Speaker 1:

From the New York Stock Exchange at the corner of Wall and Broad Streets in New York City, welcome inside the Ice House. Our podcast from Intercontinental Exchange is your go-to for the latest on markets, leadership, vision, and business. For over 230 years, the NYSE has been the beating heart of global growth. Each week we bring you inspiring stories of innovators, job creators, and the movers and shakers of capitalism here at the NYSE and ICE's exchanges around the world. Now let's go inside the Ice House. Here's your host, Lance Glinn.

Lance Glinn:

Welcome into another episode of the Inside the Ice House Podcast. Our guest today, Shane Hostetter, is Senior vice president and chief financial officer for Chemours, that's NYC ticker symbol CC. Just over a year into his tenure as CFO, we welcome him to the New York Stock Exchange to discuss Chemours focus on innovation, the company's wider growth strategy, and how he and the rest of the leadership team are setting up the company for success. Shane, thanks so much for joining us inside the ice house.

Shane Hostetter:

It's a pleasure being here. Thanks for having us.

Lance Glinn:

So you stepped into the CFO role at Chemours during a time of change just over a year ago. As you reflect on your still young tenure with the company, just what were the immediate priorities you set for yourself and for your team? How'd you go really about assessing the company's financial health and what needed to change in those early months?

Shane Hostetter:

Sure. As you said, relatively new about a year and three months in. And I look back, I think it was critical coming in. The company was in a lot of change. It was in a period of just areas of improvement and thinking through how to really go through the next three to five years. And so Denise, our CEO was also relatively new, and we felt it critical to create a strategy and think through what was going to make Chemours thrive over the next three years and then thereafter having stability within the financials of the company. So coming in, it was really assessing the actual tenor of the business and thinking through what's needed. And we really wanted to be transparent and overly critical on what needed to be spent and only those areas that we believed were essential to creating the next three years path forward.

Lance Glinn:

And you mentioned Denise, obviously still young in her tenure as CEO. How important was that for you and for her, that CEO-CFO relationship to just be aligned, to be on the same page and to make sure that you're moving forward step by step together?

Shane Hostetter:

Absolutely. I think a lot of questions come back to me and say, "Okay, so what made you attracted to Chemours?" Right? And for me, not only the technology and the innovation that really is at the forefront of Chemours, but it was the people. And so Denise and I met many times prior to me joining and we really clicked. And I think that bond between CEO and CFO is very important as I think about just the success of the company, but also just the success of us carrying forward the strategy ahead of us.

Lance Glinn:

So some of your key responsibilities as CFO leading Chemours finance, IR strategy and enterprise risk management function, how do you go about just aligning these, we just talked about alignment between yourself and Denise. How do you go about aligning all these different areas really under a unified vision to bring cohesion, collaboration, and a real sense of togetherness for everything that you oversee?

Shane Hostetter:

No, that's a great question, Lance. As I think about finance in general, right, we're at the forefront of numbers, right? People believe we're okay, so for lack of better being counters we're the analysts, etc. But there's so much more to it. And really in the evolving world that we're in, you think about strategy first and assessing risk to ensure that we're really going to be successful going into the future. And so I think that was a lot of the conversations that Denise and I had when we were first starting out a year and a half ago and saying, "Okay, so what are we actually assessing going forward? What are the risks ahead of us and how do we allocate capital and be appropriate stewards of that capital to really be successful in the next three to five years?"

Lance Glinn:

And how difficult was it to really bring together that cohesive culture because it is two new people coming into a company that has a long history. So how important is it, or how tough is it to bring in that culture, to bring in that culture of change and really align the whole company.

Shane Hostetter:

True.

Lance Glinn:

Not just the parts that you oversee, but the whole company under that vision that Denise and yourself and the rest of the leadership team had?

Shane Hostetter:

Yeah, I mean obviously I'm new to Chemours on that side, but I've been in the chemical industry for 15 years, so I do know what's at this company and what we're facing on that side. So bringing a fresh perspective from the outside I think was important. Now conversely, you look at Denise. Denise has been with the company for 30 years. She knows Chemours, she knows every business of Chemours and she knows the people, which I think is very important in coming into this company. I'm a people person. When I think about managing, I'd like to meet the people, know the people in the company, and she has the benefit of knowing pretty much everybody in the company.

So I think a lot of people valued her from a personal perspective, but also the culture that she helped create since she's been there. And my job coming in with the new fresh perspective was challenging, obviously going forward, but also not overstating the cultural perspective. I think a lot of what Chemours has been and is now and really will be in the future is based on the culture that was established before and now that we're carrying forward through Denise and I's vision.

Lance Glinn:

Absolutely. So the CFO role has evolved significantly I think in recent years from being a steward of just financial reporting to really a strategic partner in innovation and in growth. How do you personally interpret the modern CFO responsibilities and how have you over the course of your career to now meet these enhanced expectations and these enhanced responsibilities?

Shane Hostetter:

Yeah, no doubt it's evolving. I think you look at just the normal characters of leadership within this financial sector. I think stewards are being the actual financials, making sure the numbers are there, making sure the cash is better the day after than it is today. That's fundamentals. But then you look at strategy being a strategic area and thinking through opportunistic areas and making sure not only now but in the next years to come as well as the next five to 10 years and making sure we're setting up Chemours for a long-term value to help create value for our shareholders.

And then the absolute perspective there is being visionaries as well, thinking through what is the next step? And this world is ever evolving. I think everybody's heard the word AI 15 times a day. And you think about that and how we play in emerging technologies like that because the world's only going to be different and we have to adapt. And that's where I think myself, the business leaders within Chemours, Denise, everybody we're coming together and thinking through how we can be change agents to really not sit on our laurels and what we're doing now, but what we can also build on it into the future.

Lance Glinn:

Yeah, I mean AI, I don't even need to ask about it. It just seems to work its way into our conversations naturally, whether I'm recording a podcast or just having a conversation with a colleague, it always just seems to work its way into the conversation some way, somehow. Would you say, because you mentioned the word visionary, right? Would you say that there's been a level of creativity sort of added into the, I guess, present role of a CFO?

Shane Hostetter:

Yeah, I certainly believe we're held to a different standard from visionary perspective. And I take a step back and say, how can we do things better every day and how do we actually stop doing the manual processes and have a vision to actually think through more automation, bring in that AI just talked about, to really think through how to create more value for this company being more efficient while also being as effective. And so that's just for finance. But as you look at the company in total, really trying to think through how to create more with more efficient processes, I think is the vision we're looking at going forward.

Lance Glinn:

So Chemours operates in a space where I think innovation, sustainability and regulatory complexity intersect. How do you think about value creation in this environment? What role does the finance function just play in enabling innovation while also maintaining that fiscal discipline?

Shane Hostetter:

So we are the bookkeepers here. We want to make sure that we're spending appropriately, but that is balancing what we had just talked about, the vision of the company. And our vision is a balance between innovation, sustainability as well as responsible manufacturing. And so we have sustainability and various goals that we're going to achieve over the next years to come. And one of those, as you just mentioned, is being very responsible with manufacturing within sustainability. And so there's a balance, right? Spending on growth-oriented areas, but also spending on those areas that are going to improve the world around us as well as our capabilities of being responsible from a manufacturing perspective.

Lance Glinn:

So I want to talk more about the innovation process real quick. Chemours has made significant investments in next generation technologies, right? From cooling fluid for data centers to advanced materials, for EV batteries, among other things that we're going to talk about later in the conversation. But as CFO, how do you evaluate the innovation opportunities worth pursuing and what criteria really guide your investment in capital allocation decisions?

Shane Hostetter:

I'm a numbers guy. That's right. I love to look at things from a return basis in thinking through risks in those returns. So it always starts with where do we see the future growth and earnings potential of these areas? And so then it's how do you balance the risks that we're actually going to achieve those actual returns? And so you had just mentioned innovation in next generation areas. We had talked about we're going to talk about event liquid cooling as well as next generation refrigerants. Those are areas that are really near and dear to the company's heart. My job is to make sure that those innovative ideas are actually then associated with financial returns.

Lance Glinn:

And then from a leadership perspective overall, we talked a little about being a visionary creativity, that company strategy. How do you foster that culture of innovation within the finance organization? Is it as simple as just encouragement saying, "Hey, bring me your ideas, bring me your thoughts, bring me your suggestions." Is it as simple as that? What do you do to enhance that creative thinking among employees?

Shane Hostetter:

No, I mean, listen, it always comes back to team as well. And so I can foster that creative aspect, but I need help as I think about my finance leadership team too as well. I just had a town hall and the beat of that drum was challenge the status quo. And I've been in the chemical industry for 15 years. I'm no stranger to understanding how you can get into processes and you just do them over and over and over again. And so the question then is how do you challenge yourself to be a change agent to really improve? And that's really what I have tried to push since I've been at Chemours is let's not do what we've always done, right? Let's make sure that we're thinking through what is the art of the possible, and then also thinking through how to be more efficient and effective on that side.

Lance Glinn:

Absolutely. So I want to pivot the conversation to Chemours new corporate strategy pathway to Thrive. It's built around four pillars, operational excellence, enabling growth, portfolio management, and strengthening for the long term. So from your perspective as CFO, Shane, how do these pillars translate really into actionable priorities rather than just words on a paper? How do you physically go and put them into action?

Shane Hostetter:

Yeah, I mean, you hit the nail on the head. How do we execute on that strategy, right? We've created the framework last year and we've been out internally as well as externally trying to be as transparent about each one of those pillars. So if you think about the first pillar, operational excellence, we've provided KPIs, we provided cost out programs in this side and thinking through examples, whether it be more efficient with our operations or through strategic procurement or related to potential asset footprint discussions. So we have put out a target of 250 million and we have a really robust transformation office that helps us track that.

So I think internally the drum beats there. I think externally we've been out and about trying to make sure people understand what that means. The next enabling growth you just mentioned, it really is commercial excellence and really getting through an area of making sure that we're cross functionally across all three businesses looking at strategic accounts and thinking through how to gain more share. We've put out a KPI of above 5% CAGR over the three years, 25 to 27. The next pillar you just mentioned portfolio. So we've already exhibited a lot of what we're trying to get to, which is focusing the company on those businesses that we believe are going to return above our cost of capital and provide the appropriate ROIC.

And so we shut down an asset line in our Dordrecht Works facility, we shut down another business in France that worked dilutive to our earnings. So that was where we really wanted to drive that side. Another example is so we were really going hard on the hydrogen environment and one of the first things, and it was a tough decision, but one of the first things that came in was the market has shifted. So from a portfolio perspective, we have to invest more in other areas that are going to provide the appropriate returns. So we've stopped investments on the hydrogen area, and then as we look ahead, we have announced strategic reviews of our asset footprint in Europe.

So that's another area where we continue to look at to try to create value on this side. And then the last pillar you mentioned, for basically enabling the long term is a fancy way of saying we're going to promote advocacy for science-based targets that will allow us to operate in this company from a foreign aid chemistry perspective. But also, there is legacy liabilities that were handed over to us in the spin. These are past liabilities. We are associating trying to get these negotiated fiscally responsibly with the actual powers that be, but we are really thinking through how to box those in over the next three years because as an investor, we want to make sure we're transparent, but also providing realistic expectations for where those liabilities can go on that side.

Lance Glinn:

Absolutely. And when you look at the strategy as a whole, I think it really emphasizes both performance and purpose. It creates, or wanting to create that consistent value while of course then operating responsibly. So how do you balance those dual goals in your role, especially when making decisions about capital allocation risk management and other areas of the business under your direction?

Shane Hostetter:

It's not an easy task. So there's a lot of push and pull. I think making sure we're transparent both internally and externally about the values and the actual prioritization of the company. We've exercised our strategic capital allocation be focused on narrowed, focused on growth, and we think about next generation refrigerants, cooling and other avenues within our APM business in electric vehicles and semiconductors. Those are the primary aspects we're looking at. Then it's really balance sheet flexibility and making sure we're looking at a liquidity, which we're levered up about 4.7 times. We're looking ahead and we're saying, "Okay, we need to get that down and be very secure from a balance sheet flexibility perspective." And so that goes hand in hand with what you were talking about of how do you balance the investments? Well, we're very much focused on that strategic growth.

We also know the ability to execute or to actually operate in this world, we have to do such through responsible manufacturing. So there's always going to be that capital allocation to ensuring the operations are appropriate and making sure that we're also doing everything we need to do within sustainable efforts on that side. But it's really a balance to make sure that we're here, we're viable, and we're making sure we're creating as much liquidity as we can and enhancing our free cash flow to improve the balance sheet and return return capital to our shareholders.

Lance Glinn:

So I want to specifically highlight real quick the portfolio management pillar for just a minute. The strategy includes a shift from product-based thinking to application-based growth. How does the leadership team, including yourself, obviously, analyze and assess portfolio performance to ensure that it remains agile and responsive to market shifts, especially in industries that are constantly undergoing technological change?

Shane Hostetter:

You hit that really nicely, switching from product to application, and I think there's great examples how we're already doing such. So within the APM business, we've had tried and true chemistry. So PFA resins that kind of have been in the chemistry well for years, we're having applications that are going into semiconductor markets as well as in the data centers. And so thinking through how to attach tried and true chemistry through process know-how and understanding the emerging markets has really been a tried and true lesson in a tried and true area for our technology group. And we will just continue to innovate and really push the groups in saying, "This is how we're going to continue to grow and address the world is creating a up with innovative solutions to the chemistry we have and to going to emerging markets such as those."

Lance Glinn:

So I want to discuss Chemours venture into liquid cooling for data centers. Earlier this year, Chemours announced a partnership with Data Vault to develop advanced liquid cooling solutions for AI driven data centers. Just what made this space attractive for investment and how does it align with Chemours broader growth strategy?

Shane Hostetter:

This is something that we're really excited about and it's one of those areas where you look at and you say, "Okay, what's the foundation of the chemistry versus how we got here?" And I think it comes down to problem solving. There is an issue with cooling these eventual AI, the data centers on that side as chips get larger and larger and the actual servers become hotter and hotter. And so there's great detail in our investor deck, but the very simple perspective as we look at is the problem is after you get through a couple of these generational chips, we're into the black wall generation. You get in past the rubin generation, there's nothing that can cool a chip right now on that side that gets to call it 400 to 600 kilowatts.

Lance Glinn:

And talk about an industry that's constantly changing.

Shane Hostetter:

Exactly.

Lance Glinn:

I mean, the chip's right there.

Shane Hostetter:

And so our technology can do that. And so through the innovation of our, we were talking about that capabilities through the innovation of our technology groups, they create an individual molecule that can reduce that heat and that side that no other technology can. Now, not only did it resolve this problem, but it also resolves other areas that are right in our foundational areas, which is sustainable efforts in this cooling, right? It's 100% circular. So it gets heated through the server's heat and it evaporates and goes on a cooling tech, and then it actually comes down. So it's 100% circular. And then it also reduces the amount of energy needed in these data centers from a perspective of compared to traditional air and water cooling on that side, significantly over 50%. And then the outside of that is water. Water is becoming inevitable area from a natural resource that people want to protect.

Lance Glinn:

Of course.

Shane Hostetter:

Our solution basically is limited to very minimal amount of water needed. And then finally, the amount of space needed to air and water cool in this side is humongous. So if you ever gone through a data center, it's highly noisy, it's very large because of the as space needed, that is significantly reduced through our technology as well. So the simple point is we solve problems that needed solutions and our technology groups went to work, and I think it's a very elegant solution.

Lance Glinn:

Absolutely. And so you brought up sustainability when it comes to that too. How do you factor in those sustainability benefits into your planning and your long-term value creation strategy? Because you're obviously focused on the numbers or not focused, but you're concentrated on the numbers. You obviously want to do what's best for the company in that regard. But then how does sustainability work its way into that when you're thinking of, okay, well what does this do not just for the company, but for the greater good too?

Shane Hostetter:

Sure. I mean, certainly I think it's balanced in two ways, right? So sustainable as a business model, as you think about, okay, there's no other product that can be fully circular in here, so we have to know the value of such, and we will price accordingly and we'll use that in that foundation. And it's more of a total cost of ownership sale, then. You're looking at, okay, not only does it resolve issues that your hyperscalers are going to need to resolve, but it also provides an elegant solution to some of their other problems that they have, whether it be water, et cetera. So I think it's really looking at that as a financial tactic. And then the other side of this is we are a chemical company and we're dedicated to ensuring that the operations are safe and that they're responsible going forward, and we're committed to such. And so I think the foundations of us being a company are needed to really promote safety and sustainability to really exist in this new world.

Lance Glinn:

Chemours has also made strategic investments in battery innovations. This includes the late-public opening of the Chemours Battery Innovation Center in Newark, Delaware. What was the rationale just behind this multi-million dollar investment in an industry that's growing, evolving, and really changing and is much more needed now than really it ever has been before?

Shane Hostetter:

Yeah, I think it goes to us looking at where the emerging trends are in the world and how can we adapt to such to create value for our company and our shareholders and electric vehicles are here to stay. I mean, let's be honest, right?

Lance Glinn:

Absolutely.

Shane Hostetter:

So we felt it very comfortable to say, "Okay, how can we play in this market?" And there was an interesting technology, whether it's a dry coating for binding on the actual adamant cap of technologies in that side, and it really was a full spectrum. It allows our customers to reduce costs. It also is a sustainable effort as we think about that. So it replaces a solvent technology. So it's really a long play there on that side. And then it also helps resolve a problem, which is it improves the life of the battery as well. So I think that kind of threefold was an interesting prospect for us as we look ahead of us of just the overall EV market growth.

Lance Glinn:

Yeah, and I mean the EV market, you said it's here to stay, the market share of EVs on the road is just going up and up and up.

Shane Hostetter:

Absolutely.

Lance Glinn:

It's certainly doesn't seem like it's slowing down any time soon. And then so one of the pillars of Pathway to Thrive that we talked about earlier was enabling growth. How does the investment in battery innovation reflect Chemours commitment to that pillar?

Shane Hostetter:

Yeah, that's definitely a great question. I would say the investment in EV is one of a couple areas I was talking about before with the strategic focus and growth, right? EV is an area that we see a lot of possibilities domestically and abroad, the technologies we have and then we continue to innovate around EVs will be here to stay. That we just talked about the data cooling as well. So I think it's a package of areas within that strategic growth area that I talked about with our capital allocation strategy will help enable that second pillar and getting to that 5% KPI as we talked about.

Lance Glinn:

So Shane, as we begin to wrap up our conversation, we spoke earlier about the culture that you've brought into Chemours that obviously Denise now being CEO has brought to Chemours. Obviously her tenure with the company being very long, you bringing a much more fresh perspective over the last year and a half. But I see a culture as something that constantly needs to be molded as obviously employee expectations change, and as companies evolve, you don't want the culture, excuse me, just to remain stagnant. You don't want to ultimately have it get complacent. So with that being said, how are you, Denise, the rest of the C-suite, working to build that culture that is constantly being changed for the better so that employees remain happy, morale remains high and that Chemours remains successful?

Shane Hostetter:

No, that's a great question. I think every company's probably on the same perspective, whether you have a new CEO and CFO or individuals that have been with the company for quite some time and trying to think through how to really balance change in the world and really the demands on us with really making sure our culture is here is really strong and making sure people are continuing to be developed and having succession planning, et cetera, on that side.

So I think it comes down to talent and prioritizing the people around us really, and thinking through how to ensure people are going through progress within their current roles, being challenged to improve the day-to-day from themselves, and empowering them to be not only the day-to-day operators, but the face-forward of how to help us create a new company and new culture and really an evolving areas on that side. So I think it's a lot of balance between being up at the forefront of the company internally and making sure people know that we have the best intentions to create value for this company, for our shareholders, but also to create the appropriate work-like environment, environment within this company as well for a day-to-day.

Lance Glinn:

So two questions before we wrap up. We're going to look near-term first, then we'll look more long term.

Shane Hostetter:

Great.

Lance Glinn:

In the near-term, right? I'm talking a year or two years from now, as you said, you and Denise, Denise with the company for a long time has been CEO for about a year and a half, you yourself, CFO, for about a year and a half, give or take a few months. In the near-term coming up. What does the future look like for Chemours?

Shane Hostetter:

Yeah, it's all about our strategy. So we set the pathway to thrive to look at this and operate in the near-term. So we've navigated some tough times. So this market, whether it be our TIO II business or the APM business has seen a bit of a trough here over the last three and a half years. And so I think Pathway to Thrive is allowing us to execute in a difficult time. So we're controlling what we control via cost-out programs and thinking through how to attain that first pillar, but also then setting us up, making sure that we're investing the right areas so that we're not starving the strategic growth areas.

So thinking through the second pillar and then really balancing the third pillar is really thinking through how to make sure that we're operating the right assets and the portfolio makes sense in light of applications versus products. And lastly, it's really navigating a lot of the advocacy efforts and legacy liabilities that we have ahead of us so as to really get through the liabilities and really making sure that we can box those in so that some of the halo effect, I would say, on the liabilities sitting there of the indefinite amounts, we can think through how to actually, how to talk about them more.

Lance Glinn:

So now in the long term to finish our conversation, when you think five, 10 years down the line, what is your vision? What is Denise's vision? What is just the leadership vision as a whole to what Chemours will be when we're sitting here inside the library again at the NYSE in 2030 and in 2035.

Shane Hostetter:

And said another way, people often say, "Well, what does thrive mean to me within that strategy?" Right? And so the ability to execute in the next five to 10 years, having a stable balance sheet on that side, really being able to generate free cash flow and maximize that free cash flow on a day-to-day basis. And really operating as an innovative company that is resolving problems from a technology perspective and helping the world continue to innovate and really resolve areas that we've talked about within data centers, within EVs, within the areas that I think are really going to be unique over the next five, 10 years as we think about how different the world's going to be. So in a nutshell, I think Chemours is set up to be a responsible manufacturer that is going to innovate and really create a solutions to the world's problems, and we're going to be able to generate free cash flow to return value to our shareholders.

Lance Glinn:

Well, Shane, I'm excited for everything Chemours has on the horizon. Thanks so much for joining us inside the Icehouse.

Shane Hostetter:

I appreciate the time. Thank you for having us.

Speaker 1:

That's our conversation for this week. Remember to rate, review and subscribe wherever you listen and follow us on X at Icehouse podcast. From the New York Stock Exchange. We'll talk to you again next week inside the Icehouse. Information contained in this podcast was obtained in part from publicly available sources and not independently verified. Neither ICE nor its affiliates make any representations or warranties expressed or implied as to the accuracy or completeness of the information, and do not sponsor, approve or endorse any of the content herein, all of which is presented solely for informational and educational purposes. Nothing herein constitutes an offer to sell a solicitation of an offer to buy any security or a recommendation of any security or trading practice. Some portions of the preceding conversation may have been edited for the purpose of length or clarity.