Chemours Co Q2 FY2025 Earnings Call

Good morning. My name is Jericho, and I will be your conference operator today. I would like to welcome everyone to The Chemours Company Second Quarter 2025 Results Conference Call. I would like to remind everyone that this conference call is being recorded. I would now like to hand the conference call over to Brandon Ontjes, Vice President, Head of Strategy and Investor Relations for Chemours. You may begin your conference.

Good morning, everybody. Welcome to The Chemours Company's Second Quarter 2025 Earnings Conference Call. I'm joined today by Denise Dignam, Chemours' President and Chief Executive Officer; and our Senior Vice President and Chief Financial Officer, Shane Hostetter. Before we start, I would like to remind you that the comments made on this call, as well as in the supplemental information provided on our website, contain forward-looking statements that involve risks and uncertainties as described in Chemours' 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, we 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 is included in our press release issued yesterday evening. Additionally, we also posted our earnings presentation and prepared financial remarks on our website yesterday evening. The prepared financial remarks are intended to largely replace management's quarterly financial prepared remarks, allowing for additional time for your questions. With that, I will turn the call over to Denise Dignam.

Thank you, Brandon, and thank you, everyone, for joining us. During today's call, I will begin by discussing our second quarter performance, including meaningful progress on our pathway to Thrive strategy. I'll then turn it over to Shane, who will provide details around our outlook. Finally, I will share some closing remarks before taking your questions. As you saw in our announcement on August 4, we reached a settlement with the State of New Jersey, continuing the notable progress we've made under our strengthening the long-term pillar of Chemours' pathway to Thrive strategy. The settlement reached with New Jersey announced with DuPont and Corteva is a significant step forward as it resolves all environmental claims, including those related to PFAS across four current and former operating sites and all statewide claims. More to share of the settlement on a net present value basis is approximately $250 million, reflecting a 25-year payment time frame. In connection with this settlement earlier this week, Chemours also established a new agreement with DuPont and Corteva to acquire the rights to Chemours' insurance proceeds, which will provide approximately $150 million to fund the payments for the New Jersey settlement. The combination of these insurance proceeds and the release of approximately $50 million in restricted cash from the 2021 MOU escrow accounts fully funds $200 million of Chemours' New Jersey payment obligation, which covers our obligations through at least 2030. The present value of payments remaining after 2030 by Chemours for the New Jersey settlement, not considering the potential for additional insurance recoveries, is approximately $80 million. This settlement is a meaningful step forward in our continued efforts to address the overall legacy PFAS and other environmental claims. We will continue to work in partnership with DuPont and Corteva to resolve such matters in the best interest of our stakeholders. In addition to this achievement, we also delivered strong second quarter results, surpassing our expectations with improved performance across each of our three businesses. In closing out the quarter, our results came in stronger, driven by the following: increased demand for Opteon tied to the 2025 transition, TT sales ahead of our expectations with sequential volume growth across all of our regions and favorable pricing in APM from Performance Solutions in new higher-value applications, as well as solid sales execution for our SPS Capstone product line wind down, which is on track for the third quarter. However, with this strong momentum, we must acknowledge that we've had a significant impact from discrete operational issues in TT and APM, most of which were caused by external events, but some were due to controllable operational matters. We've taken actions to address these issues, which I will speak to later in the call. Now, turning to each segment's performance in the quarter. Starting with TSS. Our TSS business delivered another impressive quarter, driven by continued momentum in the transition to Opteon Refrigerant. Net sales of Opteon Refrigerants grew 65% year-over-year, supported by seasonal demand and the impact of the 2025 U.S. AIM Act transition mandate for residential and light commercial stationary air conditioning. This performance contributed to a 35% adjusted EBITDA margin, underscoring the strength of our differentiated portfolio and ability to capture profitable growth as the market continues to shift towards lower global warming potential solutions. While in the last quarter, we highlighted challenges in the air conditioning aftermarket around cylinder constraints and product availability, I am proud of the TSS team’s ability to remain steadfast and customer-focused during this time. As a point of emphasis, our team's ability to be resourceful and solutions-focused to meet the needs of our customers was key to delivering these better-than- expected results. Looking ahead, we expect continued Opteon demand growth in the second half, moderated by typical seasonality with an unwavering strong regulatory framework to drive the transition within additional stationary subsectors. Driven by this transition at the end of the second quarter, we're now seeing Opteon Refrigerants make up 75% of total refrigerants revenues, up from 57% in the prior year quarter with superior positioning in the market. One area I also want to highlight is around the ramp-up of our Opteon YF capacity expansion at our Corpus Christi site. This important investment has been key to securing the capacity to support the growth we're experiencing during this regulatory transition. Through the second quarter, we remain ahead of our target of half the overall expansion project we plan to have available this year. This team's ability to drive this performance is a clear illustration of our strategic execution under our operational excellence pillar and what we're looking to achieve across all of our sites. To this, a big thank you to all those at our Corpus site who have been part of driving this performance and remain focused on our continued ramp-up efforts. Altogether, an industry-leading performance from TSS, outpacing our Q2 expectations and setting a solid foundation for the second half. Moving to TT. In the second quarter, TT delivered overall results ahead of our previous guidance with sequential net sales up 10%, supported by increased volumes of 9% paired with overall flat pricing. In this weaker demand environment, our team executed well, securing increased volumes across all of our regions. While we are proud of this result, we've had some discrete operational issues, one being the rail line service interruption, which is now resolved, and the others caused by a gap of operational discipline in this low demand environment. The teams have now instituted a series of actions to rectify these issues. However, we do anticipate that some of these issues will impact our third quarter results. These recent challenges to run our plants at optimal levels have taken us off our transformation plan and a refocus on our cost-out diligence is well underway. I am confident that the team is taking the right steps to drive long-term improvements through these actions, and I will speak to the efforts we're taking to our manufacturing COE later in this call. From a broader market perspective, in line with our expectations from last quarter, we are beginning to see the effects of Chinese producer capacity rationalization. This change in the global supply environment paired with recent fair trade actions have provided opportunities in Western markets where our teams have been able to drive commercial opportunities. While we find ourselves in a challenging environment in a global market that is in transition, our team has been diligent in efforts around commercial excellence and our long-term winning strategy. Turning now to APM. Despite continued weakness in cyclical end markets impacting advanced materials and products serving the hydrogen market under Performance Solutions, APM delivered a notable performance in the same quarter. APM's performance reflects our continued focus on strategic execution under our portfolio management pillar, where we continue to shift our product mix to higher value applications in growing end markets and optimize our asset footprint. In our Performance Solutions portfolio, APM saw a sequential sales increase of 14%, driven by product sales into the data center cable market with advanced materials seeing a 20% sequential sales increase, primarily driven by stronger pricing in the SPS Capstone product line in connection with the product line's planned exit in the third quarter. The impact of the strategic execution on our bottom line is evident in our adjusted EBITDA margin increasing from 11% in the first quarter of 2025 to 14% in the second quarter. Our performance in the second quarter is indicative of how we view the APM business going forward, continuing to drive an improved quality of earnings across our strategic pillars with an added emphasis on portfolio management. However, as we move into the third quarter, I want to highlight an issue that we've had at our Washington work site related to a power outage. This event caused an unplanned full shutdown of our site. After an initial restart and following further assessments, our team identified damage to a critical piece of equipment that resulted in unscheduled downtime into mid-August. When these circumstances occur, our emphasis is on the safety of our employees and our surrounding community as we work through the repairs and the planned restart. Shane will speak to the impacts on our Q3 outlook shortly. Overall, I couldn't be more proud of the execution from all of our teams in achieving these results for the second quarter, illustrating Chemours' collective focus on strategic execution. I know we will continue to keep the same focus as we move into the second half of the year. With that, I'll turn it over to Shane to walk through our outlook.

Thank you, Denise, and good morning, everyone. As shared in our earnings materials, as well as the supplemental prepared financial remarks available on our investor website, I would like to now discuss our expectations for the third quarter, followed by our outlook for the full year 2025. Beginning with TSS. For the third quarter, we expect TSS' net sales to decrease sequentially in the mid-single-digit percentage range, driven by traditional seasonality, primarily concentrated in our Freon refrigerants. TSS' adjusted EBITDA is also expected to decrease in the low teens percentage range sequentially, primarily driven by the seasonality I mentioned, as well as overall product mix. For our TT business, we expect TT's sequential net sales to decrease in the low single-digit percentage range, driven by seasonality and regional sales mix, with volumes expected to remain stable. Adjusted EBITDA is expected to decline in the low teens percentage range sequentially due to lower sales paired with certain operational disruptions. Costs associated with these operational issues are anticipated to approximate $15 million in the third quarter. As we look past the third quarter, we expect our operations to improve, driven by broader COE efforts, which Denise will speak to later. For our APM business, we expect APM's net sales to decrease in the mid-teens percentage range sequentially due to production constraints associated with the Washington Works downtime. Adjusted EBITDA is expected to approximate $15 million in the third quarter, considering the lower sales as well as additional costs from the reference site outage, which will approximate $20 million. On a consolidated basis, we anticipate our third quarter net sales to decrease 4% to 6% sequentially, with consolidated adjusted EBITDA expected to range between $175 million to $195 million. Also, we anticipate corporate expenses to decrease approximately 5% compared to the second quarter. Our capital expenditures for the third quarter are expected to be in the range of $50 million, with free cash flow conversion expected to be between 60% and 80%. Turning to the full year 2025, we expect to deliver adjusted EBITDA of $775 million to $825 million in 2025. Our capital expenditures are anticipated to approximate $250 million, and our free cash flow conversion for the second half of the year is expected to be between 60% to 80%, driven by seasonal impacts as well as improvements to our net working capital. Also, the company's overall net leverage ratio is anticipated to continue to improve throughout 2025. With that, I'll hand it back over to Denise for final remarks.

Thank you, Shane. As part of the significant progress we've made to date in executing our Pathway to Thrive strategy, however, we still have work to do. While we've made great strides in resolving legacy litigation this quarter, supported by overall strong business performance, operational excellence is a pillar where we continue to place our focus. Our efforts have driven clear success in certain instances, as is exemplified in our ramp-up by Corpus, but while many of our recent operational impacts have been caused by outside events, we have to continue to reduce business interruptions and strengthen our resilience. We have really ramped up the engagement of our manufacturing COE with my direct involvement. As a former operations leader at Chemours, knowing our asset base, I believe we have room to improve our own performance to be better prepared for the unexpected. By engaging our COE, I've outlined our priorities in the following phases. First, realignment of experienced resources, creating more effective alignment of in-house manufacturing expertise to drive focus to the highest operational priorities in our circuit. This phase is now complete. Second, solidifying foundational capabilities, connecting people, processes, and data to enhance performance and achieve top reliability benchmarks. Third, building advanced operational capabilities with more effective use of technology to enable us to be an industry-leading manufacturing enterprise. I believe these are the keys to drive improved operational excellence under Pathway to Thrive and ensure we drive resilient operational consistency moving forward. I want to thank all our employees for their unwavering commitment and hard work, which have been instrumental in driving our progress this quarter in advancing our Pathway to Thrive strategy. There is no question that the Chemours team's dedication to keeping our customers first and driving strategic execution ensures that we will have continued outstanding performance like we did in the current quarter. With that, we can now open the line up for questions.

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

I wanted to discuss the outlook for the full year because based on your third-quarter guidance, it seems like the fourth quarter won't experience the typical seasonal decline. Some of this may relate to the expected absence of one-time items in APM and TiO2, but I still need more clarity on this. How should I consider the positive factors that might help counter the usual seasonal trend from the third quarter to the fourth quarter?

Thanks for the question, John. I'm going to turn it over to Shane to talk about.

Yes. Yes. Thanks, John. As you mentioned, I mean, just doing math, right, we pointed to midpoint at roughly $185 million for the third quarter, and that kind of puts a midpoint at $195 million for the fourth quarter. Just to note, right, that we had about $35 million of operational items between TT and APM in the third quarter. You add that back, which we are doing everything from an operational perspective, and everything looks good so that that will not repeat in Q4, you will see a seasonal decline. I would say, as you mentioned, some of the positives that we see for the fourth quarter that are offsetting some of that normal seasonality, I think the strength in TSS, as we look ahead, as demand continues to ramp up with the regulatory change is going to be a positive, and we'll continue to execute across both of the other businesses as well as we end the year.

Okay, fair enough. As a follow-up, could we discuss TSS a bit more? It seems like there are many factors at play. You exceeded expectations—yours and ours—significantly. Can you clarify what drove those results? It seems like much of it was related to improvements in the aftermarket and your ability to target that market. How substantial was that contribution? How much was linked to the regulatory changes on the OEM side and the adjustments regarding raw material costs that you've encountered with the OEMs? Additionally, how much of this do you believe to be a one-time occurrence, given the cylinder issues we anticipate looking toward 2026? And how much do you think will persist moving forward in terms of the strengths you're observing?

Thank you for the question. We are very proud of the TSS team and our execution. The transition has been significant, and we have exceeded our market expectations. We are highly confident moving forward. While there were some supply shortages and potentially some hoarding due to these shortages, we remain optimistic about growth for the remainder of the year, anticipating double-digit growth. We also feel confident looking ahead to 2026. We need to take competitive dynamics into account, but we believe that the hoarding issue may be a temporary situation in the aftermarket and should not significantly affect the rest of the year.

Our next question comes from Pete Osterland from Truist Securities.

My first question is on TT. Are your operations and earnings in that business more vulnerable to being disrupted right now, just given that you're also working on some pretty substantial cost-improvement efforts? And I guess, is there any portion of your cost-cutting target that you're finding you might need to delay or cancel in order to focus on maximizing reliability?

Thank you for the question. Yes, absolutely. From a cost-reduction perspective, I have no concerns. I don't believe that our cost-cutting efforts have affected the reliability of our operations. We are focused on productivity, and we feel confident about it. Regarding TT, the overall market presents challenges, but we have a strong belief in our strategy. We are concentrating on driving down costs and gaining market share in fair trade. Although we have faced some specific operational issues, I want to assure everyone that I am fully engaged in the operational side of the business. We have a clear plan, and I am confident that we will address these issues and move past them.

Very helpful. And then just as a follow-up on the full year guidance. Could you give a bit more color on what's happening with the APM outage? I mean, you mentioned it as one of the drivers for hitting the low or the high end of the full year EBITDA guide. So just wondering how much visibility you have there into the total earnings impact and the time frame? And how much of this is under your control?

Yes, I would say the actual issue that occurred was a bit outside of our control, although we really pride ourselves on being resilient in all situations. First of all, the second quarter was a strong performance by the business, and I would like to highlight that. The incident at Washington Works is really just a minor setback, stemming from a power outage that should not have occurred. You can think of it as a one-time $20 million impact. However, this business is focused on making progress in portfolio management and commercial excellence, which we demonstrated in the second quarter, and I expect that to continue as we move into the fourth quarter. This issue should be limited to the third quarter.

Our next question comes from John Roberts from Mizuho.

Maybe one for Shane. On Slide 7, on liquidity. I guess, I never really thought of insurance proceeds as a source of liquidity. Does the $150 million insurance rights that you sold only relate to existing claims or did you sell forward any rights to insurance for potential future claims? Or how do we think about insurance adding to your liquidity?

John, yes. So related to the $150 million of insurance that we talked about in the New Jersey settlement, this was related to past claims as it relates to, obviously, the New Jersey settlement for Natural Resources. The $150 million is in advance from Corteva and DuPont that will be realized throughout the next five years as we talked about, to offset the payments underneath the New Jersey settlement. So as we think about what these are, these are areas where we feel very good about getting the actual amounts from the insurance carriers down the way. The $150 million is just a piece of the total pie we noted in the slide that there's about $750 million out there. It's not to say we're going to get $750 million; we feel very comfortable with the first $300 million, hence, why I believe we were receiving the $150 million upfront.

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

I guess, I wanted to ask about the slide that you put out on some of the longer-term priorities. So looks like you have a guidance or a line of sight to greater than 5% sales growth in the next few years. So does that start as soon as '26? And then, I guess, maybe if you were to think about how that shapes up. I imagine maybe high single-digit growth can continue in TSS, but that could be offset by more moderate growth in the other two segments? And then along with that, if you could potentially provide some updates, if there are any, on the portfolio review as well, that would be great.

Thanks, Arun. Relative to the 5% sales growth, we definitely see that impacting in 2026. Definitely TSS, we see significant growth. But if you look at our second pillar around enabling growth, we have a lot of work going on around commercial excellence. You saw in the second quarter with APM, all the pricing efforts that are going on, and that's going to continue. Relative to our portfolio work, we're still, as we've announced, working on the review of our European assets. And we've given some updates relative to the exit of the SPS portfolio, which there are three sites where that business operates, and that's well underway. So we feel really good about that portfolio work.

As a follow-up, since it starts in the '26 period and is driven by TSS, does this suggest that as the mix of Opteon exceeds 70% of TSS, there might be some margin growth? Therefore, we could expect the EBITDA growth to exceed the 5% level, possibly reaching high single digits. How should we approach the relationship between sales growth, EBITDA growth, and potentially EPS growth?

Yes. Thanks, Arun. We are not providing guidance on long-term bottom-line results. However, we always aim for bottom-line growth to outpace top-line growth, which may come from margin expansion. We are very enthusiastic about the TSS business and its future prospects, and we are confident about maintaining an EBITDA margin above 30%.

Our next question comes from Josh Spector from UBS.

I want to try again on some of the TSS questions to some extent. If I kind of think about where we came into the year, I mean, Shane, you just made this comment again, 30% plus EBITDA margins. Our math looks like you're running closer to 32% now, just top line assumptions initially longer term, thinking high single digits, maybe now you're running mid-teens. So of what you're doing this year, is this a base from a margin perspective and a top line perspective that you build off of into 2026, 2027? Or to John's question earlier, is there a little bit of give back on either of those points, sales or margins, because of some of the outperformance in the aftermarket this year?

Thank you for the question, Josh. I'll start with the margins as we look ahead. We aim to return to 30%, but as you mentioned, the run rate is currently at 32%. There has been a delay in some of the raw material cost increases where we priced a bit in advance, so we might see a slight impact there. However, we feel confident about where we'll end the year, aiming for run rates above 30%. Looking further into the future, we're optimistic about the business and the potential for increased adoption in the aftermarket to drive performance. That said, we anticipate more competitive dynamics moving forward. Therefore, we aren't committing to any specific growth numbers at this time, but we will continue to execute our strategy, and we believe that TSS will be a key driver of growth for our company over the next three years.

Okay. And if I could just follow up on the PFAS comments, specifically around insurance. Can you just give us a little bit more framework of if, when that can apply? I guess, it appears this was maybe a bit more specific with the sites in New Jersey or New Jersey. I don't know if it was product related. Basically, can this apply to a settlement in North Carolina or anything else you have down the pike, which then maybe extend the MOU funds further out? Or how should we think about that?

So a couple of things there, Josh, right? So as I look at these insurance, and I mentioned a total of $750 million, but that number is the gross number. We'll have to think through what the carriers will ultimately provide and what we'll settle for on that side. Under the MOU, this does extend the amount of items underneath the MOU and provide more cover there. As we think about the applicability and where this is, we're really much focused on the New Jersey settlement at this time, right, and think that this is a really good advance to help us cover the next five years from a cash flow perspective. The specific areas are around product liability and other areas, which were applicable to the natural resources underneath New Jersey. And so we'll continue to look at other avenues to try and apply this elsewhere, but just really focused on New Jersey at this time.

Our next question comes from Duffy Fischer from Goldman Sachs.

I was hoping you could talk to us about what your strategy is in TiO2 currently. Historically, you've been stronger on price and have given up volume to peers in weak periods. This quarter, if you look, your pricing year-over-year was 4% weaker than your biggest competitor, Western competitor. Your volumes were 10% better. So it's pretty clear you are much more aggressive in the market than they were this quarter. Is that a structural change in your strategy to be more volume-driven? And if so, do you think there will be a competitive response from them?

Thank you for your question, Duffy. We are very confident in our strategy. At the outset, we recognized the need to be the lowest cost manufacturer. We eliminated our high-cost capacity and have communicated that we will continue to do this with our assets, focusing on gaining market share in fair trade segments. We thoroughly evaluate every opportunity and I'm confident that our strategy will drive lower costs and increase our share in those markets. I can't predict how our competitors will react, but I believe there are positive indicators considering the capacity that has been removed from the market. We estimate that around 400 kilotons have been eliminated. Furthermore, we're seeing significant decreases in export data from China, along with reductions year-over-year and quarter-over-quarter into Brazil and India, where firm duties or tariffs are still not in place. Therefore, our focus remains on maintaining the lowest costs and increasing our share in fair trade deals.

Great. And then maybe just to jump to TSS. Last year, your sequential sales Q2 to Q3 were down about 10%, but the decremental margin was roughly equal to the segment average. This year, your sales are down less, but your decremental margin looks like it's double what the segment average is. So is that a mix shift issue? Is that something around the 4, 5, 4B issues? Why is the decremental so much greater this year than last year?

Yes. Thanks, Duffy. It's really a mix shift. As we look at the free on roll-off last year on the pricing, according to so dramatic on the decline went right to the bottom line versus a shift in kind of the volumes this year.

Our next question comes from Hassan Ahmed from Alembic Global.

I just wanted to revisit the earlier question, get a little more granular around TT and the 9% sequential uptick you guys saw in volumes versus one of your largest competitors sequentially reporting a 2% decline. I mean my understanding is that Europe sort of became the battleground with the whole sort of antidumping stuff going on over there. And it just seems that you guys were very aggressive on pricing. So again, sort of revisiting some of the stuff that you said earlier, I mean, my fear is that could this potentially signal a walking away from the whole sort of value over volume strategy that the industry is so painstakingly sort of evolved into over the last five, six years?

Hassan, thanks for the question. I wouldn't conclude that this indicates a price drop. I would focus on our strategy of commercial excellence and truly succeeding in the marketplace based on the value proposition that we provide.

Understood. Understood. And if I could just sort of follow up with, again, sticking to the TiO2 side of things, I mean can you just give me your views both on the supply side and the demand side of things as you see them sort of progressing '26 and beyond? And more particularly, you guys mentioned some capacity rationalization, particularly in China. So if you could sort of expand on that a bit more on the supply side. And on the demand side, obviously, it appears that over the last couple of years, we are well below normal levels on the demand side. So how do you see the cycle evolving '26 and beyond, both from the supply and the demand side of things?

Yes, Ahmed, I'll start with demand. From our perspective, we don't anticipate any significant demand triggers this year. We do monitor various indicators and expect some improvement next year, but nothing in the immediate term. The focus is really on the supply side, where we have seen considerable capacity removed from the market, starting with our own actions, along with at least 400 kilotons being taken out from China. This contributes to a more balanced supply-demand scenario. Additionally, factors like tariffs and the distinction between fair trade and non-fair trade markets are also relevant. Overall, I believe we will see a positive trend develop over the next couple of years.

Our next question comes from Laurence Alexander from Jefferies.

It's Dan Rizzo filling in for Laurence. Regarding PFAS, what’s the next step? Is North Carolina coming up soon? Are your negotiations ongoing? What can we expect in terms of another announcement, if there’s anything you can share?

I appreciate your question. New Jersey represents a significant milestone for us, and we are pleased for various reasons to look at a comprehensive settlement. This applies to both former and current operations. Considering North Carolina and West Virginia, with New Jersey completed, we have four settlements behind us and two more ahead. The settlement includes a 25-year payment at net present value, which provides us with more flexibility under our memorandum of understanding, in addition to the advancement of insurance for $150 million with no cash interest payments and an escrow arrangement, which also gives us more leeway under the MOU with no obligations until at least 2030. This is remarkable. Regarding the $16.5 million mentioned in the settlement, this represents the PFAS allocation for New Jersey, which is consistent with the liability allocation from the water district settlement that falls in the 3% to 7% range. This is significant. Looking ahead, as I mentioned, we have completed four sites, and now we are focused on North Carolina and West Virginia as the next key milestones. Beyond that, we are addressing personal injury claims, and while we are in settlement discussions, I want to emphasize that our goal remains the same: to resolve all remaining litigation and liabilities similar to how we approached New Jersey. This demonstrates our commitment to strengthening our long-term strategy and provides assurance to our stakeholders, reflecting our efforts to reduce risk in our portfolio.

Is the 3% to 7% the guideline we should consider for the future, particularly in relation to how North Carolina and West Virginia may develop?

As you said, we can't project out, but certainly, the blueprint we think about. And really, it's demonstrating throughout the settlements that it's holding.

Our next question comes from Jeffrey Zekauskas from JPMorgan.

In some of the press and legal accounts of the New Jersey settlement, it's talked about as a $2.5 billion settlement, in that I think, a $1.2 billion remediation fund has to be set up and a $475 million reserve fund has to be set up. Are there claims on you for those? Or how do those amounts relate to the settlement amounts that have been agreed to?

Yes. Thanks, Jeffrey. So as you mentioned, the reconciliation to what we provided versus what the state provided, they're the same numbers. They're just differently presented. The two big items that you mentioned. So there was a remediation fund of call it, $1.2 billion in the state's numbers. What that is, is really kind of a reference, a surety or a backstop for future remediation efforts over many years, right, in this side. Just to note, as we think about that, that's really already in our ongoing cash flow on what we're actually doing on a day-to-day basis at these plants to make sure they're operating appropriately and remediating those environmental items. The other area outside of the $1.2 billion was about $0.5 billion reserve fund. That is a backstop for the surety of which Corteva and DuPont have to post that on that side.

So are there cash flow claims that are in addition to the $500 million in net present value that you're responsible for? Or how exactly do those remediation and reserve funds affect your future cash flow if they do affect them?

So, Jeffrey, in our ongoing results, right, so we have monitoring, we have maintenance, we have other areas to remediate these plants. And so there are ongoing in our past cash flow and will be on our ongoing cash flow for some time. That is depending upon the agreement of how to remediate these sites, which we will have conversations on in the future. And just to note, the $1.2 billion is the high end of that surety, right? So we believe it will be a lower amount, which will be discussed within this one-year description underneath the agreement.

To expand on the top end of the range, we conducted evaluations. According to our assessments, the estimates are at the lower end. We have not entered this line of work lightly; our evaluation has been thorough. The timeline for reaching the settlement limited our ability to fully reconcile the differences between New Jersey's perspective and our scientific findings. We established this range and, as detailed in the JCO, we believe we have developed a practical approach to ensure alignment, and we are pleased with the result.

And then lastly, your CapEx is roughly $250 million this year, roughly. What's a normalized level for you? When you think about the next few years, where do you think your capital expenditures normally will be?

Yes, we expect around $250 million as we have guided. I want to point out that this is lower than in recent periods and based on historical data. The outlook hinges on some strategic growth initiatives, with focused spending this year, which we will continue. As we move forward, there might be slightly more capital expenditures, but it won't exceed our current range or past history; it will remain manageable. Our efforts are centered around what is essential for operating our sites safely and in compliance, while also concentrating on the strategic growth initiatives.

Does that mean $350 million?

Yes, Jeff, I'm not going to give a guide on range from a CapEx perspective. I do think if you look in the past, right, so this is the lowest area. I do think we'll have potentially a little bit more as we look ahead. But I'm not going to give a range to the high and low end at this point.

Our next question comes from Vincent Andrews from Morgan Stanley.

This is Justin Pellegrino on for Vincent. I wanted to shift back over to TT for a second and ask if you could give us kind of the competitive dynamics in the different regions around the world? And then within the countries that have put in place the fair trade or the antidumping duties, have you seen some duties be more effective than others? And kind of what are driving those differences?

Thanks for the question, Justin. In terms of the competitive landscape, I would say that in many regions we refer to as fair trade markets, the competition mainly comes from multinational companies, excluding Chinese manufacturers. In the non-fair trade markets, it is quite competitive, with significant pressure from Chinese producers in those areas. Could you please repeat the second part of your question? I apologize.

Yes. Just within the countries or regions that have put in antidumping duties. Is there any differences between the regions or within the duties that they've put in place? And if there are any differences, what's driving those differences?

Yes. I would say that where the duties have been implemented, they have been very effective. In the U.S. and Europe, there is a transition period. It took about nine months for inventories in Europe to adjust, but you can see how these measures will be effective in other regions that are considering or have preliminary rulings regarding tariffs or antidumping duties. For example, the exports to India have decreased, and the exports to Brazil have also dropped. Therefore, I am confident that once the rules are finalized, they will be effective.

We have reached the end of our question-and-answer session. Thank you for joining The Chemours Second Quarter 2021 Results Conference Call. You may now disconnect.