TROX - Earnings call transcript Q1 2021

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Operator

Good morning, and welcome to the Tronox Holdings First Quarter 2021 Earnings Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Jennifer Guenther, Vice President of Investor Relations. Please go ahead.

Jennifer Guenther

Thank you, and welcome to our first quarter 2021 conference call and webcast. are Tim and Carlson, today Executive Turgeon, call and Officers; Chief our John Jean-François Romano Co-Chief On Financial Officer.

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

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

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

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

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

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

John Romano

quarter to continued safety to XXXX, zero. our And our delivering our to environment to harm report which we happy first to and operate. culture Jennifer, the today. for Thanks, for is In employees, on -- comment start previous a of trends into of it harm mind. about morning, Tronox. start meeting we thank that the the stays with every spoken to journey in in joining our ensure earnings to and we've at I'd our zero you good and the XXXX positive we communities calls, everyone, and us call target to in our zero with harm Safety value top leading like we're zero on ingrained safety It's safety. zero,

moving for highlights quarter. the to Now on our financial

also robust Our markets, another flow and demand in broke volume $XX company driven per higher our we margins expectations, performance by metrics. that continuation stronger an increased expenditures. This per meet across issued by the TiOX diluted evidence record million, million and $XXX a led China regions we ahead the adjusted is capital million volumes $X.XX, company's earnings outlook. in were in and quarter free through due was break adjusted was range income prices. TTI end Tronox. generated higher in earnings share is first investing also between for refinancing while our primarily first the sales and resulting quarter records was $X.XX. and costs We year-over-year. our of driven in figure record to highest of production EBITDA This the pricing $XXX prepared million for at of fee to time the we after Revenue to the zircon recovery came drove outpaced accomplishment guided cycle. share expected $XX TiOX quarter with and previously XX% market than of to global TiOX in demand EBITDA and as the for debt Adjusted $XX quarter. cash sales transactions well increase quarter beat exceptional robust is quarter XX% history TiOX our number our sales incredible expectations, as on of sequentially a Achieving volumes driven across This by Zircon by all to represented the hand. EPS The the million, EPS Net associated due QX and difference associated transaction. the inventory demand XX% a with was diluted

committed free strong the flow the million during month, will million the on top of end we first repaid the of repay we cash $XXX of additional an debt have to generation, by $XXX the Given quarter.

the were total interest Tim in maturities. on extended balance trailing X.Xx. closed, redemption leverage quarter, X, $XXX adjusting senior discuss with $X $X.X for little the million, the balance improvement the from the will our us and will billion we overall, to anticipated X.XX which to sheet, which and XX-month and debt notes, of a after gross quarter an given redeemed bit After the interest on During both restructured call. in lowered later XXXX, the pleased we was our are which net April our more debt in was progress balance our the cash of these savings, detail sheet But transactions enable target. continue flow outcome, increase our free very billion towards

to now commercial X, review Moving Slide in performance detail. our I'll more

million, the was commercial quarter As a driven growth TiOX both the double-digit quarter increased from perspective. versus I very previously strong highlighted, $XXX year ago first quarter by a in XX% to Revenue led volumes zircon volume in quarter-over-quarter, economic single-digit and Europe low TiOX sales average increase recovery selling in XX% growth Asia. global and and the by and TiOX prices. grew by driven percentage

the for architectural in XXXX other from in a of in rise a primary Pacific U.S. sequentially. sequential Revenue local mandated consent Asia increase XX% region of Increases drivers a to and sales the globally. North level. the of quarter led their basis. feedstock zircon chloride order XXXX. This sequential basis cost was Pricing in the in prices XX% in the and primarily recently zircon X% zircon volume which year-end utilize lower offset cristal to completions released the comparison, -- increased slag sales second resiliency a the as growth currency allowing as declined led one we evidenced pricing. the recovery in call. quarter us America GDP transaction, X% that to year-over-year during also a per were the quarter, benefit XX% dollar slag to strong in from a by TIOX year-over-year as compared QX The our China, of starting year-over-year, the our grew a will improvement on remained and conclusion from resulted quarter, feedstock the volumes growth partially stronger side, by regions earnings the more levels on the and X% us outlined FTC on produced for CP while lower fourth pig The in selling or and America to on overall equates but throughout Revenue of due increase the products all given sequentially South remedy iron internally in sales sequentially, volumes. sales data the

dedication disruptions and in not would Tronox our been supply serve order team meet our commitments and chain, navigated global who without and the of performance employees, our numerous possible customers. have our and to delivery QX challenges successfully particular, Our logistics

So I'd thank of employees like to all world. the those around

second We as very we've entered the continue quarter. strong demand see to

inventory very positioned and that's driven given zircon to the another off into and above sales quarter over We JF prices And XXXX for typical remain now elevated ability in to like We of quarterly XXXX and consignment are And from record-breaking recently and quarter, zircon by levels, JF? to quarter. are to XXXX -- given to meet to multiple lower locations. TIOX expected quarter China. second expected the stimulus the performance announced range the remain mid-single-digit turn by led TiOX though been volumes up Zircon finally, first levels demand, progress in I'd the chain, our peak, to will volumes for XXXX is regional the first with supply volume. economic well to quarter's call inventory volume the the of throughout our increase levels the continue source levels, and global strong which as operating anticipate us recovery, over review our we increase on low than sales we our price setting profitability initiatives. and in a

Jean-François Turgeon

Thank you, John.

Moving X. to Slide

of adjusted $XXX adjusted as cost the and was into TiOX, increased pigment seasonal latter during to above volume mentioned, TiOX unfavorable the saw of roll as on in leading XX% another improved were driven record volume and earnings unfavorable level rate. first result fourth call, to EBITDA offset our TiOX Australian increased operation the anticipated foreign Tronox. as and as As for due exchange pigment improved bit John of TiOX at by the inventory quarter on including well our in The quarter. partially Production and our this headwinds dropped projected and year-over-year, quarter production impact XX% well adjusted sold costs. iron partially exchange a outlined were call, due greater volume ton headwinds costs, price improved volume, and improvement quarter as by higher million favorable the by forecasted of Digging This zircon the an of overburn quarter operating range. off sold pig anticipated improved fourth EBITDA EBITDA, cost global inventory Sequentially, to adjusted zircon driven norm. and and further well as by favorable pig produced offset primarily high coming in which selling rate in previously range. cost at by the our earnings comparison, EBITDA price our end iron will after foreign lower FX mines offset from being January rate improved in less our costs the March We than sequential has cost year-over-year below

In increased rest we the began global quarter inflation, continued expect the and cost see addition see pressure the of for every costs year. see network, the first in raw our we material cost to to typical during to year logistic and

South As in increased in one XX% example, electricity costs have XXXX. Africa

our the at Taking saving and from to quarter newTRON the the FX, year. quarterly million supplier the planned a plant from strength for saving -- project consideration adjusted business than FX, shown from pursuing We from and tailwind, very adjusted inflation, to the cash EBITDA integrated EBITDA and and that be newTRON, offset extended a synthetic occur headwinds X flow also and in project. than million that at vision. our is near-term XXXX exchange the our momentum longer midterm. continued production billion to are every the cost demonstrate to set benefit cost pricing plant second due inflation-based newTRON in generate. from chlorine in rutile our I maintenance into we to expand an $X our on believe the and planned increase. of the into Taking the Investor on our of point, X at between the On will free downtime strong price rate recent the savings anticipated encompass about why $XXX and maintenance Project volume Botlek from results consideration program John What synergy $XXX incremental vertically model only will accounting we can we years. QX our anticipating remind $XX believe cost current mentioned million, last recently the synergy impact a are achieve previously, a impact we from SR going with after want help market assumptions, expected to we the results the more newTRON our achievable how in offset of -- are Excluding facility despite and shutdown, it to The impact even of and to throughout increase shutdown quarterly target on that Day investors short

X. Slide to Turning

and will reduce globally. cost of our that ton. using newTRON digital project our leverage technology will chain our supply benefit a per footprint. to procurement project and X integration the strategy process capabilities optimize and from global vertical tools, As state-of-the-art reminder, our saving key better will the first, integrated further standardize is come The will newTRON process our global multiyear enhance cost business transformation areas:

our predictive operation maintenance enhanced asset will schedule. maintenance reducing it our Second, improve of and by the through spend

of provide Third, bottlenecking provide integrated across linking finally, and more through variety seamlessly, through process organization automation it our enabling enhanced planning standardization, function a reducing business at benefit will our will it business costs. automation our And the throughout plant.

our newTRON opportunity Carlson. ton per the $XXX will including will progress. cost look $XXX We turn to I for to the our update to are portfolio, reduction forward continuing over of very Tim? now Tim to of XXXX. unlock the the about on excited expected you call We end by

Tim Carlson

to first benefits the first completed of refinancing we in the JF. I want quarter. transactions the Thanks, review

debt of As work maturity controllership legal extended by teams, portfolio's treasury, our years. our X by great a the result and average weighted we approximately

and are previously XXXX. Our term XXXX, replaced senior in XXXX now our XXXX newly loan matures and issued the due notes in in due senior which notes

$XX approximately million. in reduced interest also XXXX We cost our by

Given of transactions, reduction million timing the in the we'll approximately of $XX XXXX. a see

XXXX will of continued deleveraging, an benefit all in which cash We with flow. directly free reduction expect even further

the net debt X.Xx. on notes the redemption was after of billion total April Our $X leverage XX-month our senior was X.XX trailing and X

the total debt free this the debt month. $XXX sufficient achieve to Given remain the end repay repaid of $X.X our of preserved additional cash using of at strong committed end This have free our first our prepayable month, the incremental this cash flow $XXX of quarter, top flow of reduce target million reduce and balance in debt to our an debt gross to to million, billion $X.X the we'll billion. during to We on committed quarter. we by will

XXXX. $X.X to X of we and strength we conditions market net advance current and of Given business after capital and the outlined our debt can our side, on Slide of left-hand model, notes. previously the gross in believe our On of the goal of resources billion, levels target $XXX X, of our million vertically senior achieve well liquidity leverage Xx integrated stated we've redemption our of

As cash which equivalents, of liquidity, our is had across appropriately in including available global total we million April cash operations. $XXX of $XXX million and distributed X,

to Our sufficient the is liquidity than operate business. more current

in to the right-hand of Moving expenditures the side the million. quarter $XX Capital were page. first

amortization CapEx in anticipated expense reflecting million the maintenance as an QX, the $XXX million newTRON expect approximately $XX DD&A of related projects the year of year. as we lowest First quarter depletion so million for QX level the spend and in $XXX increase Atlas-Campaspe be quarter was the QX, our well we capital to Depreciation, expect $XXX expenditures our and for and the and million reach is to to other of to pacing year. usually

$XX Our our to in for sales approximately given in free quarter strongest earnings cash headwind, capital a month $XX March the of increase million our million accounts strong a working flow the cash our March due as significant despite quarter. was receivable was

Slide X. for an to year. share the I'd outlook like remainder to Turning of the

market mentioned, strong. John As demand very remains

expected volumes strong expected are in up Zircon make initiatives. level, volume quarterly regional to slightly second they increase volumes to a the Both percentage QX for over the XXXX quarter with prices range as though are our setting off volume and expect to to above remain XXXX levels, to quarter. TiOX peak. the expected us We increase sales mid-single-digit low we from QX come and progress zircon pricing are record-breaking another elevated

our $XXX range expect in adjusted EBITDA QX We XXXX be to million. the of $XXX to million

quarterly of to we'll XX move South trading As a of the the the The and continuation maintenance job stated, from costs, versus synthetic equivalent first trends and dollar, is from ago the rand headwinds a quarter. is that sub XX.X one the ZAR costs headwinds recall million a our approximately JF business our from increasing done particularly to Australian year $X production current to to Africa continued facility, but the basis, around that and see third on great beginning FX, the to the on rutile has planned to managing versus year that at rand a in into benefit basis. of dollar us ago. will $X take is will which move in dollar quarter XXXX, The of a a a hedge, million increase quarter. in second account million through $X.XX quarterly today $X.XX $X $X is equivalent Australian trading Recall million $X.XX $X the our approximately million million a Australian $X quarter XXXX,

million refinancing million. our Due by expectations interest to transactions, to to our $XX $XXX net full anticipated we've million in of $XXX cash. uses terms to the year of reduced Moving for the cash

to contributions expenditures of for year, the newTRON increased to range expectations million expect million pension $XX the million, given less which of We high expenditures than $XXX and and end, Atlas-Campaspe, earnings capital cash of taxes, to the narrowing million. $XX $XX include of related net

expect current upon year. the strong actively delever and Net-net, to continue of We be estimates currently the for to be the to our year. we remainder modest the flow market This capital used expecting working over based continue to generation represents manage that are cash outlook. source it free will a

also year, debt in We investments strong to highest remain capital internal paydown high-return priorities. the flow and our for generate our ability cash free remain confident

As outlook, ahead target, our our anticipate based I $X.X XXXX of gross mentioned, upon current billion debt achieving we our goal. well

in our to tax impacts changes want currently billion contemplated in any from of We also in $X.X tax the remind billion not the and U.S. attributes investors expect significant We approximately with material $X.X code. total any of NOLs that U.S. do

Our total for up over billion. opening back call before remarks for turn call are now JF deferred tax of in the $X to the assets closing I'll questions. excess

Jean-François Turgeon

I are position, on in This capitalizing delivered delivering We we the to exciting the an market first and to Tim asset portfolio our that with confident our prepared of remain with shareholder. and John, continue Tronox. results momentum are the is we for pleased our very quarter. commitment time on and

project have We comment progressing on sustainability. Much started are operate ensure sustain mind costs future previously digitally comment on identified in we conclude a with our with safety, to to advantage John on reduce key with continued capital the like and and a like I'd position. to our

more look I'd remarks. That be regular sustainability with midyear Operator, embedded talk opportunity You elements an us often of vertical We operation. forward detail of questions. will that, in the being as you with concludes our the for Jason? has upcoming our open And in sustainability positive for across to the our We report heard one that for see dialogue. years. the integration call spectrum prepared full published advantage, impact our to through having about our company been sharing and like

Operator

BMO Our question McNulty comes Markets. Capital from first Instructions] [Operator John from

John McNulty

really results. some on solid Congratulations

the environment a of off when that calling volume there think I admittedly to mid-single about potential the digits, you you're growth gating that the to be back? guide, really stronger. for that any sequential looks Again, would hold when base. the any gating in are about you factors high I if in think those guess, low So factors be? is event demand What XQ maybe

John Romano

your we drew Thanks, quarters -- to building we significantly and John. QX we are be QX standpoint frankly. as the first of a down a in and strong perspective, drew inventory, inventory From point, Look, and where from quite normally QX QX down seasonality had well. quarter, in that would very

QX. we had in again, growth -- So a record volume of

a growth So is over To are achievable volumes we'll we above amount. the bit been a that from can standpoint lot been we of see world. we'll from from we of coming rest of today. the we I'm There's to extent from demand to as sure a little standpoint low has China. It's exports where about coming the to mid-single the sure fair what lack China. been the have make those a talk requirements. get But digits of the obviously, of seeing what we that, and grow do fill into of

about think longer tie volumes to we're we we're at trying agreements. volume, term to making that when the how looking commitments fill So to additional

is question there sure can that your can meet stronger we the pull we we hope I to a do answers make So extent what to demand, on that.

John McNulty

it. Got

still then to definitely a No, like restocking come? kind question. at mouth the Or point the answers own, It inventory normal industry on sounds kind but Okay. you it? restock the way only hand at is in of the seen the of really follow-up, much of just it this not levels. your is that to levels. below Have is spoke you as and And

John Romano

on to can't industry, I norms speak that inventory supply just tremendous are well but constraints. point, seasonal are chains, levels I do this of those that Look, below at levels on rebuild the reduced. customers builds our have your supply but patterns supply standpoint to And based restocking, to order frankly, the based particular Clearly, don't quite inventory for completed stage. from inventory there's be a we trying chain Yes. think to the throughout been believe opportunity actually current those

John McNulty

were last sneak your kind zircon, effect can system. it's one you through Got effects absorption, call know some more think of in. but have going of working with you high-cost to inventory? to inventory Did too? have or higher of the I fixed regard it. on have in it inventories maybe there And the cost just as cost indicated through if TiOX that of we that the of for higher about had did I kind one any know last a guess, I was knock-on any I cost kind derivative zircon work system. how heavy product, you profitability knock-on some

Jean-François Turgeon

John, doing you always at run had is full happened capacity slightly The cost the Look, TiOX the JF. more vertically small. short integrated, that us with but cost and QX our in on we're that. the allows know, than make the being, by the mine we're absorption fixed very reason zircon it's as our to fluctuation side, slowed obviously XXXX. what maximize when down That's even plant zircon we so

John Romano

And QX. a zircon and increased production first JF allowed and the bit. from when quarter, we about we slowed back down, in the demand but to XXXX, the lot we mining additional side inventory. that up the in And slow of we had a volumes did QX that's down that capacity through build really process point, production of and We never meet what delivered us the the to to in you think started QX that

Operator

from from Fermium next Frank Mitsch The question comes Research.

Frank Mitsch

Or well. the year. seeing to you comments about exports? start by the And offer would regional as I you really demand pullback that nice actually by be strength. European are was the some place in helpful comment Chinese about certainly there? underlying can Is A take driven pricing struck predominantly any

Jean-François Turgeon

has a strong place the is the at the Frank, Look, have a China put experiencing that created very the say huge worldwide growth and around it's demand JF. I'd that stimulus world all governments moment. in

are China. look, it been that's obviously that ours it's to TiOX the products we call same for they're basic see. COVID, everywhere. has local traveling, but created -- that I not of we not in more and experienced grow But used So mean, different I of what has people stays a that guess and way like they because the demand be entertain economy.

John Romano

It's we standpoint guidance stimulus, provide though, and zircon true as of the not of we X may just we seeing the we -- also in order from exported picking price TiO clearly to are it's initiatives that towards stimulus see Frank, of believe call, an improvement in second up demand the quarter. be be progressing what unlocking through expect don't noted generated. demand, book. element pricing. top both the we're we're pull the there's some And of longer and a and It's And And share it typically we in But regional additional our but that Europe. the there, price not in in Chinese pricing, on some on over term on volume regional with agreements.

Frank Mitsch

of then Any I And update follow-up very that helpful. production terms in And Got can Ambu? any just terms Saudi provide Arabia. out provide in if you could you, can of you on update of Jizan?

Jean-François Turgeon

start with Jizan. let's So

have were going and that being to or Arabia. the an delay lot the not, some still the key not last to also at since talked on difficulty of had Suez the impact some you it our Canal, Look Metso by to some look, smelter. So is I Saudi people COVID-XX the a believe to of modifying call. there's working Outotec of Jizan. change shipped created earnings about And components

the in X say last X I'd months. probably would that thought weeks where we're So be we we behind

because basically weeks lost X logistic-related we issues. of and another COVID So

see cranked Yanbu, look, Jizan. have are view I up basically with that's TiOX. on what a And demand we Yanbu, from we where mean point of the we for So

were have because Yanbu. the XXXX low restarted all of in So running line in mentioned line you, X. We we our Yanbu. have of X in we And demand, we to only

with back TiOX now of that of really to should are producing operating. I'd would COVID-XX encourage transfer will to So in that Yanbu ramp our moment. also running we have vaccination, reopen talked this hope the harder. at to the to to by some with expat want line that border answered X June I Frank. us Yanbu best Look, to its travel allow it's that up out is question, But what challenging that KSA that and about the we of your capacity. this say some to more the to we facilitate of And create synergy know-how

Operator

The next comes question from UBS. Spector Josh from

Josh Spector

quarters do volumes, could on I full strength year zircon where past way you're for capability what's maybe given capacity you in is, on your sequentially Or about XXXX decline, of into to modest have? the XXXX? supply think XQ, volumes think, be talking the you ask and that guys in based the Just couple somewhat another to

John Romano

did quarter, we standpoint the From quarter, a Josh. Thanks, quite third was year the of fourth QX. in Yes. down frankly, last we inventory drew inventory. inventory, good The finish more quarter with bit additional a and

the of in second what's A confident can deliver there's similar installed tiles stated So toward additional in is that lot production producers do quarter. ceramic with that some inventories to new we -- -- we feel lot And of China. by actually coming additional a as from we on the for of that Chinese our volumes lot actually this being additional call, to at demand this driven stage, particular have some large-format a has with transit capacity that. driven higher-quality pull and actually being that's we

that's of or So built spending that of would you tremendous additional weren't a amount volume a standpoint complexes where demand. have buildings driving seen where getting from a historically, channel We're change of volume apartment some bit for through the also being actually you've got of upfront. are now to a that change volume buildings migration or buying lot contractors finished. There's finish a

is ceramic tile applications. purchased you're actually way the getting for shift in So zircon a

Jean-François Turgeon

capability that and we with Josh, very for production look, production customer that the I'll zircon. Maybe, to our we meet add feel the hand, comfortable have on side, the demand in inventory with

going material. be the it's to more that of So distributing really logistic

Josh Spector

just pricing. I TiOX another And that. could appreciate on time if I Okay. try

looking you not your within but talk achieved by might region? you can for difference forward major XQ, So the commentary, each about pricing have that in

John Romano

Yes.

of was in That And saw Asia first balance those to distributed lot in significant we with the South that. say I say, saw So regards would increases with provide the on of pricing, forward-looking push, to significant the were regards again, I the big fourth started where some pricing, Pacific, can't in which we, actually we America, saw then exception of on China. in world, evenly I'd the a a as detail quarter. pricing, and that far with place obviously, as increases

Operator

comes Duffy from next The Barclays. question from Fischer

Duffy Fischer

is question pigment. First on just

rate, ability So in kind your be with line maximum at up run and production what tonnage effective a on volumes your sales half pigment to if estimate your first year, that produce how this you to pigment? And look of do basis? you the sales volumes would those

John Romano

Yes.

So normal inventory of, in seasonality, it build QX from and would draw you and down standpoint QX the look, you again, and QX QX. in

As mentioned but where -- well. QX. drew inventory we to bit in our down probably We in QX, would drew as a it and to there'll down production we we earlier, quarter, levels expect the a there draw in be closer second I somewhat of be

JF, but be through to meet through if the at talk about. production, an there of we look element of demand want balance able the the we year. So continued is continue you And drawdown do will to inventory forecast to our

Jean-François Turgeon

half And at the XXXX them the of first expect first we on. we like confident the half you maybe and of a I the slowed not end in to assets say you and with XXXX. in turned those at look, year, we we Duffy, that well quarter-to-quarter. mentioned QX target, not of will more the year. half our demand I increase plant meet all last last can full and were medium that's feel synergy newTRON the turned and how are we our obviously not long in are of that of cannot the very plan know that Yanbu, that plant a will to we we in on And that look, reality capacity. the And 'XX is place assets, -- the turn good and we year. demand mean, we Look, customers. And XX% term. least biggest we the our I'd with that it's do off. debottleneck switch running QX in down And But -- those second to of did the the plants up continue In produce that's swing toward

Duffy Fischer

then enough. maybe question price. on a Fair And just philosophical

we if than closed is that But spot price follow lower sequential yet you the given be you've would every But you the pricing over us price higher got posted when in your does QX years? kind general? would was Obviously, pricing reported that trends how deal, price you what How just multiple in philosophically, spot some Your track at realized prices in QX each quarter. smooth in, long-term much get you've global of almost globally, than that look contracts. should if XXXX.

John Romano

flat. additional back the to increase guidance average that are what good that expect and 'XX moving think into bit And and recovering a was when confidence into we 'XX quicker. we with the opportunities said second to we And economy, progress. us and than prices we're X% define the about last into get again, And spot the and our relatively as lost different in global we as pricing -- in well we a again, got we in continue that making expect pricing Duff, we over the years, the X Yes, would was selling provided that the quarter quarter 'XX, give we globally, but year first -- And predominantly prices. last XXXX. $XXX-ish call, that of

Operator

question Vincent next from Stanley. comes Andrews from The Morgan

Vincent Andrews

sort little from TiOX, about paper you a it's the bit seeing talk you're customers, are Is or Coast surprising just or have or the from plastics even of packaging the on where could the from could Did coatings strength? particular U.S. whether seeing, Gulf demand markets, you in the in all anything -- market outages the from there. any packaging Maybe so end impact you? there you we maybe start

John Romano

Yes.

specific our customers would well. relatively it's we whether all question of associated how the some from is very we're standpoint we're is say plastic, clearly, We strong North with Houston industrial the those And what the to seeing the coming actual had in the doing coatings are and regions, seeing But in depends instance, I had weather second coming the remained where doing of XXXX. through what well, of Obviously, in that did perspective COVID. demand. over that outages downturn developed that all some from forecast the markets for Gulf. cold look, a So from spill of that coatings the ability your us confidence It again, lot from coatings, paper, kind very to was from, about gives us every America, And I that's to some due have happened very that quarter now pent-up laminate, market, largely, that of growth market's upon time, think, from even in the region. I area. would some the for came issues say, kind market

So -- the that it to where some of question back because wasn't of a built running at inventory. There in weren't kind capacity. be goes our building to inventory customers situation of we lot people

Vincent Andrews

the presumably to can I you working expect on actually to just full the guess presumably be going I of with source the cost is working cash And idea capital. a I'm production you that year. price is are the if bridge for you be capital up. that up. And heard ask If just be to the going to The to of volume correctly, up, trying I be going sell

inventory other to through lower built much So that have thing year, maybe expecting inventory. this course potentially the you're course of yourself through not the I the of was the have heard probably

why just cash a Or despite plan? driver costs bridge higher part volume? a working cash management capital is source how as just higher and of being do source? things of doing working of that capital So is you're and to we higher Or your the prices is sales key particular it

Tim Carlson

for Thanks question. Tim. it's the Vincent,

with exception the You the components had all of payables.

We have current terms team our our to on most supply of a suppliers. initiative chain with extend

large relative And see help receivables, little in to that should given a months December given sales the a of year-on-year well. of And source at payables end typically as an the pickup of be timing the see mentioned, months. the And of improvement will metric. we'll by year you in to end as cash collections other terms the a inventory the year. So that of we and November aren't bit

Vincent Andrews

Congratulations. Okay.

Operator

Ahmed Next Hassan question from comes Alembic from Global.

Hassan Ahmed

that the I when industry for one was for consultants there It a table July. January, seems sort to that price hike on listen April, to of for another me certain another one

Now is that beyond backdrop the to the that, side of tight. ore suggest seems things

significantly their course QX. of the One being volumes of talked through about producers ore largest the lower production

in other question of price that is looking are thinking And now of quite hikes? hikes realization these tight, -- with as being particularly of terms you you my what what price have as been to announced, And terms a in to being in of the market. integrated unique situation ore you So further are guys hikes what relative these you price is as like? availability producers

John Romano

gave higher to Hassan. we implementation? was working one Thanks, we on rates price think Look, the cost, February. what we we Everybody were that prepared pricing we're than going the had that. vertically was and implementation doing due were when customers. thing we to noticed comment increases that the your announced has I And not comments than noted in actually prepared feedstock cadence anticipated. price a again, different I'm regionally back anticipated on more had that actually said, That regards to bit -- originally with integrated. do in communications that in increased clearly direct outlook all the being of on on a way With where increases. we we We question, through

of XX% sourced to pigment need our what we Tronox. make So outside is of

demand. as inflation but see not nearly do others largely more that an as due we our driven to is strategy as we're element. impacted ore, might and So be And pricing supply towards

supply which continue to see move we'll anticipate will, it pricing as regionally. we the to continues right demand initiatives out in as So long move direction,

also will we there indication have margin there right we'll year. we so quarter. are effect into that making the had X% confident the that increase the we're we again, the first We've agreements progress that pricing we're see there. additional into that that Now stability and as in second dampening we in get given quarter, globally good to some But now, place, have remember be further some

Hassan Ahmed

in Got it. Got QX. terms of And now obviously, strong it. in volumes, volumes

about guys or came QX, market where and course right? was large to, supply at well. in were things. to the in particular, are some it of of able of this talking QX. themes lagging benefiting the out share in guess, as guided meet there at their side curtailments how I obviously, mean was you the least then were It And or of talked volume thereafter, in seemed Chinese on were, there gains the the sort that in puts range, of about commitments. and the being seems I producers end have You of market one your the And couple Chinese western production strength producer regaining Europe, behind through a again, share you're guiding takes, there higher -- that producers not to being a from year

a I flows, guidance little helpful. around you that continuing would volume your mean, share Like trade QX any about well. of strong talk sort in seeing fairly color strong guidance, you changes? could market So as bit? are obviously, I said, shifts QX, be Any

John Romano

Hassan. Yes,

you there just when China in basis. supplying. of strong. to China We that we're stimulus -- very the demand. go pull, lot that over if on we're earlier now back see And seeing demand So a regular And exports made point with region growth its again, that back coming do additional wasn't think, that's comment JF I was to I it's and XXXX, every stimulus a around growing. the started something out demand above I'll XXXX, Clearly, made and go of

consumed of if China, started pricing about fourth talked a you about rebounded as commitments back was frankly, internally. being lot the the So quarter in Prices quite We China the that market actually of our moving a quicker. region is the lot exported made, in significantly. in in were much think being moved China what

to better So are those stay right logistics better perspective from of the material are because very and or exports suited Chinese prices the a expensive to now cost higher export out. -- in-country are

we some some those against some to for of believe, regional lock of the QX this, lost -- in of the we're due some not time gained valve I a that in we is the we QX have are of Chinese. We I'd on in we're share that? on historically would customers longer that doing to trying more and for what relief tactical with agreements make now some actually may share, share have sure QX gaining movement So periods say, And we gained so just shifts.

Operator

next The Zekauskas from JPMorgan. Jeff question from comes

Jeff Zekauskas

questions. got I've X

to your your ton. it big to part How a made out of The it realize up the have ramping mean now? benefit? have somewhere reduce to else $XXX And turns are $XXX by production ton? goal that Yanbu, -- you that this much you? you take get a long that is How will Where of progress $XXX How if lower in first terms $XXX is to already? does your cost do to you you a

Jean-François Turgeon

is just linked talk So with $XXX for Project Jeff, about to and the when is newTRON cost reduction, we Project us. additional this newTRON $XXX starting

I Look, We're helped growing clarify And we we down end slowing seen And we customer, cost year. some in our full to on they're to those linked it are obviously think and reduction more look, those And synergies also position. just should in cost benefit order XXXX, and that's of talking the achieving plant. the did had will XXXX, XXXX. haven't see the cost were that of XXXX progress But it work the will in QX any hope XXXX, that that's and reduction we The they end of based we benefit to I start clear of XXXX, We deployment difference, we're we're So improved through with in Jeff. that continue benefits synergy our we're the before the toward the selling synergy real, this so then project. not and than the that our for those volume. newTRON. are the see where yet. have

Jeff Zekauskas

enormously. industry in Okay. question, if mean, dioxide And And at oil, it's every so is propylene, my why look like seals, titanium titanium like chlorine, is year-over-year I flat up commodity the and low basically price? to couple a going allow Why dioxide bad? more price for you motion? the rest the up rate? doesn't world second polyethylene, is are is of is world? everything in Is slow utilization exports into Is capture it is it at too percent everybody it What it sequentially. the of Chinese operating that about

John Romano

this Jeff, John is Romano.

So perspective. look, I guess it's your all on

the think stable that X Over the market the in. years, prices remained considering last were relatively I we

So we didn't lot of lose a price.

was where think cycle, significantly in about the pricing it went below last you If down that.

of index we I last increase So I at from our that, guidance make continue half that look this years. X can you think over back stabilization view momentum a cycle. that on lot the us would of a on The don't quite frankly, we just throughout the into going was that And benefited maybe so margin a we business reinvest then price could the no it. quarter, on were. you significantly standpoint had different got in the particular whole year. price that was the to into where And point the There's thing moving -- give of good first about price finally, of We've TiOX. is the increase one good

we're our our and but that customers have other are benefit And we a with some working products So referenced is investors will chlorine is growth. long strategy with of bit that term. long, I different, those think stable our that objective something you out the pricing and

Operator

Roger from next Bank Our from Spitz question comes America. of Instructions] [Operator

Roger Spitz

items XXXX cash you cetera? for restructuring, spoke Regarding we about, instance, guidance. about, cash et are the other flow there cash should think free Besides items

Tim Carlson

Roger, it's really aren't. Tim. There

our nature integration other behind the the fact model that to. business aren't that and I any speak integrated given uses completely us. did Just the There we've vertically significant not crystal of cash of got

Roger Spitz

all they quarter? given substantial correctly, volumes, volume zircon Did movements the departure due this this to timing. And Great. at ship if can remember your I be lumpy occur

John Romano

getting that OTD we shipments the we the our actually Look, quarter our sold we with lot we great and of happened a our more side lot we delivered of not group, the do that than not and the and South the some Africa of did what In we We've supply standpoint and those of on And quarter. of chain a equation a first logistics job, on zircon in a you and logistics volumes repositioned some And had specifically of in so downturn, volume. have. Australia. what is group did. in the from make the also historically for risk in EBITDA gave range that definitely to quarter, the out had actually

to meet additional we So demand. had inventory the mentioned positioned we

was of well would to repositioned so the that part market did a meet it. rebounded, COVID what of we lot the positioned So when be inventory we in

your question. with a So we on historically that a that that about lot answers too, has I helped lumpiness little talked our calls. hope bit, that

Roger Spitz

historical am think I and volumes what suggesting basically that's you're you may I is company, But the keeping that by the the that zircon to inventory reading right. I seen. correctly? have, lumpiness think closer reduced going that of repositioning forward, we've Is --

John Romano

as a that inside You helps alleviate invoiced it's closer also the a And than opposed are customer, do, the move inventory it a revenue that. keeping it for zircon helps customer shipments shipment the little better to correctly, the we volume bit an just and and directly quarter. us move be it's -- can where plan planned a reading to we can

Operator

question comes Goldman from Sachs. Edwards Travis from The next

Travis Edwards

mentioned Africa. far elaborate more raw and as what citing seeing just any think X or entire remarks, going me. and cost I curious inflation raw in are your you're I you Just you on question material in the up for Africa material can business, just in inflation? a South logistics those a cost other globally electricity you maybe prepared as South either was what I factors at quick if little again, and seeing costs logistics believe

Jean-François Turgeon

I on price But have route, and vertically which for logistics are contracted know huge. every have outside to we spot the that a those that. do, room front, mean, with shipment cost internally seen increase well being of in that move we normal Trevor. we we have established where to the we Yes, producer will very we what we certainly see integrated did is

demand goods immune around that for not reality. a world, we're it's vessels and clear the So for moving there's to and high that

So our that's South ilmenite QX. we to had element do excess in that one go saw the ilmenite in of we is and price has China QX that in thing in to continued One we decided African operations. up

some So buying it. logistic to advantage our we to there a Chinese high instead of own which our -- to plant was cost ilmenite cost ilmenite, pigment huge a feed send but do was expensive of China, in

how government So entity we South that earlier. is that -- because had electricity And look, in we difficult produce very that's is our huge the it's a rand that devaluating to rate inflation. move. price route Africa. dollar. it's will the South was The electricity not established gave U.S. And linked in exchange in Africa. increase, not example the was versus the really favor. Escon but Look, in predict And to playing of the

we this of his in is used the electricity down. What QX going XX moment. But electricity rand the was at went rand year still difference So to that you been had the but as has increase Tim had from year in remarks, a mentioned increase. last huge XX.X

rate huge inflation have we So combined going with a impact of us. kind double against with a exchange

our pressure they're that allow bit and that see. we're facing confident rate of the exchange cost have with kind question. lot is good I mitigate look, So the that And we color done of your we that continue out that's us the reductions that costs are of Project most going the product. margin why of hope inflation synergy moment. those to and cost and the deliver to a to we're see gives those that very newTRON challenging to a at a with work fight real to impact And of I

Travis Edwards

Yes, great was color. that

Operator

Co-Chief in There Romano, I'd to the are turn This any the conference no over queue. questions closing more John session. concludes Executive back question-and-answer for our remarks. Officer, like to

John Romano

you. end want in This interest your the of thank call. the everyone I on the call questions Tronox. your for Thank is to and

So great have a day.

Operator

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

now may disconnect. You

Tronox (TROX) 29 Apr 212021 Q1 Earnings call transcript