TROX - Earnings call transcript Q1 2019

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Operator

Good day, ladies and gentlemen, and welcome to the Tronox Limited First Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session and instructions will be given at that time. [Operator Instructions] As a reminder, this call is being recorded. I it is now my pleasure to introduce, Senior Vice President of Investor Relations, Brennan Arndt.

Brennan Arndt

welcome first and call. XXXX Andrew, you, everyone quarter to conference Thank Commercial Carlson, our Quinn, Operating Turgeon, Chief Jeff today Officer; and Chief Romano, On are Jean-François Chairman, call Financial Chief Officer. Executive Officer; John Officer; Tim Chief

move using you Those Internet through we by already should today's our call. We will website as have through be broadcast slides of listening them.

if our so, you them on website For tronox.com. done those can already listening you haven't by at telephone, access

those Report on our made call, a in on are reminder certain heading our This under Factors various that in not as but XX, Form ended best uncertainties to on Moving information as statements risks Risk judgment the subject based to Slide the today's including, comments in well to X, with limited our the specific presentation including factors website entitled that Annual the this provided for represents our both XXXX. summarized and December and information. and forward-looking the on XX-K/A information year filings, our SEC include

The may However, uncertainties. risks and forward-looking to undertakes revise no on obligation these results vary update statements. based or actual Company any

provided GAAP the appendix call, diluted are earnings and to that to the adjusted financial U.S. slide and deck. free refer our we share we and EBITDA, terms the conference Company's our flow. evaluating adjusted cash to that investors adjusted per EBITDA the nearest EBITDA, Reconciliations their earnings of certain GAAP use of include margin, non-U.S. in in release the During we will believe useful in management business terms are These performance.

XXXX certain with most pro reconciliations or that able May provide EBITDA, impacts measure uncertain an forma GAAP measure had to directly on transaction respect without GAAP XXXX. I presents because reasonably the assuming guidance filed X X-K/A call unreasonable such items on a second we to the adjusted our statements out of predicted. be not the quarter Cristal to are such your measure, that or or we closed cannot comparable X, control financial financial effort of also attention are For January financial XXXX company’s

Moving pleasure call Jeff? my Quinn. now the X, to to Jeff to over Slide it's turn

Jeff Quinn

and us Thanks, for morning today. you thanks joining everyone Brennan. Good

transformational with months The of been for on most a Tronox. strategic four The of a April of now integrated this first company. by world’s great new zircon largest largest is moment and producer time the a of level was significant second pigment satisfaction. which sands time have chain, course has the vertically marked great year second for our and in TiOX producer largest the the every occurred mineral the of It world’s Tronox world, challenge, XX. the industry, notable titanium acquisition second TiOX accomplishments largest the Cristal the of closing The producer was accomplishment been It participation producer. the in at value

on an We pigment an nine and global of consisting continents. eight footprint are with mineral facilities sands unmatched enterprise six plants

featuring technology of X.X it sulfate chloride and remaining being million low-pressure the nameplate tons XX% XX% TiOX capacity; being high-pressure both We of have pigment differentiated and about oxidization; technology.

great is We it that our in but extraordinary a the of have world, differentiate would and market every a strong corner assets us. people position

we diverse to course culturally More members as is Tronox. organization. are step forward we a plans. now and build on unequivocally first industry XXX of integration our one industry I weeks diversity two global Tronox move to rich a than culturally and leadership of new new align met that our new can team one have most The the deep ago high have performance the team state We implement to talent the in taken and technical geographically with expertise. operational, based and to our

conference for feel at XX to diversity a in different table people. the a company, languages spoken It inspiring which people ten one there of Just same never numerous weeks newly sessions, our energy was hear to enthusiasm. were that filled The that one was new and of of you team make ago with the was two meeting with the to leadership that was eight our high we the leads different at give know companies. two memoir combined at

series has and the long-term value of us We forward moving to that positioned shareholders. Cristal milestone create in our us, are transactions now major are for for we one transaction a that together. is Though sustainable one a

the completed and the deal, the the As we closing to grade closing X. schedule committed former paper associated sale on were American a XXXX the few when the transactions closing XX with laminate Cristal’s of business announced of TiOX INEOS to of on North we Cristal April May on remedial Venator ago, weeks divestiture

exercise our a in deal portion As price a the INEOS million of $XX.XX used share. we purchase on transaction agreement. also call, of completion foreshadowed common the the to transaction from at discount sands directly the as the XX price per stock in this ten per week Exxaro shares mineral day announcement we repurchase to proceeds represents a right of sell share its of the Exxaro dewrap shares the X% days to The as agreed

and for of stock after little own we day action price moved price business days a value-accretive our that in was use not set, the the in are the long-term. that our has of a believe proceeds shares trading this While was us against

orderly sands completion representing its continue sell, with of completion of the shares accordance sell-down Exxaro intends mineral agreement. the equity the by holds as in outstanding X.X% million now terms Tronox’s With approximately XX.X this and ownership to articulated of of Exxaro previously approximately to them,

to reduced share approximately approximately With count our shares, of XXX.X the from repurchase million XXX.X these shares million outstanding. we

Cristal are improving. market our conditions night, believe at feedstocks zircon As and I in press a favorable time pigment market are dynamics co-products, with primarily market in have when comes stated last we our conditions favorable, combination in release are

production benefit an in position advantage and zircon are integration. We from both to feedstock

create be and zircon to lumpy, can noise, enhancement. significant continues of While some little and a deliver profitability zircon’s margin quarter-to-quarter the timing shipments

this relative to significant drive and we an will favorable Day, be differentiator. differentiating Investor that this current we pigment the throughout produce As show discuss some how market expect in belief of and We to and integrated benefits upcoming with to cycle. producer results been analytics producers. will feedstock the integration our be believe we the in At historically our non-integrated share financial will also conditions, true true has allowing the you it us how more consistent believe future

time also a transaction when Our global comes pigment are improving. at markets TiOX

normalizing sequential stabilizing, to each position the few and all market significant in is due markets will our completed. the Tronox the conditions year-over-year Romano a improved we as that Europe in In inventories revenue believe transitioning those regions. the reflected American market resilient, was and comparison good North signs discuss are new pigment minutes, first for market John in very quarter quarter, of remaining As Asia and are the

Our feedstock of revenue and timing shipments. to comparison reflected also lower due zircon volumes the

with increased benefit put cost comparison quarter. financial to from as products second We production closing actions into which position Our we will margins acquisition. a following that the taken adjusted EBITDA long of move prepare impacts beginning of lower the Cristal feedstock the reflected unit short future and high-grade quarters in in inventory, to feedstock

in undertook results. reflected quarter in financial two actions the preparatory that first maintenance our at also facilities. these But had We was impact a negative

will discuss do actions. reflect Tim further, GAAP of certain economic the not benefits results short-term As the longer-term-oriented sometimes

pre-closing the market We pigment with from of contribute million conditions, legacy million $XXX Improved legacy EBITDA margin Cristal actions business. increased plus are what $XXX quarter do quarter. substantial strong shipments all from million second we Tronox in the expecting to results a the increase should $XX the to zircon and reported our first adjusted of operations, from benefits we

place on our structure location sites is complete a will share commercial operating days. team John been within CEO philosophy from levels initial down some at with all operations in structure his status that team assets. the across the three next regard new the around organization world new the of and have will and of has is of globe. commercial his on Jean-François often handle in you running during approach be the and Romano’s XX implemented observations remarks. to new implement the the Our our He

and the ago, you not organization, and were As that has but privy a changed. philosophy of month legacy appreciate we still commercial were to and some Cristal competitors Tronox can approach Cristal until of the

the We will The globe base. employ philosophy singular any commercial across that fact one, in to moving the commercial now global a is a as aspect our company. area important better as customer are together forward we of serve

business at including a XX. in XXXX and financial work our Investor Cristal to on time intend and Day to are methodologies applying integration provide We Our the the well analysis for forecast combined streams XXXX former complete that process underway operations. to May our planning

began planning the optimize developed optimization business to our use our already to industry’s and complex addition, function capabilities sophisticated In most business integrated linear proprietarily business footprint. programming has and

With rush view to to the and complexity greater to challenges a of try fully no the sense processes course, some business. of the FPA opportunities. IBP even Until it but implemented, comes may provide go-forward were integrated

will in seeing and markets. results commercial days. in our on will our Officer. we this in that Romano, will global and the said performance our I operating weeks the then Chief over our how benefit to report report like planning will and future John previously, perspectives their our we As new share Investor Chief I operations Jean-François work actions at are will Officer quarters. completed forecast present Commercial John turn outline Turgeon Jean-François trends first Tronox Day. the would and performance now call also and next XX few our the Jean-François on be the Operating John and John? to taken in our will the in

John Romano

Thanks, Jeff.

Moving an lower $X the which Electrolytic performance Europe booked of the was in of to in year-ago customer quarter. first pigment Asia million Pigment year unfavorable lower euro continued September the the Sales sales in Revenue in destocking quarter quarter first excluding ago lower, $XXX Electrolytic million our revenues X% and the the at will $XXX XXXX Revenue lower million translation as primarily was in revenue from million versus due of with Slide compared of absence in start $XXX the revenue sales were million. quarter. $XX first sold to XX% the of and volumes volumes, the in to I was ago quarter. a quarter of business XX% XXXX. year X, of look

X% selling margin Selling were prices $X $XX was dollar X% million XX% million, Jeff year-ago partially an on for on local remains the is North in mentioned, Zircon, market a Titanium a euro that quarter. the As and of prices as was co-products Zircon of to offset of a - as $XXX very headwind a currency sales million million higher by American were due with the significant $XX enhancement volumes the attractive timing profitability $X of from million resilient. basis know, primary and business. U.S. X% and feedstock revenue. translation XX% sales sales deliver lower a on lower product increased our increase you to X% lower shipments. us as basis, driver

of events such out of delivered shipments and ocean portion The bulk and periodic large in congestion be their is timing our are control via port our to As shipments as can weather. Zircon freight. subject

zircon be were me and basis of therefore, that As quarter of increase first one quarter. the outlook quarter a product that up that, substantial in in volumes level to full zircon second second the for first in the significantly compared similar higher Recall a year better let the of the With in of to the expecting year adjusted fourth quarter. our we a shipment than shipment In the result, to the those suited fourth multi-quarter are quarter-to-quarter. EBITDA quarter, last expect volumes rather is we to than a zircon quarter. those drivers quarter track key is to the significantly or on second share

Cristal selling million sales $X the no There sales Feedstock foundry-grade the X% the to and closing were the internal demand in moving the to other to of advance compared were as increased higher ilmenite year-ago higher offset we year-ago preparing million operations. in $XX quarter, million our to $XX of of in in the Cristal integration for for requirements market quarter. prices sales product stable acquired quarter sales synthetic Pig year-ago lower $XX sales Now were validate value increased material. pig following by by from acquisition. of in actively selling to the in not X% iron, We the iron especially million leveled remains fines volumes. primarily of rutile and were were driven the quarter closing the first of as vertical ilmenite slag the sales

sales CP are feedstock moved essentially the to a long that of going position, feedstock in position exception with away. a short from Now we’ve slag

zircon line to report of the with co-products and the will iron We and will including acquisition. came and separately other continue Cristal and include pigment tetrachloride now and titanium feedstock sales TiOX pig caustic other products which

a by There offset sales driven Now shipment prior million sales versus decreased lower million more XX% again of volumes, on to million Titanium X% prior million for prices X% for negligible zircon quarter, of as were European of moving $XX as and were on to to pig pigment comparison to in The end prior from sales lower of the to feedstock, due in compared of course. quarter, the prices $XXX the higher sequential due current the on prior the to quarter. slag, CP $XX also the XX% in quarter. quarter offset sales to feedstock to we a iron. ilmenite due $XXX XX% Slide million XX% prepared volumes of Sales Pig volumes, the or by in timing sales as local timing $XX decline momentum shipments. positive by in of of basis. prior sales the to with and fourth the more quarter, lower products selling iron shipment than normal XX% lower prices from of other increased translation X Feedstock timing, were $XX slag from the selling level in due the decreased than were million million in sales quarter. quarter and impact X% current shipments of quarter. while sales in quarter. million XX% no timing. and CP in pig the million prior million prior than no higher sales Revenue there the sales XX% the X% Zircon $XXX its volumes for dollar in Asian for closing, run $XX a iron million currency $XX Sales of and sales euro as from compared prior U.S. increase, of zircon last Pigment the year. the markets from increased the at lower continued $XXX decreased prior on basis prior $XXX quarter coupled were destocking and X% million $XXX was the seasonal volumes the $XX Cristal sales decreased quarter the were and co-products sales in million, were the quarter pigment

do only a combined at to basis. and look XXXX Slide moving is pigment on sales feedstock data not include Now our TiOX a the for X, pigment co-products. in new Tronox pro here forma or of show TiOX The sales

of sales the our sales the new combination in X% a can that left America, America, the East North anywhere well Europe the and positions Latin Middle grow Africa. to world. both and they XX% This our very with pigment our global side results in see of slide, balanced XX% on our sales mix grow as clear that Tronox our geographical the XX% with geographical enhances and customers it’s in you chart in footprint in As very in balance of Asia-Pacific in us

our affords and customers quality Our on to new greater global scales work improvements. developments us opportunities with product

participate also complement from and ultra and will growth position fine markets North our markets. in specialty greater will we participation higher We benefit emerging in in America now that

close is the less harmonization transaction much developments the the associated we working of be eliminate that is originally that months. that significant potential some we customer coming will identified One This anticipated. since price the companies process through between positive the of two than of in overlap risk with the we’ve the will the

provide to price allow that calls, reported cycle. that initiatives stability and margin our with the looking of win-win for to we’ve will same conference customers on and in recent predictability us stability consistently supply As margin our throughout work business continue stability unique in that customers are of we the the reinvest at time successfully our a

transaction, on to our new discuss perspectives commercial will topics specialty we’ve and update that customers. stability; business, our Investor our how stability benefit we where profitability; how it’s our to turn I the thank commercial with and our further outlook; and our profitability path JF? XX the faster Day commercial team. primary the results driving forward portfolio. on to over important this technology than opportunity from closed our an products discussion. The an days the and global include: forward and on customer TiOX that that advantages have I market; adds quarter. you. call that, accelerate cycles; have our into And the pipeline; that on finally, XXth it’s will footprint; margin an and share May and and commercial our forward growth the combined of clear commercial that overview our with products Now zircon now who insight of initiative collaboration the work initiative will we our And unmatched review the performance it’s the market we looking We JF are our shaping how to global of will in newly we approach our operating And of look acquired for

Jean-François Turgeon

Thank and John, you everyone. , good morning

I well and work global X, you report that Moving very our to is am pleased operations. today our to very across integration with Slide speak going

the operating TiOX are now largest production We network. integrated vertically world’s

over to the pants is in continents. the our Having unmatched different facilities operation and allows our of eight industry very control footprint value with own strategically feedstock our the level every TiOX touch use grades and optimize It six waste value us long-term. us sand over pigment to nine minimize important mineral is and global of feedstock creation. Our on maximize chain to

moved operations We position at cash flow short consistently pigment strong we We guaranteed generates run from are smelting plants, costs. high to a and reduced our able This to cost which have now with long position. position a demand utilization low low from in feedstock nine rates generates mining volatility.

year. the this the from future in of in second mentioned, in position we’ve advance feedstock quarter We taken put us Jeff as starting of pigment will product future that moving lower pigment This action unit into inventory increased short lower benefit inventory. high-grade in cost benefit feedstock in cost our production will is a and margin from the to sold. with made long operation the quarters As quarters, feedstock

perform also to some downtime maintenance We took combination. in plants our two advance of routine on

Our result later doing first each our EBITDA the the reflect so. outline remarks. quarter in will with of bridge he financial adjusted when Tim you reviews impact impact

facility discussing plant suite We by will to at Investor plants feedstock I average as and to a having also ilmenite the many Day our specific and a for enable reducing now benefit look products offer better our weeks. worldwide forward their and derived need. diverse serve chloride sulfate their we mining our distance few deploy operating enhanced of the of from global each footprint, from for advantages more benefits to these in our high-grade we production. And also customers both us

position. our We quality, cash integrated to advantage and we and footprint will lower improve outline how using costs, generate our our intend global product

way already those detailed a delivery We tell increased. the more on deliver after our detailed we the of them. the outline one confidence of synergies that will of take review, will I has and look can program at the you, in month course, synergy

new commercial update maintain smelter with Jazan option We you arrangement. our our increase on to strategic integration vertical mine, and the will our

position. operation further thank you I Tim deploying will plans our that by a look for I’ll share the to We to down. that, technology cost long-term for transforming drive With new Tim? the forward to discussion. of review our turn operation also and our call financial over Carlson I

Tim Carlson

Thanks, JF.

take to granular and major mentioned. more including a preparatory that the EBITDA X, at the a look JF actions at Slide the let’s factors Moving look comparisons, driving Jeff

million, costs adjusted of XXXX. was lower million ago million. quarter XX% million first volumes $X received Adjusted contributed of bridge and EBITDA initiatives. that related of $XX XXXX million that primarily lower $XX these zircon lower million John and absorption and Higher coke, South year-ago in million for quarter in $X refund and $XXX of compares to particularly anthracite gains our prices, than with of costs of labor, planned our the added royalty a $XX SG&A maintenance Favorable cost against a earnings EBITDA the in zircon sales that year unfavorable Africa. foreign selling more $XX the re-domiciliation some and of million and with $X $XX offsetting exchange than pigment other First in the product million discussed, first one-time quarter. electrodes, quarter associated increases overhead higher

to $X million first foreign related to the Unfavorable in exchange $XX for million X sequential the on which million by primarily XXXX shipment undertaken costs in $XXX reduced the Slide for margins quarter. Adjusted XX% through totaled the of million. and than feedstock that quarter sales comparisons. timing and in million was maintenance pigment fourth planned lower of zircon pigment Moving sold driven products lower costs EBITDA the on quarter volumes prior of of the $X higher $XX

lower our of mentioned, deferred feedstock quarters. two that were in the the next quarters. margin to from to and inventory sold. feedstock in we moved net production benefits cost sheet our will pigment unit is the three in fully from This production inventory vertical that’s income from Typically, statement Jeff quarter will yet balance low-cost realized which benefit the feedstock associated those made in benefit that have margin As We with our we and cost of the not the production. low increased built The integration. increased

Let potential we we quarter the actions third-parties. we results. long, were have muted as our taken first some of perspective that to you excess to the me When benefit sold that give feedstock future

building at position, pigment short pigment plants. our are Given we inventory our feedstock

now have an nearly a with feedstock added $XXX have deferred we quarters, three margin last average XXX,XXX XX,XXX and tons the ton. of tons of Over

balance $XX benefit in there the to of the deferred quarter feedstock quarter. our margin $XX first compared we the to in $XX added the million driver first million is adjusted So our of another expect EBITDA second plans, on increase At Day, of capital was is the as as their million substantial sheet. XXXX. in quarter Investor how With review financial will attributes priorities, thank And topics, to long-term that, Jeff allocation other well a our the we our among closing turn we will I call accelerate of review for usage. to our tax you. over and I now intend comments. This Jeff?

Jeff Quinn

Thanks, Tim.

the the work truly acquisition, begins. our With of Cristal closing

So we up are challenge. to that

forward We end to Day It are ever. is one of Investor our the looking at our the month. first

outline We strategic our will premium and vision for value shareholder will creating we you share priorities. with our

Our and respect of the shareholder cash and margin choice equity approach. generation stabilizing utilizing stability of creation offering our greater be to across cycles is displaying to commercial value the vertical TiOX by performance integration financial mission with and our

companies a version our house shareholder peers a first Our unlike quartile the a long-term Big names. a group group goal of on has and and performance versus League Basketball TiOX materials deliver broader above three Three, the we big aren’t developed believe returns sustained and the in of chemicals to space is of We basis.

our capabilities. global people, and head-to-head, our We as our technology own unmatched and leading strategy with … discussing and culture capabilities strategy successful are integration, based to three primes, with be the footprint, our pigment upon unique position, We competing for position feedstock or and will look a leader, companies comors our five pillars, each forward their TiOX competitive cost Our toe-to-toe attributes.

among outline returning capital We value-creating shareholders. will we and in sheet, an how to invest to organic allocate of the priorities even going capital are stronger creating projects, balance

leadership just goal ago, are get only fact, weeks indeed But are a forward I was stated. what told one forward, our of we conference. looks defined together like at vision we two theme mission and moving as in have not of And Together leadership success Tronox. As clear value as moving our we I leaders shareholder by the our together Forward the

as have there. We clarity get going are how we to to

will set of a global integration is vertical excitement will you and In Our around weeks, clearly confidence will would clarity the our the have the of five that you strategy new centered defined the future happen. of make pillars it few us. see guide and hear this and values and a for team we that purpose see

This get questions. So, this, to two and later now years. the we would it opportunity to this worked cannot for talk have we you. is we all With which I like waited about for your of for wait. month, we thank open And that, over up

Operator

[Operator from the Frank line Fermium Instructions] first And Research. question our with Mitsch comes of

now is line open. Your

Frank Mitsch

in it at provide terms until XX. that economy on where folks and versus putting players hits expect those not. the and what local or of western volume morning, and spectrum did QX Good have address XQ Cristal it in volume you the you of to emerged will like fall have then help between EBITDA that Jeff, has contribute congratulations least during between true and purposely the generate not If sense Cristal the price those again. how taken and sounded by a interesting are can off all much year add you that’s full May please means But it.

though, if be a Cristal So us sense that, where you could awesome? that give fell on would as

Jeff Quinn

applying business Yes, Frank, Cristal the during first as same of business the their midst new into the really, it second of in process the managed planning in are quarter that our in legacy the we analyzing that operate operating are And Cristal will not and quarter business here Certainly, – the quarter. and are the really business be taking still we in FTNA of global operated was footprint. first process integrating as Cristal of will and the sort process, performance we our footprint. as our – the I the we to integrated this mentioned,

pro really numbers obviously Cristal So, really is XXXX, to sort standalone – it for a talk it of Brennan a basis. mentioned, forma bit premature the published although we’ve as about performance on

Frank Mitsch

Got question for JF. a you. And

particular commentary, of step synergy confidence giving are areas the you Can increased just increased to During confidence, in things. I guess, through the synergies? expressed on respect side some with you your you what

Jean-François Turgeon

Look, diligence those example, Yes. the we days, for in assume some do you elements reviewed pocket of Sure, you the XX versus elements. due some assumptions big and and Frank. last

obviously, is were were Tronox that them seen we price had we of that of that of major using supply user the some of a to One are one chain use and consumable, and that the our legacy we with – this difference and obviously previous Cristal we we bigger what arrangement. thought from gave us negotiating didn’t is, very there And position and material now benefit good have argue was want in us that Cristal there. a supplier on the

So, example. that’s one

other in IBP his have The an that we is, has one Jeff comment mentioned process.

distribution. maximize one. to of feedstock So our use at area the synergy that in of the of have on look we work the again, this we dollar the different millions and value value costs of in have we week tool and and production we distribution the that using And had all and and cost logistics product. from an this and get we really are is the simulator And where

the there and right distribution see was engineer. with they and John and week, and the Cristal working So, warehouse by of optimizing knowhow look, we nice process some first is were on working in two you that of tell for start quite projects so of that very program an And the our in And doing could that, identifying working well. their and of am our on. talking sharing his the counterpart were engineers is very a I businesses. team Tronox Cristal to are working this I and products can it bit this that on the pleased are And with and we same

bit we And disappointed help it’s look, I that will my on overdeliver the can color it into feel I so, story. I the very talking the that with we And some of But different colleagues. I you were comment, a alkali why synergy. very a of complete that month, synergy. remember that’s confident after a I was we deal, And with Frank? in when on deal. hope this tell did putting

Frank Mitsch

so you Thank helpful. Very much.

Operator

from comes question Fischer line next Thank with the Duffy you. of And Barclays. our

Your is line open. now

Duffy Fischer

Yes, good morning guys.

break just, for that versus First on you TiOX? quarter, of this much like to, used EBITDA you adjusted corporate $XX down was much million question, how how it was can the

Tim Carlson

can second. I One Yes, Duffy.

So was TiOX and XXX corporate. XX was

Duffy Fischer

know and at obviously, I be you another and EBITDA. And you worst. price if assume in this. to say for Thanks. don’t then, I’d guys is QX the for numbers going runrate Cristal the to today, everybody is issue going take anything volume Okay. The mean, of stab kind

historics us from given You’ve XXXX.

are exact, try to some rough again, are even today. if out would number even So, they I they if not get

Brennan Arndt

across and is European the But minimal at obviously, that would look have legacy price you beginning markets other customer Cristal are this a Brennan. products price regional in very the it’s were They good Duffy, the then up. said, about and volumes sensitivity as, and mean exposure, business. pick results, look quarter. the soft primarily obviously been they feels the feedstock John if or in I soft I their are opportunities Asian the chart. say in play is And you overlap from and quarter of a the quarter, that, for exposure he the first Yes, pigment to harmonization. But And first and business. reflection pigment predominance early modestly clear their to biggest their pigment

Duffy Fischer

that last versus people are many company, top now historic with meeting you Okay. And in the one, XXX How then, the split? historic are many is Cristal? had was the Tronox how what just

Brennan Arndt

that. something XX:XX was or Yes, it probably was probably, Duffy, that meeting like

Duffy Fischer

Okay.

Jeff Quinn

corporate So, across across all sort functions the you regions. various a Globe But of, nice and are of the to mix obviously a as legacy much folks regions, Cristal. the get world and most percentage various it was of and into then, higher legacy Tronox our

Duffy Fischer

Great. Thanks guys.

Operator

the line next question from our And John Capital BMO of comes McNulty with Markets.

Your line now is open.

John McNulty

Yes, morning. for my good question. Thanks taking

So, with all, hit million the sounds it then, And I million, guess, Cristal is thinking that just a else you from first part thing been the guess, like that all up I our closing if $XX are feedstock. we of second weren’t about have regard equal build. that of the right, it there? to building like toward build that wouldn’t $XX was being sounds

last how of guess, in quarters I about we had the well? how should over think couple sequenced as that So,

Tim Carlson

last the question, million short. of thanks was deferred that’s couple we the building that’s $XX the for Yes, focus quarters alone. so is over actually builds – margin been in long the The going to QX as from

two So transaction, is through sold. focused the our feedstock moves increased on system on to our underlying would That on market, we manufactured have a quarter strong would margin actually and that depending realized have Cristal the three deferred had if obviously results. the delay typically we not been given QX just and that product sold when margin have in pigment which

in will going as to one-time short move long be and QX to it’s us QX benefit So and really a normalizing we short forward. benefit continue that and in help from we

John McNulty

think And investment with Okay, give how as to that there? Jazan And are I about the you the regard then, as Smelter, updated to guess, can that a opportunities, your I bit. thoughts okay. helps you us the thinking well? And on

Jean-François Turgeon

work but And changed. agreed is not Tronox risk is, just So, Helsinki has AMIC. But I to about that that the $XXX engineering the hasn’t yesterday make is, We Outotec will which sessions them. reward for smelter we have million working we operation. financially with John, know it’s the the like what had with you the with in designed that can for company us, position smelter if I and from And with to come reality JF. back Look, where be the position is met guaranteed us. we look, is that that us that

can and that issue resolve would together and smelter and ours the become the doesn’t huge that in successfully of have smelter by and the that Tronox And will operate, of will up obviously running. unfortunate and million that for it is guaranteed smelter $XXX it In will that Outotec does, share own. successfully issue cash be Outotec and AMIC that be will our for an even the Tronox case produce, Tronox. then that value demonstrates create So we if it well, it

it to for create producer. see project a I as value chance non-risk a vertically as So, Tronox and a integrated very good

John McNulty

it. Got

update. for on Thanks around the last And redomiciling. sounded like, question, SG&A one one-time it the the just Okay. shift, then,

adjusted it if guess, what drove of nothing But place So, what it it’s numbers is sounds forward. And I included a in like going guess, that? first else And in of to kind kind one-timer? the the there about? I why was that continue was

Tim Carlson

a It third are there listed for probably that was some was given us of a cost had UK we out for $X EBITDA. couple for which smaller we But cost. action that million to And about core be that basis talked cost could of in. But cost. a legal it felt, We adjusting redomicile we working a then internally of one-time of back about to out initiatives. we adjusting other is the

John McNulty

very the clarity. much Okay. Thanks Fair enough. for

Operator

our from Sheehan SunTrust. And the with Thank you. next comes Jim of line question

is Your line now open.

Pete Osterland

Good on Jim. morning. for This Osterland is Pete

price, in Excluding will second sequential Cristal, market you any that on difference be impact quarter, will the average estimate your you’ll pigment the there? now meaningful movement be there prices can in the including what be

John Romano

is, flat expect But I say QX guidance on prices Yes, don’t you this typically globally. to Look, can John be Romano. pricing. what relatively of a QX, lot should is to provide

Pete Osterland

of the mentioned you end market And condition TiOX the quarter. near is Okay. improving

expect acquisition, able that quarter? Excluding of positive you year-over-year you volume be growth the improved to therefore second impact have return will and conditions to in the the do

John Romano

our to a in to possibility. we company, I XXXX. forecasted X% are sales a from definitely the think think we growth X% somewhere year-over-year that’s new When about our compared as range, even

will So, our XXXX positive. to compared be growth

Pete Osterland

you. Thank

Operator

Vincent Thank of from Stanley. you. with And Morgan line the question comes next Andrews our

Your now line open. is

Unidentified Analyst

into Steve has see kind you forward that? if Vincent. China I any if any, headlines, could trade actually Thank talk wondering trade result starting just with you flows the playback it gone about of to a the there you. on if is for and if was This – as U.S.. make of is changes

Jeff Quinn

think, into I Chinese that our is I the of China, tariffs our will the create terms new Australian from obviously, U.S. of we from Steve, us. plant imports anything for opportunity most but into - or Well, think, operation. some and slight in impact production new But do

net-net So, a it we slight positive. see been

Unidentified Analyst

Okay, thank you.

Operator

of next our Ahmed with from Global. the line Alembic And comes Hassan question

Your line is open. now

Hassan Ahmed

Good morning Jeff. morning, Good guys.

Jeff Quinn

Hey, Hassan.

Hassan Ahmed

bunch a it sense, alike. look readying – that better you just QX for you it obviously and acquisition Cristal whole in If to one-offs yourselves identified, be get of trying the timing, shipment be guys a up

of bulk in were QX volumes a you million to due provided, where Cristal EBITDA to talked unit costs which run up up went and this higher, some I guys the So, QX of bridge about turnarounds you you guys hit obviously million from $X again, for still the $XX assuming the in look readying yourselves And Cristal. probably cost acquisition. up then, am the

right? am bulk would I million the of that’s $XX that bucks, So, back. assuming come

you recurring So basis, at million. $XXX on a are

I strong. upswing QX identified guidance the bridge the if into being given, all million or particularly seasonally $XXX million you $XXX you Now QX $XX guys with to that really have quite that to million seem positives going million significant that doesn’t to $XX with QX,

really ask guys missing broadly what differently, for are market you in, So, in QX? terms something Or am I factoring conditions of here?

John Romano

Romano. This John is

that shipments. in possibility million could some the also in zircon $XXX at $XXX that when we look slippage So we to look, are factoring million range, we have

bulk the these said, of to lot don’t So, a it have of control congestion. port happen tends we shipments lot regularly shipments are over as we and

But in It’s could there we risk possible. is factor a that zircon So, attached shipments the there to into upside be factored that to that? some range.

Hassan Ahmed

Understood.

Jeff Quinn

get the that And at $XXX when to the roll will the entire it last integrated $XXX sort were time Hassan, Day lighter together of for we million into we in million forecast as Investor company. obviously

takes weeks quarter. few So, we will see you the the puts there advance as and another into

Hassan Ahmed

Understood. Understood.

John Romano

to a timing side, as we can that. on lot time is it and well. control frustrating our shipment do say a is all bit We But not there the

normally don’t provide and So, guidance. we

manage we of it So for that. kind adjusted to

Hassan Ahmed

enough. Fair enough. Fair

of of zircon guys sort the obviously about. moving Now, guys zircon you in zircon EBITDA, market. is around part and and overall release. to a exposed about China were quite talking zircon press on, commentary being you larger The talked the larger Clearly,

will continue around of fundamentals on it China, growth, a guys uncertainty much and basis, alike, you that improve? supply/demand to things with that what gives of is GDP that confidence the sort or demand growth you zircon so Chinese comfort go-forward sort are So, side seeing on of

Jean-François Turgeon

why JF. comes zircon that it’s from equation. the Hassan, side on have of confidence supply reason zircon The the we

zircon growth of there. the supply is is But the of availability zircon know, put to down. open it into going new the and And and slightly So, because market is and you are their zircon’s producer, big some down also the of kind the not takes the the going production along flat moment mine right is, you that at mine all of new down, all even reality is market. going a

a in supply/demand really is market nice balance. that why that’s So

John Romano

up you last If think were demand. about year, with keep where couldn’t we we

amount of stepping frankly, already kind of And to been it’s stability, to migrate TiOX. So, point, was hasn’t out that into money there for in quite to is is of right the we now. margin capacity We’ve in that lot stone when new process. the us a fair get things go to There where order zircon and of been needs the investment. about into a market one talk pricing JF’s

Jeff Quinn

zircon planning, a incremental final capacity smaller, process business picking and of for business our that up S&OP it we not it there, is are because as will up the relative that deal the point as part guess, planning the be doing. also, using portion into And simply I picking be with But zircon our volume. we planning of some will will we revenue, get same be well as the integrated

Hassan Ahmed

Very guys. much so helpful. Thanks

Operator

of of you. comes Roger line Spitz with And from the America. our next question Thank Bank

Your open. line is now

Roger Spitz

good and you morning. Thank

Jeff Quinn

Good morning.

Roger Spitz

QX believe Cristal TiOX in that market you and/or pigment share you Do XXXX?

Jeff Quinn

margin a think some typically the is on and But successful say, And stability can’t far XXXX develop that are process we’ve our than that of ones our than we I didn’t initiatives, I customers, own of Tronox been relationships market. is, extended can been QX. Look, period because we’ve the as bit with would an trying that out in say, working speak for I for to time Cristal, what goes them more growing faster as very tailored I are there. those

that So some market, of be when preferential in strategic we find to initiatives that are believe I our out competing margin are those can that there. our the larger stability customers

on I traction but margin am we to regards I Tronox. for doing think to all with are stability, about it gaining going say that’s So, what actually is

Roger Spitz

Got it.

you remind was mentioned, you you you were this the slagger – think you cost to AMIC, it the could that simply threw the I Could was add you of debt time is of telling please? last please that XXX of design had the that? But And you number I update then in do although XXX. takeover the loan future. slagger, QX Secondly, were do price you I If recall, take that the to AMIC’s us and the could if out out to XXXX, option loan regards that exercise believe assumption update XXX which you you on you could on drag you got obviously. the some

Tim Carlson

Tim. It’s Roger. Hey,

spot is contributing slagger the we You get that operational. the are would XXX slagger and the debt, on consideration the for be the it the XXX be which to are of additional would the assumption

consideration be upside $X slagger and the and that is operational. working north billion fully that could are So, once it that of given on, given JF team

Jeff Quinn

– are correct. you That’s

Roger Spitz

That was okay. value, $X billion asset

Jeff Quinn

right. Right, yes. Yes,

Roger Spitz

Okay, yes. Great. much. very you Thank

Jeff Quinn

you, Roger. Thank

Operator

with James And our from line Citi. Finnerty next the of question comes

is now Your line open.

James Finnerty

Hi, morning. on good the all Congratulations progress.

Jeff Quinn

James. Thanks,

James Finnerty

you to the the will be strategy them on or forward? it, Cristal a are know, going has margin on Roger’s similar been want just that for stability doing Just change initiative, is to that following something question going

Jeff Quinn

commercial of us I moving on some a comments, of it, said, view work this the as a had. stabilization think, And and as great approach margin there, sort out of and I initiatives. especially commercial single as we said as Cristal got in doing allow are the large John strategic customers the advance our some to initiatives very accelerate approach we with customers. forward with large our perspective the benefits now Yes, into James, my clearly of perspectives to one and to will And be we’ve gotten the of

really one are So, I of globally. the move forward. relevant positive historic as think Cristal a adopting it’s not approach and of we But we approach is sort as all incredibly a

James Finnerty

to lost slide that weaker the share of of there the declined that compared I volumes the margin volumes, in a initiative? if that your part to stability stocking. say as attributed on in separately, any then, XX% demand know Was year-over-year market it … they related you and And to result that years, was

Jeff Quinn

were I think there in number is better. opportunities number have taken we that embedded that make think, that to foregone that I No, could

mean, margin of results So, does I in initiatives. our way, stabilization yes, number reflect the a that

James Finnerty

going right, great. forging to would of clarify, another during between been Okay, is have because alkali volumes producers automotive just factor does and quarter, producers And, industry, recent the differences the most sort happened just the think that to volumes, impact going on sulfate chloride about? to what to and also sulfate

Tim Carlson

are now colors as I – see saw Europe. resilient we remained the are Asia and as starting automotive move – the TiOX to relatively factor earlier, Jeff’s not adjust did we And the on sulfate regards that roughly to in am exactly every tons you I of we XX,XXX I are it’s not and market, but from to whether see the frankly, chloride, I then year with and to some in China. demand sure as moving and into positive or that’s point, uptick I it of in started going there as in American down has imported both North into mentioned and Jeff U.S. or listen do, said, is what how quite Yes, you to tariffs we market same we believe QX think, to that and movement lot into QX, inventory not,

duty, expect China in exporting Australia we And a be have probably are that’s I in going and Asia Pacific, So, with now. facilities facility to XX% of a we our would out also in currently opportunity. to China an

to China about So, post was – X%. pre-acquisition, our exposure

X%. about it’s Now

we well. – our a it’s So, but still of as measured not grow that planning to business, significant portion a are

James Finnerty

last And quarter accounts what this the is in you. one year recurring that debt just Thank debt debt question. first increase? was which Great. – terms Between to of increased, on, end and housekeeping to

Tim Carlson

down an to No, of in to of some flows. we put order just debt leverage at was issue, March, that into timing cash South initiative the those and and a asset It term of term end that loan made undertook using Africa April. out more in base loan are was that in we because the portion Africa, debt B But pay actually were took actually payments B. that to a South we

James Finnerty

much. Got It’s Great. so is you. you just timing a Thank joins you.

Operator

next Thank the line from question And our John you. UBS. of with Roberts comes

Your line is now open.

Josh Spector

for on guys. This John. Spector is Josh Hey

forma side. around TiOX capacity the question the a Just pro on

X.X So, any your on better, environment what they just are? in was the right say now or better what the million of rates market could maybe, without investment? be utilization And you tons, kind would circuit market curious a

John Romano

you think we about legacy So, if capacity have our are Tronox capacity, running at and been.

it’s Cristal the a when So, about tons there. bit acquisition think different the and we

have we the the that is getting Yanbu plants in biggest the the of fact facility. up to utilization expand opportunity through One

much running. very lot lines, get a chlorination Hamilton six and lines, a amount asset and So, of that up tremendous we not to like of capital there with of oxidation synergies, that’s similar, carbon portion believe is that we Tronox technology. opportunity regards – that that when copy a is our actually it’s with of big that six a knowing to legacy think a It’s

So, that’s most where we’ve the the one area I got upside. think JF?

Jean-François Turgeon

No, no, the and describe with John being I moment, our I market-limited. Josh. would Look, at agree operation

Yanbu, we the there synergy product agreed John produce priority have have because worried with not is is are today that low portfolio I XX would we I UK how it if can call and quickly. of help quality years on more our produce quality utilization and rate those technology quite about running like more We that that old pigment quality we assets Yanbu, at to in the the great sense, that’s and some of that that to identified because Stallingborough make need case asset talked of in we the have to the ago. the makes quality focus In capacity that years for we from today XX a the Yanbu, of and are out

strategy it’s mentioned And our that change quickly. as allow quickly I make so, to small quality that will the call, to of asset in improve previous very

John Romano

thoughtful is add a think, major that I competitors it’s I online at what that hidden with and look delays the to industry, and to think of about factory risk clear driven sort add about there cost up, we brought some we about you times, the has be have often focusing capital the the and with in utilized. core that capacity on lot industry. capacity I discussion the And And our cost will prudent not. of working issues, doing just so when realization market, the at core of by think, can own on into of that referred And quality incremental lowest that associated coming the that JF be one sum that letting the the but and think we capacity increase time as be mean this and we and the on I that from

Tim Carlson

a our about. is market Yes, the order low keep cost a years when five pre-acquisition, excited quite we think expand you company, something five–year capital were to as plan, the new to growth. of tremendous amount about that in over up be capability are with to we this spending And going

Jeff Quinn

to is we level from would that several operations years. for have Cristal the that there legacy up and prevent Tronox legacy last the seen us have And being nothing no operated the utilization to able operations reason of same bring

that’s for quantifier we that I think the dynamics good what production that – a increased if of call So, if pretty market upside capacity. is,

Josh Spector

I the around that, same If or thanks. highlighted you from overthinking I risks and assume volumes walk bringing I some customer that that maybe price that to prices helpful. to are initiative That’s harmonization on And to mean, you Great, push just initiatives, am up is level. risks the basically around prepared the there around back is away the circuit that?

Jeff Quinn

let get guarantee price. the on comment will highest think, I John his comment I’ll and that we one always

less. but over mean, various may we are that’s that thought be. we price, But customer-by-customer, work has And at the the But issue two greater. been we that when we the I if at it’s to as in what end had length deal a took been volume what that. and than realistic of to the transaction, it price I the you the our not, or could about will it was wish up sort pricing of of the the we not really will at customers that time be harmonzing point close Now, of of or that less case-by-case the harmonization are get magnitude magnitude of down quarter most is, when obviously, we that actions that we done, we at earnest greater terms in – process in that’s always mean, that your to that or through it – product-by-product case, are difference be is delta issue and sort ongoing. And it start of might is that normal in course. times But that John? of we with have the looked those happen period, to year

John Romano

prior might knew We that I – made we be Yes, of because will look, an and we – customer an be the more that medium wasn’t, and you expectation accounts. going mean, I post-acquisition, in base But pre-acquisition, customers. there when XXX%. the think big globally if comment, there the small having looked our into of it’s the mean, it’s with what had clear I there to anticipation all up or there at overlap visibility overlap to that was be accounts overlap was and

paper a So, a market. of lot in do they’ve we to and market Cristal’s had position has in plastics the that with customers. new strength then got stronger of Part the

the lower was I portfolio significant believe and don’t made price So balanced than a and what comments it that a not think harmonization. expected. It’s on associated I with I got we’ve risk we that risk

Josh Spector

Very guys. Thanks helpful. Okay.

Operator

Morgan from with of Stanley. line And the question our Dugger comes Rob next

Your line is open. now

Robert Dugger

the closing call transaction. and you taking guys. on congratulations for Hi Thank my

shares any So, And Tronox? to be when if expect remaining may there I that was wondering we could it you sell Exxaro and completed a their date is by? guidance to provide must

Jeff Quinn

will There is shares has they remaining in am the guessing, that an not the But year. will with announced them. just be a actually sell, that later our in allow When they’ll We’ve in date. actually to preserve certain at sell I to Exxaro will as time part them agreement agreed they our of point fashion. sell NOLs. that up us orderly completion it

Robert Dugger

Okay. you. Thank

Operator

the And our Alliance. Lou next comes from [Ph] question with line Fritz of

now open. Your line is

Unidentified Analyst

the debt, me, cetera, debt your transactions net adjusting cash so, for tell Hi, South good the you Could moment? African morning. the is at all and share et buyback, what

Tim Carlson

– we’ve Cristal about quote post it of million ABL. of got I debt. Currently, we’ve today and got B cash sheet Term paying about going again, transaction to am on today, the our our We’ve liquidity addition of and got to and that, million as balance the $XXX of in the $XXX got loan we’ve in $X.X billion

million. $XXX around the So, liquidity is overall right

Unidentified Analyst

takes share that Okay. the also account right? And buyback, into

Tim Carlson

Correct.

Unidentified Analyst

have then, remind when said you what And leverage all is of Okay. you that’s guys Can target me you kind have leverage? done? given

Jeff Quinn

to leverage. One targets two net three bring $X.X over Yes, couple and the well, billion like also then times our gross down to we’d is to two debt around years. next of

Unidentified Analyst

Okay. you very Thank much.

Jeff Quinn

that Investor lot of is the rich and that between, the of talk at capital about return month see Fritz, one of things menu organic of sort the the end objects the the also to the potential additional And Day capital of delevering allocation shareholders. at we of a we’ll

bit. a quite that about talk will We

Unidentified Analyst

Appreciate it. you gentlemen. Thank

Operator

question line Barclays. the with next Thank Lalli from you. And Brian of our comes

line Your now open. is

Brian Lalli

are Hey How guys. you? morning. Good

Jeff Quinn

Good morning.

Brian Lalli

morning. Good

quarter Cristal the Has helpful. follow-up forma the it a about think ending presented further columns other cash from of actually, we balance in sort a what at of and closing that I we previous you be? changed as question. April as quick our those around the found to Just, looked the than anything pro transaction, should quarter the the over next adjustments particularly model

Tim Carlson

Brian, You similar. know, very

Brian Lalli

Okay.

of stuff So, term and all loan off $XXX consistent? the repaying that is still paying the million ABL,

Tim Carlson

all Yes, actually. that’s been done

Brian Lalli

it. that to question, the answered to got that’s Yes, XXX it. previous so, Got –

Tim Carlson

Exactly.

Brian Lalli

a And interest items, and at Are the guess, from to it. standpoint shares the related subsidiaries. will, then you the million open I then, X.X is to from this point? remaining those Got million South shareholder African confirm, Exxaro in the XX.X if the the XX% two,

Jeff Quinn

completion the bundles X.X, take flipping And to right that’s two exercised, in Those something shares with agreement rights that has on time the flipping consistent have there sell the the be now the right. or XX.X, protect mineral then sands be would the that latest the for to cash at little we can at issue XXXX. for affirmative up those can a that’s the way Yes, that to are different. NOLs. either bit that timeframes actually which a The they the

Brian Lalli

it. Got

datapoint standpoint, Okay, at say, this that you that outflow from really me on in last looking guys Thanks update Is agreement million helpful. there around helpful? can of looking any at one what And a for or and be break but then, $XX Venator to should time. is cetera, terms you the a et what discussions one the that’d should appreciate for fee, that the the dates, related you cash that maybe be with be we we that there had?

Jeff Quinn

Thanks. we their made disagreement. clear position a of think, - got No, Venator the we’ve have clear position and our and I on have we that bit made

the through not on process. the this new about very getting business way equipment. with resolution any synergies – and in And our of of delivering sort way will small business and that’s moving value this that thing really its a with in work So, incidental creating and terms main forward a really that’s going their and sort of in focus

Brian Lalli

there just the maybe color. month. totally. on. See appreciate of dates keeping you the want I if any Sure, know I end to the at Thanks. But were

Operator

the Karl Goldman our line And from question next with comes of Sachs. Blunden

is now open. Your line

Karl Blunden

smaller tier-X guys Do of morning outside among today. and players big then, you good the for you And a the smaller the producers. Hi, taking forward? interested all some thanks your producers. for going comment was time room few see on that, consolidation I have three in global specifically,

Jeff Quinn

there think I is.

because European I clear FTC and are, the transparent And the industry there. robust versus a that some sort and are attributes financial we that, us that how But each unique to our in of lay perspective and we will points of at to really at we navigated the ourselves other out be of is the comparison that Union look a of compete yes, do the footprints and think on and pretty try the fall-off transaction forward a guys. with capabilities from what integration terms very to be think will and the two going really attributes allow what could of, look out. for created, sort are, in stand and all the has our at what company Investor view the is peers portfolio to think those companies we have and there of our we room vertical those think attributes what cycle Day, our I technology especially

we So talking forward look to about that.

Karl Blunden

Thanks much. very Great.

Operator

time. Thank I no questions at showing this further you. am And

will call Jeff remarks. and Quinn over closing to that, back with turn I the Chairman So CEO, for

Jeff Quinn

time much very us. thanks Obviously, for for today. listen, been exciting your Well, time it’s an

are of pleased acquisition closed the getting A busy. things business and of on. We going about really with are value. lot finally the being We creating

We as found very seeing XX. here. perspective at that we’ve enter some presented month. a day We Always net-net, with York in New forward you be positive to pleased of we and the are that everyone Always here learn, the look things what some but opportunities will challenges. end

We to almost a full in look company quarter to the which will the of second footprint early results quarter about have forward talk it. in talking new also you August with

And Thanks So, weeks. hope seeing a here New have in all you to forward a few day. York in look good we we much. very

Operator

the you conference. This a you program thank all disconnect. conclude have for gentlemen, may Everyone and in Ladies participation wonderful today’s does and day.

Tronox (TROX) 10 May 192019 Q1 Earnings call transcript