Shares of Chemours are up over 153% year-to-date and more than 50% since a short seller went after the chemical maker in June. The company’s CEO Mark Vergnano said concentrating on “higher value chemistry” has been the key to Chemours’ transformation. “It’s really all about high-value, high-margin products,” said Vergnano. “Our titanium dioxide business, where we are the largest in the world, is a good example of where we are focusing.” Chemours emerged last June as a result of DuPont spinning off its performance chemicals business. Shares of the company last traded just under $14 per share, an impressive turnaround after sinking to the $3 level in January. Still, the company has a long way to go before it reaches its high of $22.25, which was achieved on the day of its initial public offering. “When we were spun off it was at the bottom of the titanium dioxide cycle and it drifted down a bit,” said Vergnano. “We are starting to see pricing turn.” Titanium dioxide makes up nearly half of the company’s $5.5 billion in revenue and the company recently increased production of the chemical at its Mexican plant, the largest and lowest-cost facility in the world. Meanwhile, Vergnano said the company’s coolant business is getting hot. “We are introducing a new refrigerant called Opteon which has very low global warming potential,” said Vergnano. “We are only one of two producers to bring this out and it is regulated in by the European Commission for vehicles and we see a huge uptick for this product.” Chemours didn’t come into the world untarnished either and Vergnano has been working to bring down its debt and put a controversial lawsuit behind it. It has total debt load of $3.9 billion, just under the level where it started trading as a public company. Vergnano has been chipping away at the debt by selling assets like its disinfectant business last month. The company is also financially on the hook for payments resulting from personal injury and wrongful death claims arising from DuPont’s handling of PFOA, a chemical used in the production of Teflon. Citron Research’s Andrew Left pointed to this litigation risk in June as a primary reason to short the company’s shares. On the flip side, Greenlight Capital’s David Einhorn has defended the stock, saying Left’s damages estimates are way off. Vergnano said DuPont is the defendant in those trials with Chemours “being connected” and thus far the record has been good in fighting the lawsuits and he will continue to do so.
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