TROX - Earnings call transcript Q3 2020

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Operator

Good day, and welcome to the Tronox Holdings Q3 2020 Earnings Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] I would now like to turn the conference over to Jennifer Guenther, Vice President of Investor Relations. Please go ahead.

Jennifer Guenther

to quarter welcome and conference and webcast. you, our XXXX third call Thank today Chairman and Chief Jeff Officer; our Vice Financial are On call Srivisal, John Quinn, Officer; Carlson, Chief Senior Officer; Officer; and Strategy Business Jean-François Operating and John and Romano, Development Commercial President, Tim Chief Finance. Turgeon, Executive Chief

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

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

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

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

conference performance. U.S. we provided and to the financial in our to that refer business terms their call, to the the in will certain are of earnings use GAAP of evaluating Company's believe presentation. in appendix non-U.S. are we investors our and GAAP useful terms accompanying Reconciliations nearest management release the in During the

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

Jeffry Quinn

on full-year. improved quarter strategic and quarter. deeper it very with for We I our to dive continued the thank will and a outlook us of market of third demand deliver first update several and a financial Jennifer. our of we the I of my and growth business remainder optimize ongoing recovery you the quarter the projects results the joining our our and to revenues. the in through variety which and XX% sales business reflect in our The in sequentially, of regions. the results quarter the in the team were integrated ability third conditions. pleased other to for of results, other largely Good operations all then share strong volumes in increased for an strength over everyone, morning, turning TiOX Thanks, highlights feedstock by review volume into vertically Revenue across today. our members sequential geographic began a for see before continued July quarter, to will improved resulting TiOX driven

of delivery. the of reduction cost call. that foreshadowed impacts we've the discuss reasons year-to-date synergies. Finance our to captured has Today, As target the have book. adjusted Business pandemic, have join the entered delivering Development which of the been Utilizing call, were our track we increasing synergies previous invited enterprise continue sequentially, robust also is we Vice seen EBITDA. our the quarter, expectations Srivisal, increased remain proprietary strongly of Synergy To to bit our successful our and one to on we his in our even for costs million trend synergies achievement operations the John million, would stable. These our that deliver our we and fourth in more was synergy to of quantify preview volumes us $XXX $XXX of accommodate expected for optimization quarter materialized quarter view synergy Cristal continued quarter mechanism this in details a totals is that impact TiOX XX%. as a quarter while I the momentum be promise in of to some million gave of continued Senior million, will but outstanding order $XXX to in more discuss in recovered sales model, and our date through Adjusted robustness $XXX had to and we XX% our reflected outpacing pace, guardian we later. margins achievement raising well The production EBITDA reflected EBITDA acquisition. adjusted tracking higher margin and as in that our our temporary which effect million given pricing resulted John $XXX program the synergies earnings at accelerated and negative as a temporary an with October President, are in of XXXX the success slight we the to second full-year in the as minimized an the EBITDA. comments, to been acquisition internal now

We continue expectation out the schedule Day while total $XXX deliver our last come. total laid for million increasing to synergies to ahead XXXX. we've of a in of in synergies At Investor our target synergies year,

Our almost twice target this is new for that much. year

the pacing before, which through of said absolute amount. increased our legacy in led of the of encouraged the and has expectation by have combination an value remain synergies, both to terms we As I businesses, creation achievable two

synergies Given February, our year, synergy we end creation help increased of synergy our details for targets of process value the we years. John provide at will we for of in call beginning on the future the year-to-date longer-term future this budget that demonstrate in year trajectory, more out continue laid to new increased synergy at complete out the lay the After areas grow. the XXXX will will achieved targets the breakdown significant for significantly see years. year to

are tax of benefit portion allowance valuation reversal that relating allowance is million U.S., improved U.S. a valuation as our increasing Our $XXX the of a further profitability utilize of strength model deferred our our third the value loss our continued the deliver This substantial is sheet. based to to liquidity tax able $X.XX. despite quarter evidenced carry net capital operating resource in net shareholders and asset non-cash pandemic. yet portion $XXX U.S. EPS perspective, for reversal the in as balance how be business the our for Tronox included positioned our will a quarter will and to of subsidiaries income U.S. our due on to future. of our again, how of This likelihood of an of we pleased is expectations the deferred our a well analysis the upon forwards. well with profitability, business Adjusted the million From was

to than We liquidity, cash have sufficient available $X.X billion our business. and in more sustain

advance to turn Strategy and Romano, will Officer, of end As performance we our Chief debt our over year, closer and excess debt the marketplace. down commercial incremental in John on trends target to comment now we of move seeing billion. towards the I our options will liquidity we John? to Commercial pay gross sheet global evaluating are further are $X.X balance the utilizing who the on call the the

John Romano

Thanks Jeff.

moving Now to Slide X.

The million year-on-year in primarily were of decline than impacts XX% by decline impacts the lower volumes America reflecting I'll $XXX of for TiOX improvement XX% XXXX volume India in $XXX pigment Latin in lower lag primarily $XXX of COVID-XX driven previous quarter by volumes ago you Europe, were Pacific Revenue quarter, exceeded the North was to slight Asia of First, take the volumes. led America is from and due XX% X% were to million QX X%, year-on-year. year-over-year COVID-XX. while sales weaker demand of where A with comparison. million lower volume for a due year through a from the the leveled in pandemic. sales QX significant

to local lower backdrop our year-over-year negative a or outlook, were Jeff stability largely variance X% TiOX provides point expect X% in attributable he to the a share currency our with As we this margin represents this on will initiatives. you currency. from the pricing in few macroeconomic be prices lower year-over-year fourth when This little adjusted quarter. when movement minutes despite eliminated challenged very year, last basis for selling

year $XX million volumes to year-ago Zircon timing Selling and than shipments. QX XX% sales Now when were softer lower quarter. prices ago. lower by a were moving the driven of of conditions a Zircon. of to lower X% compared XXXX XX% were market than Sales

in fourth late and mentioned As pricing early quarter we in the first the Zircon before, quarter. declined

feedstock due mandated declined this $XX for remedy comparison to of roll transaction COVID-XX. demonstrates comparison. lower on lower that associated Cristal of the CP other slag the sales largely sales million the a pig iron volumes In and year-over-year and with So due XX% to forward trend products sales

sequential prior on due sales market $XXX a stable leveled the and higher to macroeconomic we America the by in basis. in have demand. the XX% operating and and sequential $XXX prices on of quarter currency pigment Now versus quarter down on higher the from in. increased TiOX comparison volumes products to recovery of other volume were in Revenue volumes TiOX Selling has regions moving or despite U.S. as TiOX North were saw led we Latin XX% X% strong million growth relatively sales been been Sales XXXX. compared environment million. to a significant increased XXXX were $XXX of dollar basis America. XX% all in second feedstock challenging improved million pricing local the

shifted finally, by feedstock consent $XX volumes of X% communicated the selling largely very on what earnings decreased other volumes volumes FTC that in and by of product as to XX% a shifted shipment our $XXX as iron be increased as into sales slag from as as Sales the CP Zircon And and resumption sales quarter, Zircon. driven timing previous sales now by million will quarter strong the have of that XX% volumes XX% million to declined Moving some mix. pig improved result fourth call, we a well from due declined QX order. second mandated of product QX into per quarter. prices

finally, the into quarter the our outlook speak end strength see the encouraging moving expect the in to third we're condition, is to over an into quarter, our QX to will through this was October continuing which in quarter. with of out the indicative back of month. in volume And we XXXX. TiOX the fourth year September see The remain third later of volume TiOX call. trajectory pricing Jeff quarter strongest line improving expecting we as and market Looking

to on call, to JF quarter in following the Chinese quarter. As last supported second operating and JF? improving drop has fourth quarter, of a will demand the pricing. the by performance for began profitability review continued call we pricing a Chinese off our I sulfate earnings the in over into and and increase precipitous now an increase discussed July turn our imported increase to ilmenite and in in

Jean-Francois Turgeon

John. you, Thank

of driven by offset Slide the $XX primarily quarter foreign I'm due a million exchange approximately to to planning million ago of margin the back second lower captured, of in related dollar. accommodate John achieved comparison achievement operation and operational improved million, our margin our the quarter, and by of presented production idle facility EBITDA This the rate, comparison. the of cost XX% COVID-XX. this the costs mix, challenge charges, Combined Overall, unfavorable versus million $XXX versus the of let improvement and adjustment by with year despite offset achieved XXXX. increased year-over-year the than sales we impact first on absence review the pandemic, Australian of operation our This was Moving ago of integrated the exchange euro by Africa year operation to earlier, QX. production of quarter. primarily the continue X, driven have fixed an tool, from favorable $XXX program to we Brazilian profile. volume reduced rand, primarily to rate, production proud remain COVID-XX African and adjusted QX half foreign real. our due South our was from our the quarter lower X% volume of quarter, was deferred $X strength in by the the excellence business rand COVID-XX. have benefit increased and considering the and synergy the million of slowdown the our million incremental the pigment QX Sequentially, pricing impact Using me Adjusted African benefit from synergy pandemic stable, in the synergy costs on anticipated minimized a $XX in We adjustment and to of to in EBITDA the operation accommodate in effect our the discussed increased the and $XXX effect our favorable South LCM costs South an

John deferral Srivisal turn benefit like detail. operation that to would once were to normal While over many in of cost this in reduction forward. first be we incur to synergy will call the the from synergy of half now further will XXXX, to discuss the carry returned John? I the the

John Srivisal

JF. Thank you,

Turning to Slide X.

million reflected in the previous reflected in of in million on achieved $XXX This incremental EBITDA As to amounts total in year-over-year $XX synergies JF and achieved EBITDA. synergies. being QX, of million year-to-date synergies the from tax $XXX we other mentioned synergies, balance slide,

Jeff the call, year. to has integrated reflected set vertically our raised our also As of to demonstration amount synergy we be year. The the $XXX from from $XXX mentioned million target in given EBITDA, have of benefits our is this million this earlier full-year this which the expected earlier million XXXX business continued of increased targets target in the from $XXX model, earlier million $XXX

and targeted tied coming majority As to we the have not true synergies calls, previous of the earnings mentioned cost on volumes. are savings from

in a buckets, with realized year-to-date the through We in slight despite synergy detail. realize XX% which synergies more the macro I comes SG&A. allocation shift backdrop faster across walk anticipated continue more of from will EBITDA to synergies the

of use at the XX% SG&A for opportunities the figure. ability materials experience the identify in achieve synergies, year-to-date sites as was implementation of of in had in initiatives of XX% in savings new comes of teams what the well significant through for targets Investor $XXX in at historically value realized intellectual $XXX on identified. and to We are leveraging on, processing in The that the make makes call Feedstock deliver balance EBITDA opportunities point XXXX. services. sites, our feedstocks million to This is skills significant representing and new of synergies XXXX combined of and costs internally, opportunity the last improvements such the about the what total The from plants. legacy optimize and best the operations is end majority from expanded by Cristal or footprint, million these portfolio, reducing program is of or Brazil. were committed to we early our XXXX. continue to costs synergies continues larger the by operational better-than-expected goods increase current benefits the of procedures as XX% property While savings expect purchase our these we identified at network company as practices supply as optimization to pigmented to I up we wanted the of of and synergies chain performance XXXX, and [indiscernible] maintenance driven higher in by on realized synergies achieving and technology, of performance Day May initially across exchange use, realized the incremental projects.

expect of a only We expected. financial are been our further deliver delivering Carlson our synergies continue pace, to than cost I'll had unlock target robust target, rapid that we'll we a opportunity much expected pleased synergy to now able synergies. review and Tim the than for savings we years over Tim? XXXX call been to at more and over be has the to turn more position. two To earlier drive XXXX report the not have we nearly clear, double and

Timothy Carlson

John. On quarter. quadrant, the resources left we've X our liquidity capital of at Slide top the and Thanks, outlined the end in

in We million have $X.X cash total available cash including of liquidity, billion and equivalents. $XXX

is $XX $XX in the Our appropriately million our excludes of distributed trapped operations we to cash is TTI which escrow equivalent global cash, cash million have cash acquisition. restricted and of cash. of $XXX The million related and amongst no

sufficient the down preserve debt to fund for our Our business. current optionality liquidity and is acquisition, pay TTI

Moving quadrant. to right the top

billion. debt is Our billion $X.X our and current is net $X.X total debt

leverage net a Our schedule. debt to included maturity chart current trailing our months X.Xx. is outline We've XX visually

maturities see, XXXX. until term we on or our loans have As bonds no you can

our on or also have no loans term bonds. covenants We financial

Our allocation unchanged. remains policy capital

on to projects We of debt to prioritize billion. spending with capital level deleveraging gross targeted a a high in net disciplined leverage return and continue Xx Xx $X.X of

expenditures million. lower the expenditures Capital our million to was depletion third were million. expense $XXX and the Year-to-date Moving page. $XX $XX quarter in capital amortization of and half depreciation, the totaled

capital that next. million to of a discuss expenditures increase critical $XX expect Jeff projects to due fourth couple to the will quarter We capital for

$XX Our the free million. flow was for quarter cash

our and overall volumes pandemic, feedstock meet remained other to mines to we as increased operate requirements. balance inventory we flat the adjusted relatively operations inventory of at our our internal to inventory effects continue declined volumes While accommodate the our quarter-over-quarter, feedstock pigment as XXX% high-grade while

contributed $XX rates FX approximately to unfavorable Additionally, inventory million increase.

some to Our at no outstanding remains on like Jeff an concerns. update have accounts developments key turn I'd Jeff? receivable balance strategic XX% call and provide current, back receivable and we the our outlook. aging now to to

Jeffry Quinn

Thanks, Tim.

capacity, signing business In synergy to of on our to million, EBITDA. further have of we integration positioning to navigating many were TTI the feedstock on an vertical strategic moment better recent and a strategic like our in reducing in remain team on has Eramet costs will to planning support focus our long-term X.X for announced multiple us adjusted representing a definitive counsel increasing our for our emphasized contributing our and the reliance Directors, third-party serve that adjusted of a company the pandemic our the come. the I projects very which feedstock management update approximately the will turn $XXX by Board XXXX I As our allow agreement future production provide months strategy take through lost and with not our lower goals. of This the titanium suppliers, pigment strategic to to thereby several acquisition times customers. highly our TiZir on ongoing recovery May, acquire would key focused for from to

anticipated. as continue the making regulatory towards closing and with authorities work through customary the process closing We progress are to we

vertical the we asset that a help has TTI be great and our future. demand internal pandemic strategy term, in short still in believe us CP the achieve will integration diminished the While slag

time technical remain at acquisition the likelihood up improve the the the project. acquisition ramp which we a to their successful smelter. agreement, increase and with design experienced Tronox amendment remains technical announced May, modifications design in by to strategy. the startup but In also services mid sustainable delays that and XX% has of time. project the operations. advancing currently ongoing anticipate to to that our to interest back result associated design integration some achieving restrictions of of an trigger The Tronox the are announcement, to has optimistic we and We of vertical managerial a mentioned we for design will TTI a resources successful the eventual working Design will important travel commissioning acquire asset COVID-XX, call XXXX. element allowed As also The of devoted due in an cautiously

higher vertical costs project first Moving introduced return and operational digital integrated enable sustainable at integration aimed last costs per transformation to a a reduce project. portfolio. the project implementing to cost reduce multi-year and achieve introducing global the is to to ton This proven of Tronox Investor enhanced newTRON the automation deploying across will It position. operating by quartile maximize Day next technology, We our year. improvements strategy our our excellence benefits process

this quarter and capital control. million drive for the $XXX will the up expensive fourth within increased in and our in XXXX. the pacing with target ramp The CapEx Our of in investment project portion is this in the as anticipated this Tim project increase timing expenditure of CapEx mentioned, year a project. The reflects associated quarter

merit. manage investment environment We have the as our conditions newTRON and in industry to ability macroeconomic

is the benefits our allow we success. Having out that our project excited across will our in of would our five-prong position the footprint to foundational this maximize competitive ago, laid our a strategy of integration. for chain for Having global of essential We to part a Two us an value shareholders. unique years newTRON the is strategy. deliver distinct to vertical advantages structure cost strategy. cost benefit that are

the founded execution is Our directly newTRON having and addresses also successful right our the TiOX being right enable capabilities of the premise on that those strategy the strategy. leader technology people, will several components. of culture and

feedstock replace the Snapper/Gingko project the project to Campaspe to feedstock supply available we next pipeline and development existing is value life. mines, will be which contribute the integration medium-term, in nearing vertically represent projects significant key and This The maintain required rutile the global Zircon rutile, which mine Eastern our high-grade or maintain high existing the production are strategy expenditures and Investor conditions assets. end has development Atlas This of verticals source site from indicated that will macroeconomic direct use high Tronox integration on projects capital our levels will manage for mine as their of suitable supply our located from integrated of we in zircon project our demand. project is This mine of in resulting in slag ilmenite a profile. current synthetic processing. XXXX at value investments in integration. Australia for ensures natural of with the abundant strengthening of high market levels differentiation Day for line competitiveness in capital of commenced future depending return and These the our will Lastly,

the ongoing remained medium for to While our continue position with competitive contend focused simultaneously enhancing on long-term. global pandemic, the we and we

of details early our each these results year, projects. provide of next on more end part year will As we call

to of for remainder Now turning I'd outlook Slide the to X. our year. share like the

of macroeconomic third end improved of year, environment the earlier, through the we moving is out expect the while momentum mentioned quarter the market indicative uncertain. anticipate the I remains quarter XXXX fourth from have of the As the we volumes fourth quarter or strong above at seasonality and sales XXXX. third resulting normal a of fourth We deviation in TiOX favorable quarter quarter conditions

from the result in range volumes of XX%. and the of market continued strongest the for recovery quarter sales fourth and sequentially third shipment timing end to year, the are expected quarter of Zircon’s be a improving demand, the as Additionally,

$XXX adjusted half should in incremental margin in the back achievement strength our combined cost of the EBITDA EBITDA first result of adjusted quarter, commercial reductions with with fourth to offsetting an and million XXXX expectation levels. of the range synergy improving Our outlook to million in $XXX

charges to tax the given be allowance, recognized anticipate. been expense, adjustments of year, for allowance valuation million you $XX challenge excluding million. tax our our to We we has $XX tax a valuation expense and of that many maintain expectation this full-year reversals Additionally, to

Srivisal addition reviewed, also raised should subsequently continue to the ability targets exceed newly we long-term targets the to out achieving targets the for demonstrate and XXXX, continue exceed laid John that out in to synergy expect year. and As laid to the we our initial synergy in increased early

to of million adjusted our full-year. the anticipate to $XXX for on to be Net million, $XXX XXXX million range $XX and Moving expectations the $XX million cash. cash $XXX cash of We would and full-year a interest million million in our EBITDA taxes. be the of million $XX $XXX the million. following million contributions to uses Capital at of of our between Working of our million, between is and previous and which $XX capital and million. outlook. represent $XX use estimates range of $XXX low current based These on our $XX net cash between end expenditures pension market

for ability flow to year. free our strong the cash confident in remain generate also We

Our investments priorities debt with down capital taking allocation internal pay return remain and unchanged high precedent.

I call, billion. earlier evaluating excess target on advance sheet fourth the options As down gross our pay the quarter, debt utilizing of liquidity in farther we to are accelerated the towards in balance debt $X.X mentioned

include modified note mantra then bottom on also low Slide to safe, we've of our may tons You sustainability. quality, X, this cost the

and produce we in think continued an way the the ESG Melissa that aspects we we is important and everything and operations of by grow business led acknowledging we During as of talk this and to our tons the report to businesses. forefront do. critical felt at keeping Sustainability Officer, these our Sustainability about Chief XXXX Tronox GRI of for published the the aspect our our quarter Cristal increasingly combined Zona, we

our provided the and had can am GRI very you third based a adaptable us. markets. encourage us to this to seeing to as COVID-XX, results upon I to The stage, our with to some pleased current manifestation our A resilient the of do TiOX not most impact have to to ability our our undoubtedly due industry to available uncertainty report, we in At it If economies remains. link forms our assets they leverage leader allows have on industry-leading of to position financial is quarter, so. an resurgence I are various website. we our outlook a Globally, delivered as information optimize the portfolio you found secure end deliver unique to are continue performance. our of seen to the review and today not opportunity be of shutdown reversion

However, we the ability demand needed, developed should very market have adapt as quickly change. to significantly

I'd Tronox’s today. focused team I to of prolonged the We to remained strong the into of the call wellbeing performance pandemic, for through The throughout tons looking seen while like people, and of Operator? nearly X,XXX has our business extremely entire I world. extend cautiously around positioning out Tronox our questions. optimistic prepared the continue again, and continuing one sustainable to come. thanks safe, the for another our safety health which prioritizing will to for of our the deliver caliber reinforces confidence year that, In strength quality, cost your and and to With my low like colleagues the speaks That are sales the trends resiliency through our end month to remarks would how of this XXXX. the we and that my customers. once closing, for have am concludes open our the my recovery in proud

Operator

the will Mitsch question with Fermium ahead. go Frank now Please [Operator Instructions] from session. question-and-answer The Research. is begin first We

Frank Mitsch

up be reigned TiOX in what to moved normalized – cost volumes but quarter? I I'm quantify they might've impact you to impact any the a year-over-year. of at look were in down in everybody. when your might your when given production terms mean, the X% absorption XX%, morning, you fixed been with Is get way there negative the Good reigned as at Hey. third from negative quarter trying in the I pandemic.

Timothy Carlson

Hey, Tim. Frank. It's

quarter. $XX And the Just to take a our standpoint, certain did of you've about those GAAP so, got know economics the idle than pandemic. just charges, the are let capitalize facility absorption cost reduce U.S. rather expense doing to from whereby you we the charges million a did in In we cost to in of match production inventory.

QX. about idle Those margin production half decline unfavorable will we that ramp will charges So see probably overhead absorption still a of a bit little was in bit, fixed our quite at cut sites. couple we two start up a of actually facility in points. to QX But in as

So probably as to from from flipping a similar facility of cost absorption. margin QX in terms it's overhead idle profile

Zircon that just So improve we'll continue we see to given of the some see in that through QX. to flowing

Frank Mitsch

think rates. made if the And the Yanbu positive operating on was one you. at of that progress facility synergies, I very them to about higher Thank you. Got tied you've

I understand rates a are that stand having the are Now about terms how midst up progressing where process? of to can of so we pandemic, ramping that in production. an that on you whole you is in are, Hamilton Yanbu you do your But talk impact and in where

Jean-Francois Turgeon

JF. team if costs Frank, team of So kind and done we quality a and confident when it's that buckets are those to focusing instead has obviously on that focus overachieve COVID-XX, synergy done synergy mentioned, addition. detailed I is synergy, of we're what on volume none of as to we And the and will continue other overachieve he have have is have of on we even Look, we John because linked what have volume. mean, of we

Jeffry Quinn

this Jeff. Frank, is

volumes for ramp demand also up increasing of have we think our it. market the the ability confidence when I calls to

stepped visibility have able to there. we yet lock be to not certainly Hamilton while up those our to get improved So we've rates,

Frank Mitsch

much. you Thank so Terrific.

Operator

Alembic The go Global. is from next question Ahmed Please ahead. with Hassan

Hassan Ahmed

Good morning, Jeff.

Jeffry Quinn

Hi, Hassan.

Hassan Ahmed

about market course are How you quarter. touched pricing you through going how positively you Chinese ilmenite the infected made, comments that touched also and on TiOX the China and were of talked you? on had wise, the prices in Hey. In how you up the

demand pretty question; speaking, was was seem one two-part ilmenite, all So the there it tight bit a up us? the talked through tell were trying that you earlier, that that and we and pricing is, now that going pricing China of of place, de-stock of XXXX, seem kind and de-stock happened of see up, where pricing in it sort go over seems but obviously ore high-grade if ore again. a in was is then and right? you pandemic weakening, it's been As just of broadly to us in course particular now? then behind of could you sort supply it right terms was And Because is just the going pricing, about so

So like two, I China, said, one on the and the side. ore de-stock pricing in just

John Romano

Hey, Hassan. It's Romano. John

in would agree I with So China, de-stocking on you. the

we move regards back XX% We into in an see pricing And And QX ilmenite I'd reasons down. not from the continuing it’s significant be ilmenite there. seen de-stocking and say to to fourth inventories XX% pricing the that'll ultimately impact pricing. pricing is production. and haven't starting That's in range into it's some has then one that With the a we've demand, feedstock, that in in to have ultimately of increase TiOX impacts would high-grade general. the on really why of, had imported only quarter on pricing, from ilmenite have pandemic July. in as the as only seen China The improvements ilmenite but on price That's started seen uptick reflected we're come Chinese not a obviously well. that on Chinese an

as at early likelihood say mandated doing the So in stable, particular other pricing, posed we not with what to it market with into transaction say that but sell I'd should up that, the than feedstock start we although the we're Cristal we've XXXX. when to this stage, by high-grade I'd seen get as we're FTC move the

Hassan Ahmed

be Understood. obviously guidance obviously strong to company then a And quite is for Very the you. strong as the expected well. overall volumes follow-up, QX clear. as quite Thank Zircon

sense that talking about get volume for XX% contribution are to sequential terms EBITDA guys incremental of incremental sort QX, of to? trying of a that in Zircon would Just what translate

John Srivisal

market I'll even We're – as XXXX, the a about on kind the quarter. in Tim? of midst same. color again, over the in can give of pickup had about impact you XXXX XX% provide that fourth our to Jeff seen well. on if are volume volume it in the in the trend we Jeff the third earlier, where and you code were a and moving in impact of and the be but demand timing that to XXXX resilience of on But EBITDA. going little some think Tim of pandemic. above then we would volumes shipments on range whatever into The quarter, and an made seeing the the it, we the point have good a gives and

Timothy Carlson

it just just does structures Hassan, the product, don't comment specifically from other provide for good Zircon, us. given on than you margins of of a margin to our standpoint, nature co-product we as say margin know,

Hassan Ahmed

Very guys. Thank so you helpful. much

Operator

McNulty is question with John ahead. go Please from next BMO. The

John McNulty

from one coming run be I right, the Yes. synergies you've just $XX just the taking it terms year? like understand But in that year. give incremental synergies why as we Or also, about the just these the that look higher XQ? It my with accelerated as year. the And be sounds color are to or – end you the same, so are up would first if it, question. more and XQ these if if going Thanks some the wouldn't you're rate know of came synergies detail. for rate to that of new were out the I run like guess at you inching around give are this million can the for developed? that I incremental opportunities XQ to looks us

John Srivisal

This is Hi, John. John Srivisal.

why year. we come number continue in we expect to the QX guidance. As going but my We to believe raised go is to It's we our were out we in outperform believe or do the I throughout Jeff at. mentioned, expect where as – and some one-time QX, we to full-year synergy mentioned there report to comments, benefits, that synergies above at we

Jeffry Quinn

his I think synergy and John pacing. increased be comments, the mean, just in So the John, the said and quantity, both to clear, early as quantity overall the I amount in is

there also we've that some we've been anticipated not able percentages been things realize the So story why pandemic of faster. been and sooner I delivering And of some little from, things some we synergies of because of the to that There's the new it able quicker. some some and that of the things and But is capture is to fully moved bit. that's around the allocations, effects more have a think overall, the whatnot.

Jennifer Guenther

thing one just more John, adding it's – Jennifer.

fourth the third quarter. So your quarter question this, aligned with being regarding the

really didn't tie a lot synergies we volumes. said, we've to our of As

while we're fourth we're pretty this expecting front a year. in our strong the we've to quarter, So operations recovery managing with still on align the seen demand the volume

a in amount why fourth think of to seeing attributable you're level the quarter. that's So I more kind

John McNulty

own customer terms of you all kind the base then terms inventories of XQ sense. catch more caught stronger of give your back how up them And being as hearing total color TiOX Or function the I just higher. to guess, that? year this should that, end you're That you in are And what I is a terms in off look enough. maybe Fair it. a ends the that? this think thinking what product inventories. about little Got trying of demand shape. from kind how they're Or is trying in makes stronger their get about how it on thinking us some to be a can the mean demand, in much Is bit to in for function you that guard XQ guess, where of demand we of overall customers? does

John Romano

Yes.

of In they of were customers I although quarter, and do were numbers lot through on So believe, the consuming second are a from inventory – the our down hand. had view where we the standpoint inventories. significantly, running on our customer our

of When of This the pandemic I that second the into the through there rebuilding as believe And as in and kind went recovered. number happened that pretty October than scenario we year, analysis, element that have that volumes the is is our we this this we but our demand that we development. strongest is looking an less is March. views only optimistic look month the at I going on, actually much ease. more had was So do the inventory had had we also quarter, true might outcomes of fourth one guess,

the in outpacing the why quarter going impact see that So because not see would would we is to what quarter. downturn continue we're the fourth volumes seasonal seasonal and normally to we that's strong fourth normally recovery in see the be

John McNulty

much the Thanks color. Great. very for

Operator

The Please with next Duffy question from Barclays. ahead. go is Fischer

Patrick Fischer

Good guys. Yes. morning,

First smelter. around just Saudi question the is

after it and the pretty As it quickly ramping starts it commentary to ramp the worked stood I was thought supposed whether was, in QX, fixes not. start we to before, or know would

to does when and working going delay? and the will are this actually up ramp with generally know money timeline, up fixes that the us new it the when is of going we amount if has in cost So

Jean-Francois Turgeon

some delay Duffy, one COVID-XX key a what of because site have its JF. on said difficulty the we situation the Look, two-month had only of about that adding the to to versus the previously, people to have it modification. and realize some of there's

it's a making that ready But certain the know, XXXX, [indiscernible] now of after people the take that envisaged And Tronox success that is XXX more have of we in has site, When the QX a year those ownership. we at probably the on that a will smelter we good the for next almost to as construction start acquire you that he crew Jeff complete So to level as progress. referred construction on we're be it would referred start-up that deliver year that the modification. that smelter. today, middle would We're working than in for of to Look, because plan. making the XX% making us are in on XXXX. startup and see about of do

Timothy Carlson

Duffy, delay, capped are regards our any or And whether at to we with not costs question in as will million. up $XXX then to your

additional QX $XX end of We have made $XXX We've the QX. the already. million in million contribution at

So We're capped there outflow design related $XXX going to would no at cash be forward. additional million.

Jean-Francois Turgeon

we'll Yes. ramp shortly after. And I when begin premise know to up, that Duffy, we think your

up, obviously to it. I of ramp get it's be to start a think to certainly we mean that's we'll going accurate. on ramp I lot begin you whether push then up And as successful. and read good

modifications have we mid design read good You get a trick. of really the on the feel level. done sustainable better long get yes, to might up But year, ramp how next take operational whether you're it should a to right

Patrick Fischer

year net China significantly. of out And up gone then exports the Great. Thanks. this have pretty

that or of we than thought, is, geographically, where And do you So of Chinese seen And you so then have in actually or added net new decrease of incremental where just One, supply that end exports, net Chinese more was structural China? think one maybe do exports demand chance up? two a meaning weak that questions a that's you most second year. tons, here. the level a additional see result of they next there's

John Romano

last first. say suppressed I'd in the And I'll demand Yes. answer China question been, a bit. I think, has

volumes so think the particular when you it's still X%, about point that million August the it's from bit drive And change in does about down but a is on the average, little September, months tons. about in up. X.XX time, And exports this in trailing XX at

added I no question do been also some have there's capacity. as So been that's some think pulled that Chinese capacity well. that There's out

the demand but trend, say believe will absorb bit in X.XX I So to is a volume. now it's definitely some that hard new tons start China a million to of that that pickup

there seen then bit we a in we far have a compete Europe volumes Brazil, seen we As with I say. And have talked gone, an have the where There's in move would But India, facility pricing. some a basis. input in of been on obviously Turkey, regular little head-to-head in we've uptick a earlier, as Chinese in so volume well. we specifically, the as as significant about

China We moved up the XXXX. because on mean, and and we end move fourth in continue visibility up an quarter, into that enter have the will quarter we sulfate has we asset pricing great have into fourth now our to as I material

Patrick Fischer

Thank guys. you, Terrific.

Operator

Morgan Andrews from with ahead. is go Vincent question Please Next Stanley.

Steven Haynes

Vincent. to is wanted question margins. a I on this on Steve Hi, ask for Haynes

you've you temporary cost have come also deferral some guys where when had, sounds taken given XXXX, like obviously XXXX out of you there's that’s synergies, kind and that of next de-stock, going big think, of kind in year. ton a back pandemic I had to it

how should would be any be directional and guidance So thinking there. kind directionally, of helpful margin mean, I we about EBITDA

Jeffry Quinn

This Yes, Steve. Jeff. is

first I you of fourth in think the quarter EBITDA to had said, the will I recover in what sort think, half. margins we as

as we a with that upward we certainly to in recovered that we longer-term, that think range recover. mid-XX maybe So range and EBITDA volume can little sustain margins believe movement I

So sort good our I that's think margin long-term for EBITDA of profile. outlook a

Steven Haynes

Okay. Thank you.

Operator

question is Please Josh Spector ahead. UBS. from next The go with

Joshua Spector

for maybe was a an taking predict, seasonally the you for if just volume I it's would my whole? continues, what to think maybe little Thanks could strength fourth and quarter, you if question. scenario expect see wondering be understand tough fourth upside to in bit would what you quarter share would hi. Yes, I but as October a

John Srivisal

fourth of we where above in we one today not as we're paper as October QX, strong. are quarter at we recovery number, a be we or plastics we the business. And specific are sales were where the a based for expect where was recover give but that Look, see on to much in number do of going to is to increase hadn't in where well We've coatings in in laminated demand well. and as were the and September, Again, volume we XXXX. seen seen significant market started QX a

what that I have guess I some stage this levels. at is or And will We has but by will we're say that confidently recovering muted been at QX seasonality, particular would the recovery. above seasonality QX because be

Jeffry Quinn

Josh. Yes,

even look, we is The it still yet is month. book together very, continuing even the late little for as coming other month, week very recently historically thing month than this happened into that to and shipment different a this order as still bit the orders place will has, this

that buying because bit patterns just that's a pandemic. a of shows the have changed but unusual, So little

Joshua Spector

I you'd willing if how volumes try to were up one Maybe time, share October more much could year-over-year? be Thanks.

Jeffry Quinn

quarter No, or again, that don't fourth we're levels. year-over-year XXXX volumes Josh. at above volumes I volumes. John But and report at track will said, month-to-month, as we third very quarter or be mean, confident above and

Jennifer Guenther

from the Our still the high-single approximately digits sequentially. quarter in typical is seasonality fourth are down quarter for third the

a typically pretty be flat away say is So we're what talking, favorable big trend deviation wise. move we see to from above when we or a

Joshua Spector

than flattish. guess quarter if you guys in for SG&A I expected year-over-year you of when enough. you're it's And better not front, I synergy maybe specifically what maybe that at Yes. mean, characterize relative look How the obviously year, I'm I Understood. missing I last this doing on lot Fair could ask a that? expected. some I'm are sure to synergies some would kind offsetting inflation. or the of comp just

Jeffry Quinn

cost employee benefit of had of of Josh, and in benefit year. credit this in QX costs last bit little a had some we incremental employee we a QX year, in

Timothy Carlson

your right. is And the inflation comment about

the have items. synergies some of cost of and Some the offset inflation

Joshua Spector

been What would comp normalized without be SG&A for incentive XQ have approval? that Okay.

Jeffry Quinn

about say less. to $X $X million million I'd

Joshua Spector

All right. Okay. you. Thank

Operator

Edwards Please is Sachs. question Your Goldman next with Travis go from ahead.

Travis Edwards

just competitors level That's two front. timeframe Jazan the you'd just question in on Hey, market integration right assets confirm the the that will would part get vertical that be that got wanted integration guess, sort active of fully coming both I generally to sands in side. feedstock what like on good does two-part now? the like. want that the to mineral And morning. Just more event it availability then second you’re a and on those targets, your here you be, XXXX, the I in to look you've in TTI more the vertical in progressing. assets sort of of

Jean-Francois Turgeon

contract that we're vertically with XX% XX%, question. that of assume slightly production. XX% XX% pigment with Jazan obviously move the XXX% need to production. So in the need we will Trevor, And get maybe our integrated. would would to TTI, we the increase start intention first about will Jazan we that I we But is respect. to TTI today have up when can the your ramp answer obviously look TTI part to Look to And that the it's some of of

really So integration. the our we vertical that's to achieve have planning that

Jeffry Quinn

create in high-grade And on be are we intention high-grade a but our end not to to structurally going of in situation where what if for value commercial work put feedstock, shareholders. we our look market it's and opportunities a will Travis, asset design the that seller for to enter to long comes we Yes. to up feedstock, merchant

that of question help a activity overall are There to continues. assets, your about And always sponsors regarding investment, regard. successful. in very So be number mineral for I mean proactive then out make projects that sands looking there that we'll for looking

projects think in So wants for fresh investment are aggressive area, in need become of that probably anybody more there and I available who need to are of money. that

Travis Edwards

helpful ends. to That's on an common maybe And both extension share. color just as

about else our you I down, guess the generally that the case Just year, we would plans but two, guess down? – talked of not of are how you when that end pay before delay, sort disrupt, any or things? And be, aware you're base Thanks. to anything considering that might debt M&A that [indiscernible] thinking looking I should then wondering of down anything be on one, you're is pay pay like about

Timothy Carlson

Hey, Travis, Tim. it's

the the pay down right the just half of is terms looking on question we're debt. given it option likely regards debt as the first Just at your to options, facts in term down, pay circumstances of the all but the and now most

Jeffry Quinn

planned. debt. interfere Travis, And comments, Atlas to TTI we along closing of other the allocation Yes. M&A newTRON, We that's that priorities the as are pay don't terms been would acquisition in have we other priorities, the prepared our down something said projects, projects the capital with on than priorities. real being going expect in don't already strategic those Campaspe, We foresee

Travis Edwards

[Indiscernible]

Operator

with Spitz Bank go ahead. of Please is question Roger next America. from Your

Roger Spitz

liquidity recognizing morning. What I'll excess ask their [indiscernible], your do is at September plans synergy target much that normalized liquidity have and Good how first. and you

John Srivisal

a million, cash ago of million if the to given might in liquidity not and million that the little used. a liquidity you'd $XXX year pandemic, Targeted depends, of terms now of ABLs probably end on have $XXX is me target have lines million asked bit the $XXX $XXX we just then and of different higher

and need the Excluding is at the TTI, which we to we have which debt. down over reason is liquidity, some we're far looking targeting $XXX of that above million what pay is,

Roger Spitz

just availability understand to of normalized of beach, may each. was want but… It $XXX of just million of to $XXX I this liquidity loan make it cash like sound plus million term I sure

John Srivisal

$XXX without pandemic Yes. $XXX we million where now more Still the million million about it's it's the combined given now are probably right right probably lower pandemic, combined, – than that. $XXX

strength free of that model cash generate despite in. environment our the proven we're given Just the we can business

Roger Spitz

cost? project like to it. you. much Do would require et going mines? CapEx, XXXX Because cetera. the infrastructure, replace How it sounds would Thank have Australian you that's be given what Got initial the would that And an project? that Snapper/Gingko Greenfield

Jennifer Guenther

high Day So we currently on We the range, this, through communicated say return planning I due capital think could CapEx the XXXX be communicated lower to – levels we're I that. at investment of Investor these we should estimating some I process. still than have in projects. elevated expenditures, mid going that think our We're high XXX we

capital, disclose as mining part and our results, call. And that but It's the Jeff those Jeff required conditions, of there’s some are there, newTRON also So be driving depending replace But certainly is we still on there's development of benefits that manage to largely market are the like projects, name like outlined Snapper/Gingko. there but pull a the forecast, sites. that. out said, development Campaspe sites our those shared current the Atlas will Atlas capital QX we need Campaspe the building can located, on said, should Jeff so that we'll increase like for similarly

anticipate be year plans our given adjusted capital that can this those we but demand with like if market much the targets, currently we needed did environment. So

Roger Spitz

very much. Thank you

Operator

This conference Chairman concludes to remarks. to for the any I turn Jeffry session. our back question-and-answer over CEO, and Quinn, closing would like

Jeffry Quinn

a recovery anticipate in with of the and closer out towards Thank year one a due Certainly the of has the Despite the for and you, third much for tough very memorable here all year we quarter a fourth at as been quarter. and in us quarter, point uncertainty, your first quarter for lot your back to is pandemic time then normalcy second a Again, thanks Tronox. strong questions. thank sort operator. you today playing at

weeks time, discuss out of in of that encouraged. for on year-end with the call yet, as to but to out doing we which you speaking and not all projects you we I conferences to be the synergies. are obviously, forward the and close overall as on XXXX. February longer-term come forward the you strong we're look of the of at we'll are the many We our provide will in And a of this our We of updated an believe and path view some in couple update very said, key year, addressing

Thank time. have a your much. very Everyone you. appreciate We thanks great So day.

Operator

now attending you has conference The for today's concluded. Thank presentation.

You now may disconnect. Good bye.

Tronox (TROX) 29 Oct 202020 Q3 Earnings call transcript