What happened
Shares of The Chemours Company (CC 15.28%) jumped over 11% today after the specialty chemicals manufacturer announced second-quarter and first-half 2018 earnings results. The company delivered strong top- and bottom-line growth compared to the year-ago period, on strong pricing gains for its core offerings in refrigerants, fluoroproducts, and titanium dioxide.
While the company actually just missed Wall Street expectations for revenue during the most recent quarter ($1.82 billion expected vs. $1.80 billion actual), the business smoked expectations for adjusted earnings per share ($1.59 expected vs. $1.79 actual), according to numbers compiled by Yahoo! Finance. Either way, it was difficult to complain about a 75% increase in net income compared to the prior-year period.
As of 2:09 p.m. EDT, the stock had settled to a 5.5% gain.
Image source: Getty Images.
So what
Management delivered plenty of good news to shareholders when discussing second-quarter 2018 earnings results. Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) for the fluoroproducts segment increased 17% year over year, while the titanium technologies segment delivered a 53% improvement in that span. That helped to drive significant growth for the overall business in the first half of the year, compared to the same period of 2017:
|
Metric |
First Half 2018 |
First Half 2017 |
Year-over-Year Change |
|---|---|---|---|
|
Total revenue |
$3.54 billion |
$3.02 billion |
17% |
|
Gross profit |
$1.09 billion |
$794 million |
38% |
|
Net income |
$579 million |
$312 million |
86% |
|
Operating cash flow |
$539 million |
$225 million |
140% |
Data source: Chemours press release.
In addition to the actual business growth, CFO Mark Newman said that the expectation is to return nearly all free cash flow between now and the end of 2020 to shareholders. It will do this via share repurchases, and via an increase in the dividend, which now yields 1.5%.
Now what
The strong results from the first half of 2018 provide reasons for optimism for long-term shareholders. After an incredible rise from its initial public offering in 2015, Chemours stock has moved sideways in the last year, with a fair share of volatility in that span. If the business can continue to ride the momentum in core markets, deliver strong cash flow in future periods, and gradually reduce its debt balance, then the company will be on its way to earning a higher market valuation over time.
