This morning, Chemours held its 2Q Quarterly Earnings Call, the first since completion of the spinoff from DuPont, and failed to address serious issues facing victims of C-8 contamination in the mid-Ohio Valley and the company’s stakeholders.
The call presented a dismal outlook, including substantial job and pension cuts, which reflects our observations from our Keep Your Promises Investor Briefing in June: namely, that Chemours is a company saddled with massive debt, exposure to billions of dollars in lawsuits and remediation obligations, mounting defense costs related to ongoing litigation, and declining profitability and cash flow.
“We are disappointed to see that Chemours continues to be ill-prepared to keep the promises made to C-8 victims in the mid-Ohio Valley,” stated Keep Your Promises advisor Joe Kiger. “This whole community has been kept in the dark for too long, and we deserve much better.”
Specific areas of concern raised from this call and from questions raised by leading industry analysts during the question-and-answer session include:
- Chemours has not accrued for the costs of the over 3,500 C-8 cases awaiting trial, nor has the company released an estimate for those costs. Chemours leadership acknowledged that there was no accrual made for costs related to those cases. Further, CEO Mark Vergnano misstated DuPont’s responsibility for Chemours’ C-8 liabilities, stating that “[t]here is no connect back to DuPont on the litigation piece.” Based on all current filings and proceedings in the litigation, DuPont would remain liable if Chemours failed to meet these obligations, and such a misstatement should be unacceptable to stakeholders.
- Chemours has not acknowledged or accrued for additional costs stemming from tightened EPA regulations on C-8, which are expected in the near future. The current EPA standard for C-8 in drinking water, established in 2009, is 0.4 ppb. The EPA is currently reviewing that level, and based on recent scientific findings on the health effects of C-8 we expect a much lower level to be set. This new regulation would expose Chemours to additional costs for cleanup and repair of water district infrastructure, similar to the current litigation brought by Little Hocking Water District, yet cites only increased length of remediation at existing sites as the source of higher costs. The implications of EPA’s impending regulatory change are not accounted for.
- Chemours has not shared the complete list of sites for which they are responsible for remediation. We believe that until this information is released, Chemours’ estimates of these remediation costs have been underrepresented. Further, we suspect that the release of that information will reveal that Chemours’ accrual is grossly inadequate to cover those costs.