TROX - Earnings call transcript Q4 2019

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Tronox Holdings plc Q4 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] Please be advised that today’s conference is being recorded. [Operator Instructions]

I would now like to introduce your host for today's conference call, Mr. President Relations. Vice Senior Arndt, of Investor Brennan

You sir. may begin,

Brennan Arndt

are welcome to Kevin, Guenther, of webcast. quarter Officer; and John today Strategy Chief and Jennifer Commercial Tim Jean-Francois Thanks, Executive On Quinn, fourth Relations. Officer; Investor Chief call Romano, and full everyone and Operating call President Carlson, our Chief and incoming Turgeon, Officer; Chairman Vice conference year our and Chief Jeff Officer; XXXX Financial

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

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

to subject not limited and our information certain and website Moving on include SEC but reminder in to made uncertainties, that This best including, on comments this today's information judgment forward-looking are summarized various our X, statements call, factors in information. filings. risks based our on and Slide our a to that provided presentation specific the represents and

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

the the believe of During we to in refer non-U.S. our financial the call, terms investors use we business will GAAP and when to are that performance. useful certain evaluating conference management company's

nearest their provided in the presentation. this our terms to U.S. Reconciliations are in GAAP of earnings release appendix and

performance, earnings the of a the and our XXXX. we’ve our both compared XXXX fourth provided in to performance, saw release, basis in XXXX full-year compared of forma fourth pro and you to to XXXX our reported quarter As basis full-year results on quarter assist a discussion

earnings XXXX to the presentation forma XXXX our on fourth underlying reconciliations, of XXXX, our a the performance, and basis EPS trends your the and adjusted our pro will Our in and be release XXXX. adjusted primary comparisons understanding on focus on enhance a In of and and the the business quarters and operations statement all of full-year appendix on and of pro markets. are forma this EBITDA today results for those

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

Jeff Quinn

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

the Before moment I which transformative largest year producer. of with through take XXXX vertically the last world's reflect XXXX. on year brief just to the a on crystal a TiOX marked for into the diving to we financials, Tronox want integrated close formed acquisition

with customers anywhere Now, with plants nine eight to an to global in six grow who mineral pigment That allows than faster our continue footprint. as world facilities operate they market. continents, the and the growing from our are sands with grow and with across us continue footprint overall we unmatched to customers alignment benefit

in more initiative average The targets patterns. value-added delivered XXXX. a We level which global on is a historic success XXXX the our I’ll and sequential stability enhanced opportunities basis the slides. relative stability margin detail price, synergy synergy has remained This our of bespoke of we in line industry top as in new selling over cover additional TiOX discover and increasing to win-win our XXXX for our our through are increased in target XXXX, Tronox, couple reflected on which of stability across essentially

and on appointment the payment. We our returned safety debt a share discretionary to million initiatives. a including in sustainability, $XXX of through and Sustainability our to Chief focus manage commitment We shareholders our our approximately and XXXX made million enhanced to repurchases dividend ESG $XXX maintained Officer regular relentless

our in would possible be of this and mine. people course, area developing without none of employees. key a our is Of Investing focus

we Tronox, accomplished value environment. and well We inclusion. move we initiatives, a development shareholders was XXXX to forward. end, we’ve of create year are believe situated this as including macroeconomic To employee despite diversity an renewed challenging our for improving our

to Now you the walk next year. for slide, the financial highlights turning through the I’ll

commercial than our was and global optimizing financial many and the XXXX strong synergies Despite our million. operating execution performance driven within in integrated capital. structure, accelerated have wisely strong control were footprint, by allocating flow through EBITDA such program, margin of free our on initiatives acquisition Our and our challenges, adjusted XX% as managing our at integrated vertically cash generated cost remained we $XXX delivering macroeconomic

December, synergies I achieved am targets. happy total to quarter to exceed acquisition the third million continued Investor our synergies target Cristal and XX our by Day increased We by $XX $XX report through in million. that exceeding the our of million Transaction target

again, I’ll increasing our in targets detail more a are in synergy moment. which we outperformance, review our once Given

China. and across due adjusted of basis Zircon stable stability We success FX X% India Global down owing average down an a volumes with in and and our relatively TiOX slight quarter, to volumes the margin XXXX program. commercial in on win-win fourth in re-stocking selling X% to some timing saw price pickup and the pricing remain shipment

half overall in XXXX, this co-product second remained strong enhancement. demand deliver margin and of to and prices declined profitability soft the While continues high-value

as at decline entering weak in point. the have at disciplined a made in we shareholders year, capital dividend the of However, million repurchases This experienced back the of share guidance Tim start and $XXX approach in mentioned starting discuss discretionary in XXXX few is to and debt lower the a resulted reflected We would that XXXX half us million allocation a to $XXX minutes. our I through slight further payment. our a the and maintain returning

displays an cash Tronox. moving XXXX and forward and in enterprise stability throughout the strategy, generation team We integrated of global delivery focused Our new together cycle. remain that performance is our vertical execution on in one greater as is financial which creating

what balance to well basis and a the to business XXXX. dividend. evidenced have and targets conceived, projects, control, in we those through executed continue deleveraging year in to that increased manage investing an demonstrate believe XXXX an full shareholders synergy achieving our forward to organization we capabilities return increased to as will we the We sheet, can capital the returning We high and well the look continue on

would to like Slide to X in synergies to more I turn detail. discuss the Now,

our our this was figure synergies Day. SG&A of in XX which Slightly XXXX our You of will XX this chain from related with Through Investor actually life reflected is we the fourth of from as balance million integrated total since million footprint savings, to pigment have we been coming recall the supply of related our benefits the achieved end half quarter, EBITDA. using over benefits. real slide have feedstock progress the additional track and

be during third XX future you the other quarters, million, will interest quarters. quarter P&L and $XX savings. reflected not call in was achieved was of and in supply of sheet, in for XX by synergies achieved cash and chain earnings money our and our balance million million see future which tax target other or exceeded synergies in $XX the synergies related reflected will feedstock consisting figure reflects in increased EBITDA This on which XXXX set million. The EBITDA

Given to and delivery a new additional to to are Day, of the value million, the on which our time synergies, Tronox on we target continue we set XXXX XXXX XXX original these and find Every excited XXX the the to at increase our new Investor we day, creating acquisition. from our to estimates opportunities build continued target XXX in our performance strong increased targets the were originally opportunities. and represent targets target over increasing These million, significant we are XXXX million.

our in John call to performance Officer I’ll trends commercial seeing we over now on to and turn Commercial global markets. our the Romano, John? Chief the report are our

John Romano

Jeff and Thanks, good morning.

the forma the the performance markets. $XXX Moving Brennan X%, pro which and on were sales XXX said understanding as local a lower was clear while commercial focuses ago first to selling our comparison, prices Sales than of numbers of X% in on Slide trends TiOX million a year-on-year give Revenue you X, with increased lower of X% basis. a to were lower. volumes million currency X% year pigment our

is X% FX euro On strength a value XXXX. Cristal's the in appeared be Asia. year-on-year headwind year largely issue chain increase reason sales the selling translation; approach selling lower lower the at prior were dollar U.S. and price the to North the again $X our completion to reflects Inventories normal The primarily and on in for offset continued average million America once volume in as TiOX today. by destocking levels across regions prices commercial The Europe a due of revenue. across was primarily basis

price We the as first will we harmonization in see completed QX, closed quarter discussed. shortly after was we’ve carry-forward this to acquisition as the

in in each see the as again in comparison, will XXXX. comparison you prices sequential As have did selling global essentially average remained once they sequential stable, our

well activity was market to to Moving negative XXXX, Sales volumes on generally ago. lower quarters and XX% regulations on lower, conditions, XX% QX environmental war as $XX price compared from were trade Zircon record, million the than one when were due which a growth. of softer of impact of products, mix impacts our China competitive strongest to prices in were lower primarily year as which primarily lower a had Zircon, X% continued the price. quality and with slower Selling product increased sales

However, the and third impacted quarters and has our loaded that fourth in point decline back-end was in starting XXXX.

million Zircon grade sales. products, versus of premium CP grade and QX. on increased standard to a at of other run feedstock $XX higher in products sales Our sales in slag And continue rate XX% higher

pigment were and for Zircon $XXX sales lower sales. seasonally or to range currency $XXX on for million million. X% and Slide dollar XX% X TiOX down volumes, volumes basis moving typical Sales and the was on from versus were lower selling Revenue sales the quarter QX X% comparison TiOX million basis. offset lower to compared feedstock within Now lower, by $XXX local quarter. a XX% partially U.S. the third the were prices sequential other higher of the prior and

to million earnings the volumes to China higher were deliver discussed Zircon increased of on to QX last enhancement Sales Moving margin the strong $XX Zircon as some profitability timing of shipments and X% quarter. the for restocking Zircon, and from from in to and continues and X% Tronox. previous QX due we sales call. India

volumes for by XX%, forecasting the to sales driven and of iron. are and and second year Zircon fundamentals the long-term product And of million to finally, recover feedstock slag medium still positive. $XX pig lower CP We remain half the sales other in of decreased

like Now, moving comment slide, I’d on next the our to the to for TiOX market. outlook

been XX plus contraction this I��ve in the As last in mentioned my has demand longest years cycle TiOX. previously,

cautiously optimistic of are that We reversal. signs contraction showing is a the

a recovery. general stabilization early signs market seeing indicating are of We

page. changes trailing total imports TiOX Asia in this Back has conditions. the of introduced the market which of a in is represent believe on We've bars outlining indicator leading slide pigment Pacific. countries served see slide average you on importing data track, three-month what which chart, updated from good we as the May, net moving reported a this The we TiOX of we in the

Using demand. this served that and data an can demand has We seeing as a dataset the demand, as Asia-Pacific haven't found you leading latest for we’re in TiOX in XX this uptick proxy which for last indicator see we historically seen a months. global

we're data We’re normal seeing demand in than the including by QX. market, trends earlier and the an encouraged in both the Europe uptick in in

the normal seasonal We’re increase the about demand cautiously will continue increase current half the as and over the optimistic year. second still of to above approach outlook and believe we

we’ve across even TiOX given of is given the on a mix supply Tronox result in modest in rebound to a well-positioned previously, recovery in is TiOX fundamentals recovery As sales balanced capitalize mentioned our the should current demand demand and world. conditions a macroeconomic

it’s monitoring in key point, our still in sales determine it have on the long The we’re both early effects There currently impact in seen short-term that is TiOX coming Europe that to to as of on the the a have that remains increase will medium factors we COVID-XX too and been modestly we’ve term. have and At outbreak Zircon. from the the and Asia. impact positive this full orders uncertainly One in may serve. however, markets slight

network our continue the be respond conditions and they situation but integrated will model vertical to global develop. day-by-day, that will business We our as market changing monitor a believe well-positioned to assets of

And with for of JF? turn the I’ll profitability JF operating that, now our review quarter. performance to and for a the over call

Jean-Francois Turgeon

morning John good Thanks and everyone.

$XXX EBITDA adjusted comparison. EBITDA review Moving year X, pro EBITDA first forma ago pro of of let’s adjusted million Adjusted than was to year-on-year the XX% quarter. lower the forma Slide

Zircon As selling TiOX volume primary lower and driver. commercial John price commercial Cristal discussed, to were related legacy approach the lower in XXXX

and ore maintenance our we South this normal was with factor Additionally, and dollar. operation, met costs, rand offsetting higher the integrated including exchange production on primarily were foreign inflation, favorable general seasonal costs, in Australian partially the African higher cost

EBITDA $XX contributed addition, In million. synergy an improvement of to

are pleased the delivery We to with very synergy date.

cost true in and feedstock network to coming previously operation, As mentioned, across and benefit add outlined, additional opportunity the Jeff significant [growing the from realize chain. target our we’ve combination increased supply continue we to cost from find saving use saving value our are to benefits our opportunity the driving an]

In incremental produced reducing improving and start utilizing position realize XXXX, quality we operation and costs additional synergy best at Brazil. areas at such operational across product plant these such as our Cristal will to saving legacy practice continue to in of cost our as see and Yanbu, the

On the additional the this point, identified, will and we reduction the reminder the in XXXX. opportunity are cost realize year we last out seeing about to team start excited Brazil of which already are has of

Delivering of our is part excellence the synergy only one program. operational

this and within is performance to ton global our quality, optimizing our per our to costs across call improving team initiative driving safety on importantly operations our as our Our increasing lower relentlessly global Tronox. footprint, journey all we product zero most continually

$XXX driven margin to other can sales lower from off what EBITDA pleased by feedstock, third the we and look fourth and results XXXX. with XX% in volume realizing normal one sales the seasonally our million fourth deliver to of time forward decreased quarter QX. and of the primarily lower sequential quarter Synergy Moving TiOX to million integrated EBITDA contributes quarter. comparison, million, absence in and I’m the the $XXX adjusted compared benefit to second XX volume,

the I call discuss on like in our turning had operation impact the would COVID-XX Before to had China. over,

COVID-XX had the has our sulfate where originate. this a a our we of in welfare our is drive remained time. Province, five-hour in safety of Fuzhou Jiangxi The With which acquisition XX,XXX through top and Cristal, ton priority employee from the over Wuhan to uncertain footprint outbreak

incorporation $X had million our operation days This EBITDA. and XX we on the end, Fuzhou at the left Chinese impact that local To with Year authority, shutdown for our around holiday. a New

site. been have fully the addition, supply COVID-XX we of impact outbreak operational safely no February no since XX, date, XX. case February on In chain. our resume global on there have have We operation our To of been had at and

in We management the are time. team this the through safe grateful uncertain of and their China to plant

our with regulation. We will ensure employee and of the continue of to closely plant complied safety operation our the with to monitor the local government work

With our the next our look quarter to report turn in to thank and that, continuing forward I for on review over of financial to progress call Tim call I Tim? a you, Carlson I’ll position.

Tim Carlson

JF. Thanks

the of starting X.X and with sheet. and to our ended net debt billion with Moving total balance Slide of XX billion. We year $X debt

million strong Given term discretionary free cash loan on flow, made debt repayment in our $XXX our we December.

and comprised was Our revolving million under million liquidity $XXX agreements. million of cash and and credit equivalents XXX cash available XXX

with ended addition, the restricted million cash. In we year $X

Our net XX-month leverage pro was trailing four times basis. on forma a

to consistent which achieve leverage net with the are to guidance to a X Investor at Day. the times, ratio XXXX target by of targeting continue We given we end of X

allocation capital remains Our policy unchanged.

disciplined capital projects return to on deleveraging. on prioritize continue We spending high and

$XXX and our capital expenditures depreciation slightly were million, fourth Capital In quarter capital our expenditures expense ton million. our was of other focused depreciation our XX to Approximately EBITDA of ESG, remaining to two-thirds XXXX, the million, in maintenance, XXX and increasing and were cash the $XX million our compared amortization below on guided one-third and million. of per was projects. range XXX on

Our expense with on XXX our both reported range of depreciation recorded amortization was in-line and XXX figures guided basis. are to an million as XXX,

million XX.X dividend XXXX of shareholders, we Regarding to capital $XXX in approximately shares the repurchase for payments. regular our returned million returning in

of our results generation As in annual we quarterly reflecting cash in will business of $X.XX dividend consistently per which cycles. integrated strong Jeff mile dividend an confidence the increasing our mentioned, our be by vertically across share, capability XX%,

confident softness and in Regarding our deliver within considering near-term Zircon market, commitments the we ability remain our the the our to conditions uncertain control. global in outlook, while XXXX remain macroeconomic

EPS expect net XXX For times the we’re million, to to of expenditures $X $XXX by end XXXX. million, three $X.XX, to diluted $XXX achieve of million, full-year billion, at XXXX, and billion over $X.XX flow the cash our million million to revenue free XXX EBITDA of of capital of to targeting we $X.X XXX of leverage adjusted adjusted

their I’d Before be finalizing team disclosures file our returning to and XX. advantage before the analysis and [indiscernible] a March like to We're extension accounting to the XX which calendar day crystal acquisition. will our take on efforts of our finance for call back thank and Jeff, purchase XX-K, moment dedication global still take will or to to

like that, With to color call Jeff? I’d to turn back the over to areas in Jeff add our XXXX. additional outlook to focus for key

Jeff Quinn

global deliver our uptick in just Tim our current The beginning targets. of TiOX the to uncertainty our represent Tim. ability sector macroeconomic outlook you and synergy softness walked near-term numbers our confidence an Thanks and balancing in with that in Zircon through increased the

At the back XXXX in a half range conditions our XX% results, half forma guidance adjusted of EBITDA XXXX expectations of the out dynamics represents of market and for we increase macro for coming pro the our back uptick face and XXXX. midpoint, over reflecting an the

Just increase a per million approximately to $X per EBITDA selling as ton $XXX reminder, a $XX impact EBITDA per to in prices ton prices million and Zircon a $XX has million $XXX has in increase quarter million average quarter. $X impact an a pigment

So, our significant there environment. pricing is leverage an to system improved in

of at will Advancing the reflects increase. quarters tighten effect The the prices guidance to in which impacts positive one fixed financial feedstocks in feedstock on a KZN, for an this to furnaces the continue days. feedstocks of this the includes off-line cost quarter, reline will likely Our future furnace the impact pigment EBITDA of and realign pigment have our business. approximately availability million as impact will XX $XX five of also take estimated realign the ongoing and expense

the due rising and feedstocks is peers market, to inflation guidance $XXX have integration Our the type does it us terms while also some seeing compare cash to] on our over vertical impact. our in Free we're of [new flow return capital of deleveraging, to current with funds million what plans to provide of impact cost program level reflects through our disciplined million what consistent be $XXX key in of flow upcoming during reflects we’ve will continue to allocation for perform previously. projects out also invest year capital This high priority. will our free the which cash laid a feedstock

known effects short-term factors our the including plant of shutdown positive JF and COVID-XX, discussed Our near-term of range that the in guidance John outlined. the Fuzhou impacts

time the at results. not However, to potential the does situation we are on quantify XXXX somewhat the unknown. cautious account our fully for this precisely We it as remain impacts of unable

monitor daily. balancing really effects case It GDP. to potential a we dynamics The situation, microenvironment potential which the changes continue TiOX is any is on industry on [dozily] with global macro effects of the the that

as we event based time, what said, for to as vertically develop. we and believe any not year, model network However, we to of global on a assets see this but quickly as changing at our the and in significant conditions they as situation headwind needed positions integrated do know market the respond us business John

but the strong. global economic market that have macro is remain TiOX we the believe uncertainty as outlook Clearly and entered for we XXXX,

from and emerge we a beginning trough, shallow that believe environment. we of precursor a to an industry volumes have has uptick the an in improving pro-long, As price seen been but historically this

will remaining EBITDA future competitive industry vertical advantage a all while margin strategic cash safety free financial of to us through outperform our take our generation where and we flow to of sustainable confident a that for we XXXX performance your global committed the to footprint, industry-leading be environment. economic We integration continue Due number actions a are the terms deliver we development. believe of irrespective would in peers prepare and of to a

open questions. to like now Devon? call your the up for we that, With

Operator

from line with question question. first please your you your can Frank could you line it. Frank Research. muted your is Our open; is Frank, unmute if Instructions] Mitsch [Operator comes ask Fermium

Unidentified Analyst

Suzanne it’s guys, for Hi Frank.

on areas elaborate The I increases, the just are those synergy first you could on guys which had seeing and more you question guys within increases?

Jeff Quinn

that Look, practice generate year it’s transfer. best that the will we the start basically work last of on some to did

the transferred of legacy time, business use the to that with to get transfer on could synergy out if react advantage So, the continue and to operator our operator of to chain, practice we the but and moving one be year. supply synergy will those and Tronox some use the additional obviously will this on is term really was feedstock more I chlorination had the we of knowhow best legacy from takes we the reactions, start obviously of Cristal of asset combining order that quickly where trick those there new the quick to that business

Tim Carlson

lay our we the be and in volume. where and and in terms more follow synergies, we of in operations into the ending we’re whether of the in actually targets system risk-adjusted reductions more Tim we we’re comfortable It’s little cost SG&A as on very them get it that. terms for on activities up, When across very,

Unidentified Analyst

on on demand follow-up, coronavirus, as could know then a seeing but Okay. as guys for supply the tightening well? guys supply you you seeing bit are on demand early Thank you a industry impacts guys the – that. And the you in you are elaborate guys I what side touched you more just the region the and from guys

John Romano

is Yes. This Romano. John

standpoint So, inventory mentioned the year. this and demand where inventory, earlier, believe I from of should be is we of as time it the for supply

the as before impact. least We a quarter COVID-XX COVID talked just picking up as short-term So, hold. before, a actually volumes I’d month norms, we at long result we was say saw took seasonal the a that first of uptick and about at entered

half of saw returned effect has recovery as we from will is supply Slide what pricing and we and demand is working mentioned mentioned start position a second the Jeff downturn, slide, to likely at to enter it towards X looking year. seeing as we're in upsides I as demand the see a So, on that where indicator the number we’re where month a on starting in was I XX think good

Tim Carlson

just is customer enter But from it Chinese the is ground, totally enquiries on this supply. clearly stories what from we're seeing impacted and

Unidentified Analyst

guys. you, Got it. Thank

Operator

next Our from Fischer question comes Duffy Barclays. with

Duffy Fischer

Good morning, fellows.

down you volume time like, in like you it’s being so shift has know hung a about can on least when talked on big, because about don’t spend is market a number year little a mix much just maybe look normalized down back you for like did First from the last as well your a Zircon bit last then much if talk question and of are at today look peak price over prices the is XX where the on over because negative, but a at footprint price of XX just years you years? TiOX, versus your like-on-like products how I you

Jeff Quinn

I you – XX will that look were at If say is not which last a would the spike, the includes in X,XXX something years be duplicated where prices range.

So, range] the look somewhere some quarter when XX additional about X% moving peaked factored from where really down the guidance we XXXX, price the in at is quarter. we into first first the we we’re provided and into erosion had [XX, of how the

from going a second from where it kind to and are year. first of half was So half perspective, demand be last flipped

we a a the a move for bit it’s year will the and into tail of years of planning So half kind year to of as be slower recovery. second a where continue two we’re the first

Duffy Fischer

Okay. down And the year, maintenance efficiency hit million] [$XXX in of how that break true you kind the then, if growth this versus volume? your CapEx just versus regular roughly projects would midpoint of

Tim Carlson

reduction vertical will and benefits. of for ton the be associated doing capital million. some for in in with Hi, driving some that our additional we've million, we We've our leveraging and $XXX got $XXX our the our plant terms extension integration ranges capital cost safety per Australia continuing Of from $XXX EBITDA then mine plan capital in anywhere Duffy Tim. maintenance to in it’s got

Duffy Fischer

you, guys. Thank Great.

Tim Carlson

Thank you.

Operator

Our Markets. with Capital question John comes from next BMO McNulty

John McNulty

Yes morning. Thanks question. taking for my

demand that balance, [more stability are come]? would seeing or what in in the, with initiatives may an like there, notable what some uptick how like you’ve the is guess looks that lock that’s out put of yet So, increase onto in seen to a something supply regard you you I early looking of you, terms be margin to demand the have customers in for

John Romano

Yes, this Romano. John is

the and XX world, it’s in customer’s It’s about played profitability that think I not the accelerate the in plastic from months including in margin continues America paper traction stability, our when also So, coatings. think significant program of again last just on that. and to we a with it in getting regions cross regards it we’re to North regions where segments interest other and role

John McNulty

so think going it. Got range, for XXXX, plus at can guidance million assuming that or even then the the comment with that XXX looking the million And I hit cash the range your regard it kind EBITDA simple terms pulling that you’re as downside a we like the in that bottom flow to guess you're are how higher at as or in if million in you close end you're the you of flow number free XXX that that $XXX levers come to towards you’re wouldn't in of high-end that as to pull looking the should scenario about of you cash range, necessarily variance? of

Tim Carlson

Tim. a cash couple direct come on can pull terms of that you little spot There are are a increasing terms range in at of our but that levers John, of flow. in bit the high-end a we question. Excellent Hi it’s free we directly, impact in if

EBITDA in incremental spend are point there in to increase of ton we cost per system that remain taking can where sheet by hope our that spend million same balance increased working of work in our opportunities bit that in We to have do we $XX do to capital. at working continue capital to of a the if flow cash regard. out time $XX burn but capital optimizing We minimize little terms forecast, million that, see we

John McNulty

much Great. for color. Thanks very the

Tim Carlson

Thanks John.

Operator

question comes with Jim Robinson. next SunTrust from Our Sheehan

Pete Osterland

XX pricing titanium-based not? morning. ores ores and that cost comment in Good on the This is Pete you inflation environment expect the Osterland Jim. for for magnitude Can you for do the on of you XXXX

Jean-Francois Turgeon

it’s Pete JF. So,

are We XXXX XX% vertically in integrated.

in look products rare. one think it’s increase. I a a those look because plant, our that increased different of the So, at that the increase world. best the that rutile, that is than in in we’re product most have our Look, position that mean competitor pigment use and is much if experienced on more we digesting we you we has for versus it’s the rutile it’s high price that and double-digit price not available there’s demand the

margin price very because SR that we COVID-XX also positive seen TiOX and significant as the whole it’s of as as increase those. have look has business even jumped Slag of China specifically and ilmenite in China, side ilmenite we have TiOX of increase tight out is a what seen very tight feedstock as the price soon and because has for to their in to the and market increase, match has are the front. obviously recently And

would So, be my comment feedstock. that on

Pete Osterland

then Thank currently as are given repurchases, XXXX? a priority, use you of valued, about share consider where during shares you. the as as And would you deleveraging well spoke cash but

Jean-Francois Turgeon

I mean, always those remains priorities between and among deleveraging first sort of we’ve but foremost about, those. allocate three we talked Yes,

we will at look projects would high aggressively look and that sort the at are those share in priorities So, maybe repurchases, order. but have of think I return then that that we in and relative

Tim Carlson

our follow-on, have as And of [Jim], as Tim, limitations. on limitations a we result do NOL some share repurchase it’s a

Pete Osterland

Thank you.

Operator

comes question Jeff with next from Zekauskas Our JPMorgan.

Jeff Zekauskas

you the material point you inflation, up want your do sell prices your given you of Since the a word producer dioxide raw to domestic seen already very to do Thanks titanium the you the have China the want market, operation? view going sell are export to much. to are in of market, from China,

John Romano

Hi Jeff, it’s John.

took seen selling in far we're some whether the of product areas. that COVID-XX we’ve before move looking margin as as that been sell material our in higher Chinese China, and optimizing to have and move prices Fuzhou, China was sell at actually questions, plant take looking it that been out to margin we to how up we’ve With or hold. those how respect pricing and both maybe in to we going of on So,

that early raising started we So, price January have implementation an and China gone in in through process.

So, significant and we’re that’s move. JF's price supply to ability at tons seeing actually get minutes having significantly it’s feedstock TiOX ago, to point pricing [indiscernible] a lower is X this constraint impact to buy of pigment. or company’s procure ton with not whole on of a No a few percentages a inflated

going is optimistic think for of China. reasons we’re variety So, pricing for where a I around

Jeff Zekauskas

there it the margin Slide that of there Slide purchase, higher can on clarify hand the I sequentially I million for of integration in the you the year-over-year, left why side And was, two right-hand benefit those follow-up the you of Okay. an have production and my million fourth quarter part was costs says and versus indicate slide, then downward then the bars? what wondering case? that absence in of XX X red on you was your XX was was quarter on EBITDA wondering were the third And that

Jeff Quinn

Sure. Jeff will I start.

do have business the XXXX who QX to try about to legacy QX should asset the the in we a that where and that owned and by realize say was put to and was is the that sell was it operate. in at not have maintenance been plant, someone more business to I’d in quarter You level maintenance good Cristal the condition always

little we that one probably bit we come to add. of As obviously quarter was and QX say Tim, did that what that’s a cost I’d increase that’s important want front than where more you cost, an needed a to and component. on control, to the we be time in done at and and the took less had assess

Tim Carlson

that it realized sheet we profit operation plants. we our would African and as and open and putting result feedstock by selling a selling as relates third open that benefits, market to the feedstock just normally the a of as in QX, our to Jeff South on of the we of it margin our absence parties, market, our QX to internally operation XXXX not decision made have all to to a pigment to integration sold feedstocks the when balance in it reminder it stop of the selling Australian

about on realized to and to that of this QX we of balance QX. and sold, sold ore actually profit QX, we incremental had a our if a you sheet calls those QX, you QX probably and at put it, quite from of we million shift QX realized really pigment with just it year in as that as product margin result in and and from timing the the benefit and pigment manufactured million as and profit capture a remember QX then we it’s $XX on profit the that headwind in look QX back $XX our balance sheet we We actually of to and was bit of

Jeff Quinn

And go shouldn't forward. that’s for as – that see thing both the ends we we are one-time

Jeff Zekauskas

you quarter? inventory the what to I quarter were now third just understand in were me, you're fourth they costs in the said than in higher

John Romano

third No, not of exactly we and Jeff. of What a would we parties normally that happened was year as QX result all of the profit sold internally. realized selling QX have last to in

the standpoint inventory a to balance and just through profit timing QX So actually QX, and lower went from sheet cost that QX. flowed QX into that from on

it that shipped So, a was those between as profit quarters. just four to probably mentioned one-time Jeff benefit

Jeff Zekauskas

great. Okay, much. Thank so you

Operator

from next Andrews The question comes Stanley. with Vincent Morgan

Unidentified Analyst

for on actually Hi, this is Vincent. Steve

how assumed us on your actually wanted high-end what’s from and Just much the question low-end can Zircon XXXX of XXXX? from was a at Zircon, EBITDA about guidance ask help and of generated you think in kind to the

Jeff Quinn

haven't we TiOX, north impact a have Zircon volume generate does in EBITDA. terms know, than from does significant So, you contribution EBITDA of publicly Zircon, zircon overall but any disclosed on higher degradation margins so our XX%, of

Unidentified Analyst

maybe a thought XXXX, pieces? pretty on the have quick and timing help working I it us in a going XXXX is in then headwind like to there in tailwind reversing just that, benefit you the was I there but bridge a And you looks two XXXX, XXXX, a misheard in because capital could follow-up that’s guys significant are so maybe or just

Tim Carlson

Yes.

inventory capital. is fourth DSO around a – The the bit mix DPO. to the and as of at it a did working really levels. So, in phenomenal Where getting quarter we’re relates it’s job in XXXX hurt team

in but the again that see inventory levels and QX bit free given acceleration building inventory and reduce of QX, more just significantly in drive recovery reversing know about. that our John would a recovery are any obviously, cash. terms them We declining You and talked balances

John Romano

us build in QX inventory It's QX. normal to and for

Unidentified Analyst

Thanks guys.

John Romano

[Steve]. Thanks

Operator

Our Josh next UBS. with from comes Spector question

Unidentified Analyst

Josh. This morning. is [indiscernible] Good for on

in uptick? about you're this talked you’re end-markets also when you more seeing uptick bit color demand integration, contracts provide off? then, in strongest? back seeing Thanks. are can just the little what mentioned remind you a Europe, roll You And your just early us And feedstock can specifically you markets which

John Romano

Yes.

to destocking the largely exited the and so, see it's one area, any I’d being particular not in focused Europe, across the we’ve started on to XXXX, segments. it’s and as started say and the into uptick books complete order So, the good of in visibility. got effects we we all January, had pretty moving improve

seeing, of, is at go I’ve we’re that on would most uptick the that on is that it's referring we’re COVID-XX. know, you before, As not back what now you past numbers know, not out first quarter to support looking our right the we’re indicator mentioned order a book – that the and good this and of

Jean-Francois Turgeon

Matt, honor And, contract we’ll all our still to of that integration], be we by commitment. but have XXXX, the have out in on XXXX [bank we

Unidentified Analyst

That’s helpful. Thank you so much.

Operator

Roger Our America. next question with comes of Spitz Bank from

Roger Spitz

Would much. be the in EBITDA for guidance very Thanks you XXXX? interested first quarter the of giving

Jeff Quinn

that I Roger. don’t prepared No, that’s we’re think to do. something

uptick. obviously, issue believe think an dynamics the a furnace as what we cautiously have offsetting And we said, we as optimistic with we KZN. we’re we’ve and see the right I in lot one-time is moving what marketplace at of the reline now, about that have, then,

we longer think really the quarter-by-quarter. the look into business this it's and know, to term, So, over period longer at appropriate don't segregating start you

Roger Spitz

can in obtain in XXXX fine. flow you instead, synergies this to your CapEx are are guidance? free cash not that you That’s that expenses the And say what otherwise cash know,

John Romano

or million million. to going $X It’s $X be minimal

Roger Spitz

Chinese get on is to they, the tile you work you coronavirus, comment Chinese to tile? Okay. or can demand because And is, can't on you industry work back know of know, the

Tim Carlson

Yes.

XX look, So starting backup there the majority of JF back mentioned month. since again, plant the customers’ and is as are this are and say, running customers, our process up and customers the I now would our XX or

Zircon to of look at this up all QX QX. plants, not mean QX we’re again, were in and that are XXXX, sales in and they as but quarter, process similar starting the that at are – to see running our we seeing but first to we’re that restarting very numbers are up we I QX QX of to in stage, particular So, X%

Jeff Quinn

QX. with Not but in up X%, line

Roger Spitz

very Got you it. much. Thank

Operator

with Our comes Lalli question Barclays. next from Brian

Brian Lalli

that synergies, summarize all I the on $XXX of the I pieces to takes Zircon Hi, a thanks. guys. you that's on point have right just appreciate possible, savings I in a million of were, on that's then furnace again that know add million and basis? of [$XXX but starting a a million EBITDA would want that maybe and and you I’m – if $XX I I of million first the, Good and from thinking improvement specifically, relines, $XXX have we’re if that these, moving correctly you maybe future pro to on EBITDA and know, of forma have outlook basis, million morning. if that take me puts this a synergy wrong then pricing, and, would around that is and of year-over-year know, make the just outlook Maybe – doesn’t EBITDA key you housekeeping million] basically love realized enacted we XXXX, I any if correct sure then number on the item about the $XXX know, in follow-up, lot know you to doesn’t some the $XXX there

Tim Carlson

that our sands taxes $XX in plants sands the That the million $XX components P&L another It’s three had EBITDA plants our had associated and Brian. operations to is roll in remaining miscellaneous plants of hit Tim. some we two in with and items. months. million pigment The six inventory that we operations, in they pigment probably interest $XX in a mineral in our synergies the XXXX, or relate our through million our the sands the Hi, line. $XX synergies EBITDA they We and realize of and and in capitalized matter we the months – and mineral five roll pigment million in mineral plants into pigment

to as as that that through component going the again I balance be million onto increase of would going terms tad] we we incremental – ramp the be items. synergy always to expect there’s to in flow a So synergies, that’s in XXXX [a additional $XX to decline some and but in year XXXX

can investors, the we’re identify in in we’ve that the of to for the that’s expecting see calendar page, tried amount achieve XXXX. P&L and EBITDA of to million year bottom actually for $XXX the actually that you On our

Brian Lalli

apologize. – one, bottom I the it. I I actually Got That’s appreciate missed that. so

Tim Carlson

No worry.

Brian Lalli

a you just follow capital maybe continued again, allocation priorities know, the I repayment. as debt appreciate and And then, up, comments on Tim, for

of fair the You the about front in it? over are to think target? know, debt it next given another, $XXX still two the you as is, the XXXX gross way know, billion million is that $X.X reduction thinking about years right of you that basically target know, sort of you us debt the is So,

Tim Carlson

Absolutely, Brian.

Brian Lalli

thanks Okay, the confirmation, guys. great. I And appreciate

Tim Carlson

you. Thank

Operator

Our Zekauskas of Jeff next JPMorgan. comes from question

Jeff Zekauskas

much. very Thanks

answered versus don't may rate an or I cost $XXX cost XXXX, I You how know, cost what will million run XXXX? mean, you that cost. you incremental, you know, this, $XX incrementally the you million savings mean are how a cash much have extract what and when in basis, will it outlays? I much That's by on

John Romano

flat will outlined. and synergies it to needed much in the achieve are SG&A we’ve relates within some as the Yes. $XXX The pretty synergies that capital outlays miscellaneous million cash the of those year-on-year be to

Jeff Zekauskas

Right.

XXXX? will capital on much that how be spent so, And in

Jeff Quinn

I’m me $XXX million if million. maybe the of million correct $XX $XX to JF wrong, guess My

Jean-Francois Turgeon

we’re cost, Yes, the have but the able cash good what yes. a number, synergies to is Jeff, cost, don't get of starting benefit forward. you significant that’s obviously from things happens, move SG&A of have some best in And to now you that early you but are a to for that as lot – a really some are deliver more of impact cash more and those start practices those things see and

Jeff Zekauskas

new then Okay. coming are China markets? lastly, any the seeing TiOX you into global chloride-based And

John Romano

technology, has recently. than to significant work perfecting [indiscernible], companies no that are there's nothing announcements including there is mean, been what I that continuing in obviously, been on announced. more has China but been There already

Jeff Zekauskas

some it the feel shipped market? rates is, it in market? is you being at in Do That higher

John Romano

we quite No, don't. honestly

Jeff Zekauskas

so you Okay, much. great. Thank

John Romano

Jeff. Thanks

Operator

I call further not to any remarks. to And showing for at this turn the I’m now questions Quinn time. closing back like would Jeff

Jeff Quinn

time Thank thank you for just to today. I you. your want Well,

the outlook forward. for TiOX sector We move are we optimistic on as the

we to few much very focus we of that you first you of economic We leading and execution irrespective quarter to face. things the performance to and whatever And continue on the control our in a forward talking we financial focused look we continue months. be on thank can to very industry delivering macro conditions call on

Operator

today’s conclude presentation. does this gentlemen, and Ladies

wonderful disconnect a have day. You may now and

Tronox (TROX) 26 Feb 202019 Q4 Earnings call transcript