. Europe is feeling strong as we start the year. In the U.S., I think the outlook is more cautious, if I could use that word. And we will see how that translates into a normal cooling season with a hotter weather in the summer.

So I think as we think of the year, we'll look at how the summer season plays out in terms of temperature that could affect our seasonality, along with auto builds.

And then in the second half of the year, what we would be looking for are people buying ahead of the step down on HFCs to use up their quotas and so that could be a positive versus normal seasonality. I just want to reaffirm what Sameer said earlier that this is a very seasonal business. Q4 tends to be our weakest quarter.

But as we said, Q4 last year had a number of items, including some LIFO items that really impacted the quarter and which we have taken you guys through before..

Great. And then just on APM. You also seem to be, I guess, a little bit different from what we're seeing on the electronics side.

So maybe just kind of walk through some of the end markets in APM and highlight some of the areas of strength that you're seeing and maybe weakness if there are any?.

Yes. APM is kind of a mix -- well, APM has two distinct portfolios. Performance Solutions and Advanced Materials. And Advanced Materials tends to be "more economically sensitive." These are broad industrial applications, where we saw some volume fade.

There are also markets, candidly, we are deemphasizing as we free up inputs to drive the growth on Performance Solutions. In terms of areas of strength, our Teflon PFA is integral to any new semicon fab.

So while there's some softness in electronics broadly speaking, there's still a lot of focus on building new fabs for higher quality, lower node size chips, where our high-purity PFA is key.

And actually, the limiting factor for us on both things like PFA and Nafion membranes for hydrogen where again, we're sold out is how quickly we can relieve capacity and, in some cases, get permits to expand capacity at some of our plants.

So there's kind of a push and a pull within the APM segment this year where the advanced materials is more subject to sort of global macro, which you saw in our results in Q1. And Performance Solutions is really tied mainly to our ability to unlock capacity, which the team is really focused on..

Yes, and the only -- a couple of other points I would add on the APM side is, as we said at the beginning of the year, for APM, this is a year of transition, right? You saw that in Performance Solutions is up 20%. Advanced Materials down 8%. And Advanced Materials are more economically sensitive business.

So that's kind of reflected as you're going to think about overall seasonality into the year, have that overlay of the APM transition as well as you kind of think about overall guide for the full year..

Our next question comes from John Roberts from Credit Suisse..

On your earlier comment about the regional mix difference with Tronox and TiO2, does that imply the U.S. went through a bigger supply chain correction? And would that be because the U.S. does tinting at the stores while ex-U.S. is factory tinted so maybe there's just structurally more channel inventory of paint that contains pigment in the U.S.

versus international?.

Yes. John, that's -- I don't know if that's to be true. What we do feel is that a number of U.S. customers are just being a little bit more cautious than they otherwise would be at this time in the year. But yes, we're more represented in terms of U.S. -- the U.S.

market, for example, than the European market, which, as I said earlier, went through a significant destocking in Q4 and which has rebounded nicely. So for example, Europe has been strong for us in TSS given the strength of that economy. But we're less represented in Europe on TiO2 versus some of our other MNC competitors.

So I think it actually has to do more with how strong Europe has come back and to some degree, a little bit of caution in the U.S. There may also be a little bit of market exposure, coatings versus plastics, for example..

Yes, John, this is Sameer. Just -- I would just ask you to just zoom up a little bit here, right? I think the -- it's a lot simpler in our judgment because if you think about it, it's a timing issue, right? Europe went into recession much earlier and started coming back, as we said, even in Q4 last year. So Europe has been coming out, whereas U.S.

now, where we are more exposed is becoming more cautious as we kind of think about the impact of the financing markets on the construction side. So I would think of it more from a broader timing perspective rather than individual product or channel perspective..

Right.

And then secondly, are you seeing any TiO2 customers exit the price stabilization contracts and go back to less formulaic pricing?.

No. I'd say our contracts remain in place. And as I've said many times, we have had no major customer exit any of our major contracts..

Our next question comes from Vincent Andrews from Morgan Stanley..

This is Will Tang on for Vincent. I guess kind of going back to an earlier question, you guys mentioned that the destocking you saw that took place in EMEA and China was now largely over.

Does that mean that if we get into a situation where the macro kind of weakened from here, you might expect TiO2 volumes -- your TiO2 volume at least to increase sequentially, just to kind of get back to the goal sell-in and sell-out rates?.

I'm not sure I fully understand the question, but I think our expectation is we'll continue to see a gradual recovery in TiO2 volumes throughout the year and sequentially going from Q1 to Q2, double-digit volume growth..

Yes. And also, as you kind of think about our TVS customers, right, where the incentive to build the inventory as they were going to talk about in the past, is lower as these are percent volume commitment. So I think the volume that you're going to see pull through from them is going to be more representative of their demand..

Got it. Okay. That's helpful. And then going to TSS, I guess as you look at auto builds and maybe expectations for EV production to be lower this year than what we had thought maybe a few months ago.

Are there any differences with respect to the TSS content between EVs and ICE? And would that be an incremental headwind just on the mix side?.

Actually -- so again, I think our auto build forecast for the year is tied to IHS. Clearly, we've seen really good strong auto builds out of the starting blocks. Some sense that even as we go into April, auto builds remain relatively strong. So I think actually sitting here today, that could be a nice tailwind.

Candidly, on -- as you look at the EV to ICE comparison, EV charge size is actually larger than an internal combustion engine. And so the increased penetration of EVs is actually a positive for our business. And that's probably something we'll share in more detail as we look at overall EV mix as it grows over time.

But car for car, the charge size in an EV is somewhat larger than an internal combustion engine where you're using a heat pump essentially to heat the cabin in the winter..

Our next question comes from Matthew DeYoe from Bank of America..

Yes. This is [Indiscernible] on for Matt. So firstly, I want to ask a little bit about your margins in TiO2, where I think they came up 11%, and they're still quite lower than some of your peers.

So I'm just trying to understand, at this point, is it more a difference of vertical integration? Or are there any other structural changes that are leading to lower margins for Chemours? And you mentioned before also that you are focused on closing the Titanium Technologies segment.

So can you provide a little bit more color on what some of the initiatives you're taking here?.

Yes. So clearly, we're not happy with our current margins. And as I said earlier in the call, have a keen focus on the cost side of that business as we go through the year with the expectation that we'll exit the year at 20% EBITDA margins based on both a gradual volume recovery, and the work we're doing on the cost side.

Denise Dignam who's come into the role of TiO2 President, or TT President, is -- has a really good track record of being focused on the cost side of the business, which he did in APM. And so I think Denise and the team are really focused on how we drive that business forward.

The other thing I would tell you is we're clearly adjusting our capacity to be more in line with the volume in the market with the focus on running the business on a full year for cash flow.

So I'd tell you, I don't know if margins are always comparable when you have a mix of, say, mining and pigment, but also when you look at how you're running the circuit with a focus on cash generation. So listen, there are a number of differences. I would say, let's focus on our margins. We're not happy at the 11% level.

And the team under Denise's leadership is focused on improving the margin as we move through the year with a target to exit the year at a 20% EBITDA margin..

Perfect. And as a follow-up, I want to ask a little bit about your agreement with TC Energy on a couple of green hydrogen plants. If you can provide a little bit more detail regarding the investment size, the size, I guess, of electrolyzes, the hydrogen capacity.

And just trying to understand, will all of this hydrogen be used by Chemours to kind of decarbonize your own product? Or do you see yourself participating in selling green hydrogen to others as well?.

So first of all, we're very excited about our role in renewable hydrogen. We think that has a huge role in decarbonizing economies around the world, and we want to lead by example. So we're working with TC Energy as another member of the ARCH2 Hub application. This is a demonstration hydrogen project in West Virginia, where TC Energy is a partner.

And what we've agreed with TC Energy is we'll be a partner both in the supply of Nafion membranes for the electrolyzers to be used at those facilities, but we'll also be using at least some portion of the hydrogen generated at these facilities in West Virginia -- at our plants in West Virginia, with a commitment to decarbonize our plants.

You would have noticed in the quarter, we received two Department of Energy Awards on our -- the work that we're doing to make our plants more sustainable. And we are on a path to achieve a 60% greenhouse gas reduction -- absolute greenhouse reduction by 60% by 2030 through a number of initiatives, including this one, at all of our plants.

So we're very excited about this project and the MOU we've just signed with TC Energy, who is a partner in the ARCH2 Hub submission to the DOE..

Our last question comes from Laurence Alexander from Jefferies..

You mentioned the potential pull forward in refrigerants ahead of the step down.

How much of an impact do you think that would have on your volumes after the regulation change?.

So we'll have to wait and see, Laurence, to see what kind of summer we have? I think -- my sense is, and we've indicated this on prior calls, is that the step down is likely to generate some level of buying activity as people sort of look, how much of my quota have I used up in the year, again based on how much demand there is this summer, how much do I have remaining and using that up towards the end of the year.

Clearly, in a market that's restricted on volume based on a quota, that could drive more robust price in the second half. It may also have some impact on seasonal demand patterns throughout the year in terms of HFC demand as people look at their use of quota versus actual demand in the marketplace. So we'll have to wait and see.

But obviously, net-net, it's a favorable impact on the business ahead of the step down next year..

Great.

And then can you give a sense for how much -- between where Opteon is now in both the mobility and stationary applications and what you see is like full market penetration where it shifts to growing in line with GDP, how much of a step-up in EBITDA do you expect before you get to like just trend growth?.

Yes. Laurence, I wouldn't step away from our sort of long-term guide that we gave in our Investor Day. This is a high single-digit top line CAGR with EBITDA greater than 30%. Clearly, as we said in this call, we are expecting overall margins to be close to where they were last year on a full year basis.

But our long-term guide would be, with that in mind, that this is a business with robust top line growth and the team very focused on making this both a high-margin business and a high cash conversion business as we move forward in time..

Okay. Great. And then just lastly, there's a large chunk of fluoropolymer and related chemistries market share available after 2025.

Can you give a sense of how much of that Chemours should be able to pick up? And do you need to do any investments in 2024 on either in terms of new formulations, qualifications, customer service cost or CapEx to pick up that share?.

Yes. Laurence, it's a great question. We obviously believe that fluoropolymers are essential for modern living, but they are also key to renew economy whether we're talking about high-speed data, AI, electric vehicles, hydrogen.

And our big investments in APM today are focused on hydrogen, where we are wanting to do a significant expansion of our Nafion membrane capacity and capabilities. We're also expanding our Teflon PFA line in our Washington Works plant in West Virginia, which, by the way, we're the only PFA supplier in the U.S. So if there's a U.S.

onshoring of chips, we're key to that whole activity. So listen, the investments that we've announced today are both in Teflon PFA as well as the hydrogen facility, which we would like to cite in Villers-Saint-Paul in France, and we continue to be focused on those near-term opportunities.

But the team is also very focused on debottlenecking a number of our plants. Again, whether it's demand for materials on the EV side, we're really focused on the growth in our Performance Solutions business, which as you saw in the quarter, was up 20% and really is subject to more of our ability to bring capacity online more quickly.

Interestingly, Performance Solutions was 31% of the portfolio last year. In this recent quarter, it's 39%. So that higher CAGR is making the APM segment a lot more specialized as we move forward in time.

And candidly, when I look at our TSS and APM business, I really would agree with the sentiment that our multiple doesn't reflect the power of the earnings of those businesses over time. So we're very excited about where we go from here, and the team is very focused on delivering..

And I guess, if I may, just would you be looking to expand into novel formulations, chemistries end markets? Or is it more just -- because you have such significant growth opportunity in the market that you're already in.

Is it more just a matter of trying to keep up with that demand curve?.

Yes. The team is really focused on where we can add more value in sort of adjacent applications or provide more value in some of our downstream applications. Obviously, we're very thoughtful about potential channel conflicts.

But we think there's real value in understanding how the chemistry works from all the way back from the monomer right through to the end application. And some of these are, for example, manifesting themselves in joint ventures.

So we did a joint venture with FUMATECH in Germany on fuel cell membranes, where we have all the supply chain, we have all the chemistry from the monomer forward but they have a lot of expertise in membrane capacity. So we're working with them on that..

Yes. Laurence, this is Sameer. The only one thing I would add is as you kind of think about the growth in that business is we had a big change in strategy under Denise when he had laid out the APM business. Effectively, it's going to be market-led innovation, but we have some very unique properties that our materials apply.

And as you're going to think about the market needs, it's going to be market-led innovation that's going to drive the growth of business..

And we have a follow-up question from Matthew DeYoe from Bank of America..

A couple of last questions since we have some time. The first one was in the TiO2 segment, you had previously mentioned that you see EBITDA for this year kind of as a worst-case scenario of $500 million.

And just given the current outlook Q1 performance, I'm wondering, is it still the case that you're targeting at the mean $500 million for 2023?.

Yes. This is Sameer. I'll take this one. Yes, we stand by the number you had in the past that, that, hey, given all the changes and the market dynamics that we had in the business, the trough should be 500-ish is how we're going to talk about..

Okay. Perfect. And the second one is in your APM amount, you're talking about higher production and raw material costs.

Can you provide a little bit more color on the inflation you're seeing there, both in terms of what level of inflation and also what categories, what raw materials are still going up?.

Yes. This is Sameer, I'll start and Mark can add color. Overall, as you're going to think about the inflation side, it really depends business to business, right, because they all consume very different raw materials. So I won't generalize over the top.

But the comment I do like to make is, as we laid out in the script as well is as we progress through the year, we expect the inflation headwinds to moderate and that should really help drive the margin as well. And that's reflected in how we're going to think about the TT margin recovery as we go through the year.

So overall, the headwinds are moderating quite a bit as the supply chains have eased..

Yes. Now clearly, I'd say energy to some degree or we're seeing prices have already rolled over significantly. And as we look to the rest of the year, our procurement team is really taking advantage of a low inflation environment to drive cost improvement across the portfolio..

Yes. And as you kind of look at the last comment I would make is look at the earnings slides as well, right? Again, in this quarter, the pricing has stayed ahead of the costs line item as well. So we are staying super focused on the commercial side as well to make sure we stay ahead of any inflations..

We have no further questions. I would like to turn the call back over to Mark Newman for closing remarks..

So thank you all for your interest in Chemours today. The team is remaining very focused on delivering another great year, and it's great to reaffirm our guide for the full year. And we look forward to seeing you on the road and to taking your follow-up questions throughout the day today. Thank you..

This concludes today's conference call. Thank you for your participation. You may now disconnect..