Chemours places three on leave during review

The board of Chemours has put CEO Mark Newman, CFO Jonathan Lock and principal accounting officer Camela Wisel on administrative leave pending the completion of an internal review by independent counsel that the board’s audit committee is overseeing.

The scope of the review includes the processes for reviewing reports made to the company’s ethics hotline, practices for managing working capital, including the related impact on metrics within the incentive plans, certain non-GAAP metrics included in filings made with the Securities & Exchange Commission (SEC) and other related disclosures.

As a result, Chemours is evaluating potential material weaknesses in its internal control over financial reporting as of 31 December 2023, with respect to maintaining effective controls related to the control environment. This includes the effectiveness of the ‘tone at the top’ set by some senior management figures, and information and communication components of the COSO internal control framework.

Denise Dignam and Matt Abbott are acting as interim CEO and CFO respectively. Dignam has been with the company since 2015 and has served in multiple senior roles, most recently as president of Titanium Technologies. Abbott joined from PwC in 2019 and has been chief enterprise transformation officer since June 2023.

Lock, who was previously chief development officer, had only become CFO following the resignation of Sameer Ralhan in June 2023. Ralhan’s was the third departure in quick succession at Chemours, following those of Edwin Sparks, president of Titanium Technologies and Chemical Solutions business on 31 March and Alisha Bellezza, president of Thermal & Specialized Solutions on 31 May of that year.

This all came after the company announced a delay to its Q4 and full-year 2023 results, which were due to be issued on 29 February. It has filed a Form 12b-25 with the SEC and will announce a revised date at a point as yet unknown. The Q4 results had already been delayed from 13 to 29 February and the company’s share price fell by 45% in that time frame.

Reuters quoted Barclays analyst Michael Leithead as saying: “What we think many perceived as likely a relatively minor accounting hang-up two weeks ago now appears wider, longer and with more ramifications than the market initially believed.”

Unaudited preliminary estimates suggest that sales fell from $6.8 billion to about $6.0 billion in 2023, with a net loss of $225-235million, compared to net income of $578 million. This includes $746 million of pre-tax litigation settlements mainly related to PFAS and $153 million of restructuring, asset-related and other charges, offset by a $106 million net pre-tax gain associated with the 2023 sale of the Glycolic Acid business.

The fall in sales is primarily attributable to lower volumes in Titanium Technologies and in the Advanced Materials portfolio of the Advanced Performance Materials business. This was partially offset by increased pricing and volumes in Thermal & Specialized Solutions.