- Earnings call transcript Q3 2022

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Operator

Hello and welcome to the Tronox Holdings Q3 2022 Earnings Call. My name is Harry and I'll be your coordinator today. [Operator Instructions] I would now like to hand you over to Jennifer Guenther Vice President of Investor Relations to begin. Jennifer please go ahead.

Jennifer Guenther

Thank you and welcome to our third quarter 2022 conference call and webcast.

on Co-Chief today Carlson, Executive Officer. two, and John Chief slide Turgeon, Jean-Francois Officer; to our are call Romano Financial Turning and Tim

will through we We slides call. move using be today's as

presentation can on You the our at investor.tronox.com. website access

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

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

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

that note are unless during the noted. financial a year-over-year please Additionally, basis comparisons on otherwise all made call

John pleasure Moving it four, is over now John? turn to the call my to slide Romano. to

John Romano

everyone Jennifer for and good Thanks and joining morning you thank us today.

and you evenly and East, Europe, mines, continents. which was world's vertically six billion integrated largest facilities the may of distributed Africa, be with the the we're and pigment revenue across Americas, a upgrading who plants, XXXX who those have joined $X.X across with TiOX For story, little fairly Asia-Pacific. less Middle totaled Tronox familiar five nine six producer

our globally. of X,XXX of tons approximately base million well-balanced X.X pigment capacity supports Our customers

business of ensures feedstock supplies model and customers. supply secure our integrated this internal for XX% our vertically Our consistent and needs approximately

of of from strategy, Day significant and to you replay generate key initiatives, June targets. also to listen financial haven't already we mid approximately our tons a XXX,XXX to Investor largest webcast learn zircon world's TiOX, second and as our value I to about addition invite done so capacity. producer of the with In you long-term if more

including to year-to-date share elements waste. many electric co-product commitment which strong Now, quarter $XXX because And and streams magnets by turning within our a now this finally, EBITDA we use adjusted the We payments. value our vehicle has found those increasing include were returned model. the of strengthening very EBITDA million of million demand permanent of it guidance little shareholders And variety conditions. their were consisting $XXX emerging we've economic margins economy, light green resilience monazite cost range five. margins than projects market And earth a in rare We continued XXnd to $XXX despite in the in for to eighth is that repurchases adjusted through margin slide row achieved third higher stockpiled monazite motors key in margin rare-earth a achieved elements. margin and Tronox's we're of our of streams higher-value portfolio, in wind historically for quarter million strength Tronox's as of and of performance turbines. co-product evidence invested consecutive high-value and given The monazite, scenarios. dramatically vertically quarter Tronox's XX%, increasing EBITDA is XX% difficult and carries integrated including updated enabled ongoing dividend realizing now business adjusted greater as business the the and where that This above facets our reinforce from XX.X%. capital

as in what waste. has support but million renewable year-over-year, year-to-date, co-product generate less driven to growth from enabling greater is rising provides Tronox increase earnings the streams interesting was co-product XX% revenues realize only This these also space. not previously Tronox an incremental in value the for revenue growth a opportunity $XX to energy viewed for interest While than high-value it

Turning by higher iron was million. higher Income zircon, to and pig million prices million Tronox slide six, $XXX was attributable TiOX, our driven volumes. X% represented net increase, revenue pig iron and of third to income from quarter $XXX operations and $XXX a

to Our recorded being GAAP asset. earnings Adjusted benefit per an and to EBITDA allowance in Australian quarter was $X.XX conditions. per due represented deferred market a $XXX softer diluted X% the to due share primary $X.XX the decrease largely share our share of an a we XX% earnings was for adjusted diluted with a adjustment of million tax valuation difference

to and decreased address driven of build replenishment to rolled million margin $XX the higher mix from QX cash taking generated in was flow, in to we the Jazan that which from result with quarter stock the purchases from free this of review JF as points fourth iron QX. XXX the both in minutes. unfavorable we're in safety XX.X% and by quarter action inventory And softer Our will impacted costs a you basis by pig finally product volumes few a demand. And feedstock as higher

Moving to Slide X.

strategy. The of quarter Asia Revenue XX% to volumes in local selling pig TiOX and driven US orders our headwind the in TiOX in third impacts, average was the $XX zircon basis. the our positive Zircon in a last while improved million, and softer continued Pricing increase a month increase by the the compared dollar release XX% or volumes from TiOX quarter X% in weakening were of to US due line continued quarter. dollar in across in increased quarter, the products euro. Middle to the basis quarter, both volumes other price unfavorable revenues. translation due zircon and into from of an a the strengthening on driven higher Africa iron reduction in versus East with the rare from X% was communicated revenue we currency Europe, on earth commercial momentum Pacific. demand the and and prices by primarily prior X% pricing to sequentially, resulting on declined second expectation, pricing significant and X% that our rolled our execution was a quarter owing As

the to weakness demand fourth of volumes. weakness, direct QX Europe, into trough the by are in previous do will weakness relative this the Americas. we of will customer inventory confident economic believe decline received, not to move we year, continued low and to to levels XXXX. as sequentially we similar Based Customer looking quarter remain see be customer XX% and periods destocking and remainder on we we've we East feedback, driven and pigment seasonal So Middle XX% in destocking for TiOX Pacific so of expect Asia Africa the levels

owing our of We the in previous financial to margin continue benefits implemented previously, expect results. see performance. and vertical of that a I'll And approach we've the communicated do stability the we've as JF? to the turn the JF now to pricing to transitions landscape our for it not several initiatives integration commercial last in differentiated we over and move years. operational has review economic our call as over

Jean-Francois Turgeon

you and Thank good John, morning.

to Turning X. Slide

higher the increased saw on to serve impact by have in lower was higher remained had space. volume, in an abate. increased quarter from offset to pricing products pig to headwind other margin. of sequential sales third higher We in rate has no a by significant players the quarter Freight rate EBITDA to level the across including our exchange customers, our to unfavorable decline favorable costs addition all and commodity headwind from has year, operations. been adjusted prior product iron a driven in mix cost Costs partially Our margin our different

tons increase headwind our year-over-year to and XX% and million or energy of million currency sequentially, cost XX% a fixed sold material volume equate EBITDA by driven XX% sulfur, coke, sequential on The year. $XX increased by production acid material and was chlorine, a prior million primarily major major higher versus driven the basis, $XX in from quarter Our the constant sulfuric absorption. $XX costs costs. the lower headwind total, to In cost on

African incurred on impact lower a impact revenue. rand year. prior or results weakening offset net also cost due production EBITDA Australian pig positive FX lower favorable to unfavorable South a impact had $XX in iron a compared million more pricing. on than and translation to the market $XX dollar The FX million charge costs We and This to

Turning X. to slide

macroeconomic success. We our optimize we portfolio. for a position are of that react process employ model, action enable for backdrop, optimization enterprise able economic to taking the Combined As our to landscape and with a a scenario. Tronox and result part us plan we robust a as forecasting navigate of current swiftly review the variety are to our of

scenario We number across of laser focused are a executing a reduction cost and continue to to performance optimize levers on. of on that we be variety have

reduction playbook. cost have executing already begun our on We

We freeze. have implemented a hiring

We and costs. are discretionary travel professional reducing fee, other

supply costs optimizing are chain initiatives. additional also fixed We our driving and

replenish demand which Softening inventory to last the level in below increased our us the TiOX drove safety level several allowed quarter for norm stock, has seasonal quarters. third been and

slag contracted Jazan Additionally purchase the drove increased feedstock of level.

to to we level customer production due As lower a result, taken have demand. action reduce

are highlighted have integration projects previously, we initiatives. investment As our profitable and to medium the vertical key newTRON and support long-term growth

XXXX spend implemented million to have unfold annual it as our to in the we plans significantly $XXX to However, is environment reduce below macroeconomic capital to [ph]. adapt

it the flex we delay action is scenarios time the this our cash variety business with our capital across spend. free anticipate will flow recession this of will this projects, case. ability for believe to from these decision to this do benefits positive realize is While generate and Tronox our our ability including consistent appropriate to at a enable We

to Tim like will for review the I needs effectively would to and We success. while turn our for call the to have we product meet balance necessary positioning generation now continue a to over future of our cash Tronox ensuring Tim? are outlook. customer

Tim Carlson

JF. you Thank

Turning XX. to slide

monitor of developments monthly a market to continue through trends. bottoms-up view We

in to lower million range a levels. discussion $XX expect identifiable sequentially. includes we approximately current to upon production involves Based our volumes range process XX% XX% review, evaluate thoroughly $XXX charges also million and million adjusted for $XXX TiOX forecast. QX. The to declined one-time total EBITDA opportunities Our robust of the risks assumes in our This to from

As our to adjusted XXXX a for to $XXX million expectation $XXX EBITDA be year is range full the of result, in million. our

we million. to cash are of million, Net to Our and cash $XX in a TiOX, updated expect $XXX expenditures million be a taxes feedstock cash working million, use assumptions across which inventories QX. million as $XXX of we $XXX capital interest result managing capital of increased approximately approximately proactively of of use $XXX are as approximately expense follows;

our million We process also QX, accounts in portion been benefit a upon flow expect anticipate since a continue cash based in the a to greater has the Based current free year of million. facility our cash approximately $XXX outlook. $XXX completing our QX. which receivable to market and These one-time for that upon securitization assumptions be free in best represent these we than of generate will estimates our

We have remain conceivable sufficient our detailed the we ample currently any JF commitments. executing the delivering levers we're under focused on scenario. We liquidity, strategy to on Investor ensure and at Day, actions taking. reviewed

confident concludes our That Given the what for we recession case prepared remarks. to over I'd today, know our Question-and-Answer like call XXXX. remain turn in Session we questions. that, in Harry? achieving With

Operator

our [Operator first question Instructions] today. And for

to we to our your will Fischer you going For are like if your proceed first would line Duffy, Goldman open day from be Sachs. question of now the with question. Duffy

Duffy Fischer

guys. morning, Good

to number of be your XX% volumes is First which kind anywhere Their the of go, near question, had to as guys volume. a XX%. we've as appear of down bad don't three-fourth coatings

seeing Is a you're that what how So large versus walk that think in is destocking, destocking of where can fourth please? quarter, chunk destocked? to you is is needs XXXX trader you talk the be consumption inventory through big that is of about real your customer? at or that Is demand the that level? Kind at,

John Romano

is Thanks, Duffy. This John.

were So of We of a in things. inventory. safety our we made stock combination We it's reference the a third recovered of some look some that variety quarter. building

XX% slow what of destocking So prepared point, us, hearing be demand. bit some seeing But of as regards we number destocking The our comments, a some result is on the part specific basically of reported, what to XX% what on going is it we order we're referenced the your end what we're to down to patterns. by seeing have the based the referenced -- customers, from and for a will quarter. to in we're and we event further of based to be with slow that them finished from believe the

you using any a obviously, quarter better negotiate are that customers say of of prices. get lot a have absolutely, real to We to to into ability time to and year can't that are walk downturn. coming those the That's something that happens. this believe significantly you four take I'd to going We what first, number, it try And think kind in get is happen in numbers then XXXX. multiply we that of the lower and by

we destocking for end believe fourth why, TiOX, confident short is, that's the trough be will that So the we're that quarter. the said answer we volumes it's quarter. the complete And the is by we of believe

Duffy Fischer

enough. bring relief is therefore side, compete pigment and or think, is? tighter structurally with on prices or on you do allow directly, the what that And then and you but more integrated market-based don't Fair going you do meaningfully, matter you ore market in the ore pigment than obviously, will down for and Thank see buy there side itself so cost next Will year? them much or as you. get you're in your competitors into they to costs maybe pigment hang

Jean-Francois Turgeon

we Duffy, thank of vertical integration. the in to strength question. continue look you believe And for our this

the always a the As clear we at a price adjustment one by GDP, the demand. I about And material XX% XX dynamic, is word make that we mean, raw takes XX% to shortage on is the reality it's talking year the line to in Look, beginning changed you with said cannot an pigment quarter world the drop to of GDP quarter five in for realize. of that that XX% to is and but dropping not one were know, feed with TiOX XX%. years projects and

ilmenite your in we imported with China, made has production increase. no and sustaining true that's down in is is imported that weak be been weak in for was the continue that Look price we to very it's demand feedstock And and in stable instead think local not of at price a with and their comment TiOX I what QX all ilmenite part of have There pigment the obviously, the lowering sustaining even China, So feedstock the business, seen And of continued absolutely the for point to the China. the for in either. even stopped slowed and not grow going to that they of happening going and to the ilmenite production ilmenite it's you price. moment. price agree China, of have

feel very we position, that confident related our So, with vertical to situation.

Duffy Fischer

Great, very helpful. guys. Thank you,

Operator

of Josh, question next for from is you. today line now UBS. line Spector Thank of is And our the Josh your open.

Josh Spector

for question. Thanks Yeah. Hey, guys. taking my

be And to there Just separate cost you I ask reduced on impact what that of through. quarters, impact guess or the a the quarter of reduced for talked about due for one-time to guide. be wanted cost tended fourth I higher that related flowing to a when production. an would to you impact guess, inventory of kind lagged from volumes? kind can rates of kind there cost absorption fundamentals of of And you number versus a reduce Tronox

next year this into early to this expect that call well? or You as we time. one should time Is see different

Tim Carlson

question. increase One said, production which Hey, two as that the a unfavorable in really the components following in up cost about. fixed And Josh, end result as is are absorption does it's into There we Tim. does of quarter. it think costs roll inventory. you Great

it take than into However, certain happens, bit actually times. down we'll that there that And rather inventory. we of the be putting are period in lines quarter little charge for taking the a longer when

QX. of costs will And So that of through million and the million a probably that don't of costs flow the costs to $XX associated will the in inventory we as there's another in immediately that million allocate lower incremental we QX the result cost, about $XX into there's flow through with flow $XX production inventory.

John Romano

more maybe that. just on comment Josh one And

We different on six TiOX levels of of continents nine plants have inventory.

hit that about we some next that's we that inventory moving because – So of us second the flow-through into talk amount to have this don't of we historically. the into the that year, year, quarter of had first going

in the us impact little going a quarter. So actually to that bit is fourth

Josh Spector

reduce just helpful. kind That's extent. maybe or – there into mean, to rates where it, prior the market operating back build selling have benefit the related of question I side? And an some to load side consider Would you're mining that know, to. inventory the of integration. inventories still to consider and your been you on of part are Thanks. the there of of advantage conditions you would That's ore of to going any to Tim take you market semi-tight the more you the don't I keep lean on

Tim Carlson

Another at at operations great of can cheaper without of overtime had as look is The look schedules of feedstock. do one as terms at out a that maintenance schedules building of hurting slag we services. how and with production of question, in item our result costs opportunities managing and optimizing to We some all excess we in We to bit QX We in maintenance about it us Jazan. profit. is, coming opportunities talked Josh. the look QX terms that outside we sell are relates mining the a bit CP a

Jean-Francois Turgeon

doing Maybe we mind to more our we high incur more obviously, call satellite in you that, in in and mean, that. that out to Josh, a add those time get I product deposit demand, have I we drop side XX%, stopped those time costs you remote I mean, of time some area. could see what XX% where save of of And costs operation by

So doing we're this. actually

John Romano

as of workers we're workers projects would those that do reduce some contract own to the our with well. cost we doing And with historically

Josh Spector

Okay. Thank you.

Operator

Thank the Begleiter open. Deutsche is of you. is now And of Bank. line line your David, David question next from our

David Begleiter

environment permanent any Thank forward? changes respect looking morning. In footprint, you the you. making given are European going energy higher at considering Good you're your to

John Romano

No. This is John Romano.

David. Sorry,

quite energy on Europe. impact think going we about UK, to permanent fourth looking coming any the had have making are our cap UK be. our gas biggest frankly, relief. the not to numbers quarter to prior We actually footprint We we some changes risk some what our at was with natural a more in prices on gotten And in are in in

quarter what government the the fourth cap So was a based place a moving of significant call could was some put hedge, which on you been UK energy. a into in by headwind that's what abated putting on

Jean-Francois Turgeon

cost we improve have our dependence that's And reduce our to to gas position. our David, facility. in plan our strategy on part of And five-year natural continuously

with our that's confident we So feel there. why footprint

David Begleiter

Understood. mentioned given benefits in were CapEx. you. the you savings, future and there And Thank the time just that those reduced the project Can some on delays realizing you newTRON, quantify going delays forward?

Jean-Francois Turgeon

newTRON David. JF. don't us market always And conditions. the It's and mean come the benefit that to need impact that flexibility to already stop work year. give the Yes, project in it XXXX. we XXXX. mentioned it. that we capital the this obviously, of want have achieved that decision around to And about was We that the slow for is volume reduction newTRON. additional we on I continue Well, that adjust Look, We benefit, of we newTRON don't more newTRON was us. in the down. benefit to million expenditure our We the because will to mean probably the reduce of cost benefits remaining a gave it, We which just will $XX with want

it's we're originally be probably still very a going what the to slower $XXX those and confident get ton, will XXXX to at And will but to benefits We in still XXXX had mid-XXXX $XXX but and have of per instead anticipated. continue we pace. some in we

David Begleiter

very you much. Thank

Operator

Global. Ahmed the question of Thank our you. over next is Alembic you. Hassan from Hassan, And of to line

Hassan Ahmed

John on Good and Question JF. volumes. morning,

sequentially as XX%. X%, can to But volumes, of Zendor take a cognizant guys obviously, you sequentially guiding declines I XX%, I'm, TiOX at While down about look you [ph] competitors. that Chemours down QX talk

just So, in fairly majors I of, across sequential these, terms any color of large sort volumes? mean variances around TiOX the

John Romano

Hassan. This Thanks is John.

specific So, we'll look, talk can't generally. to you're speak but We right. competitors

obviously the saw China. Tronox, the in slowdown For was us, that areas of we one first

one there. that operation We was first slowed over one the of huge an actually we that not have It's a plants but down.

little bit believe -- do in APAC have impacts more our the we So, a exposure market. I

three those So, when competitors we think is thing. one quarter-over-quarter about

also one than look a a to I it, at think further has bit have you maybe quarter. Everybody profile. different just customer

different Some others. customers than are

adjustments. Some working are driving capital

is demand variance significant we even with happening But moving reading least can too not from between what got getting there's last there's is is this system anywhere big do those to believe was to driven destocking. lot regards of near a of be and still forward, I'm into we're that already control there downturn. we because the landscape two of that that landscape random referenced. portion back what we're our not seeing the inventory the were focused And we've what's during different, what amount people We've So, different. we're referenced last-minute you And and The but of that the on clearly hearing customers, that at on. a in pulling orders influence. is we're that customers

is signs out made comment trough. prepared So, volumes number, be which the we quarter the to we back our fact And would pick our into in support all indicate to move up. fourth as are that the XXXX, we that the are in going going comments and believe there, the

Hassan Ahmed

follow-up on in you a $XXX I an given. to weak guys annualized is that which of as $XXX QX enough. is trough seasonally to EBITDA, million guide fact that $X below quarter. $XXX $XXX million obviously, Fair to million million. a on Obviously, But the $XXX basis, understand the QX have the million just billion guide that's And

the comfort that is, shaping it gives you with you really around trough sort the sort market question my and of that? be number. to is, guidance of out reiterating So way guys What

John Romano

start? to want you do Tim,

Tim Carlson

Yes.

talked in So from now. that saving perspective, are my the Hassan, cost activities process JF about,

a activities benefits than saving the of expect declines cost The forward about we that next volume true saving the absorption absorption that will we unfavorable outlined XX% destocking more into place rolling also, top I because full XX% and And and talked unfavorable support to volume that in don't XX% further the increase that's that recession and benefits going we of haven't of some happened. for decline, the activities. cost those have we case So offset was our yet on realized year. EBITDA.

much So volume that lower as XXXX also our support back recession incremental will than a volume that coming case. levels result alone with

John Romano

guess I we're reference will be significant range you go was point on lot reduction just a between pickup minute. have upon made range, in within dependent a where to the we and And expectations What we see the seeing month orders the volume. might that of to the EBITDA, to bit back of numbers that I volume even customers place starting a little higher on are as that October mentioned last at the

volume a into is that the there fourth that of quarter. factored So that's element range for

Hassan Ahmed

Very helpful. Thank you.

Operator

is And open. our Fermium Mitsch from is line of question Frank, line Frank of next your Research. the now

Frank Mitsch

Thank you typically Yes, fourth build morning. inventories. a I quarter think as a to time and good

you year-end? that production about rebuilt I'm it and stock the appears obviously announced it is are it is target you is comfortable levels obviously ended how what curious others safety TiOX have inventory you're given the for think quarter, lowering at producers your production industry cuts? Is do you've others your You're in that industry the in third it where inventory level to and as lower, lowering and higher production. the

Jean-Francois Turgeon

fast as the is are XX% turned sales But Look we a production we you Frank sale of in capacity has as had than not taking to reduce So XX% to as we're and action in down. it's what can anticipated reduce to JF. imagine QX. more going drop

positioned a inventory bit back 'XX look and demand and will level. our why in inventory go above something to build be the cash expect what we And we probably more and working But and ending the happened that's QX and we we capital. little consider very continue of at we'll is look than we'll build well working that adjust are what some hard So, normal up in on to our is free if see normal moment. flow to

Frank Mitsch

you offer to were is as increase realize and you fourth could 'XX? to a I'm what And outlook quarter modest any the for your comments in if with pricing able to curious sequentially. price Understood. respect

John Romano

Yes, is Frank Romano. this John

did So in Chinese and third we But in the recognize price there quarter improvement well-known quarter the which some in some pricing impact forecasts was the the provide our forward. pricing don't moving during we specifics very in on generically had on an it's even third movement regions. third quarter price

different in the still bit agreements margin different, our the agreements that are the place and little we helping transition. quarter. So variety which not are other negotiations have be reflective Obviously, a now had and our quarter downturn to I the than numbers a earlier moving what seen we the fourth as margin we we're third historically stability going pricing quarter what moving about right be when have that into mentioned in but we've We is we ability our of us pricing significantly the negotiate. to fourth fourth in still have of manage our our think at into this in will quarter throughout not economic

when other landscape's sulfur up. haven't got the say down, prices changed. impacts also prices back You've are Ilmenite the starting to we move moved

about to referred that get that recession in those very that down think to the significantly with to of we make it that's to So when are during along to going we things for move that case why system costs elements that. and there's Investor still all of which lot recession are a pricing confident Day we're in difficult in the and still other number place

Frank Mitsch

That’s very helpful.

with Asian to the a had price comments a was being pricing referenced at had wondering which was if you any the Chinese respect or near bottom. You case that I'm and that not? thought declined or precipitously there

John Romano

that's Look to on question you When have great about think Did follow-up it? you another a Yes. go question. the export -- ahead.

Frank Mitsch

cost No, some of their below variable just or it operating at was because were producers production.

as what I there? So to was was your curious just comment

John Romano

while it TiOX what would -- think moving mean some in not pricing think have we of four was I pricing months hit. And you when China exports drop this XXXX consumption. our to gave the visibility massive saw dissimilar I in down that we three saw actually to No. which quarter gone last when COVID in of second down, the significantly, the about out Yeah. those

Our pricing last actually TiOX to seen inventories price in production confirmation slowed XX producers have what as to We from Chinese And up. went we've that medium-sized the flat. recently hours, as XX small is but announced remained down eight increases.

So where allow We've gap is going we are the do but direction. continue. to seen costs believe that other aren't in them already that to significant a there start to now move we

Frank Mitsch

you so Thank much.

Operator

the your day open. Our line Matthew next Matthew, of question from is DeYoe Bank of of comes now America.

Matthew DeYoe

can a are continue for stockpiled nearly morning, going think earnings you're everyone. transacted revenues about while? margin? pure selling we waste? And these be from should to it's How that Good given sustainable I as this then, this these waste, is -- monazite from mean,

John Romano

a question. great That's

So look, several these on brand-new XX that, for significantly been the materials, the we've from increased what it -- is the the not But months. sales margin seen to those depends is monazite We've years. has all course us. selling last over selling of

opportunities are So rare coming that's additional reinvest on money we from revenue earth that development spending in to opportunities.

in get the what tailings. So X,XXX how that sold Africa tons would That produce over doesn't and range it it on of period continuing we include a South all We we're of for sell the depends be to through year. XX-year our -- Australia we quickly out somewhere we to if that. X,XXX

possibly one downstream stream is that to future. will we look continue looking also at believe that So in

we into also strategy downstream. move we will As to move looking opportunities at a longer-term be

Matthew DeYoe

build and feeding theoretically that, know now. inventory well. We're this through feeding And guess that there's inflation about are on like as days I right. going sales but you're the through and replenish I number I talking the sales more Okay. inventory, be mean, to should XXX

be So, as did inventories high? days why to sales have

John Romano

sure Well, -- you get when great days… not XXX the I'm point.

Tim Carlson

our Until, feedstock.

John Romano

talking So Okay. inventory? total are about you

Tim. So go ahead,

Tim Carlson

No.

mentioned you sales day inventory integration throughout our includes So our vertical all feedstock as channel. of that

been QX manage and burn is we on going But of to from a As QX, our our seasonal of a of with end -- do we're on you as at burn to And global inventory a much each standpoint. goods mentioned mentioned, to We'll manage not bit build look which different our components production bit in part those we'd earlier. with days enterprise optimization, a finished sure the make And as now demand. at anticipate feedstocks a like of while be sales by pretty that continue year. the to where JF our it's next we're we're inventory. a right JF we norm production consistent that mentioned I as as from little high year, to be

Matthew DeYoe

I if then you think guess I guess, that we next working I capital in can do that? on slide can unlock then to, comment year? what for

Tim Carlson

Yes.

specifics on and we'll February. on part not in our be thoughts this guidance point be providing we're providing So as time XXXX. of in to going XXXX any At specific call

Matthew DeYoe

Understood.

Operator

our Hi of And next now you. BMO McNulty John, Capital of question comes Markets. the open. John your day from Thank is line

John McNulty

Yeah. Thanks for taking my question.

the markets sustainable I little is thing if is different be products, like markets level to zircon and the tend forward? one markets degree. really going feed the end but understand seems a are guess, that's in if obviously they're weakness some us or TiOX why bit in a that you may just to tied pricing be hanging confusing same yet that And zircon potential to there the help Can So to seems into construction some into well.

Tim Carlson

the I But And zircon. John, the a have JF in that wants But last completely the -- the is last still call, this years. to this case it remember is than I and demand, disappeared. year, five building that supply-demand was takes as as this start has you was that's we impact came year And XX such and an really seen even demand. is this came let inventory of mine we on have and to. were and TiOX. demand much And to And supply new Hey, why short situation he lower added if in zircon, add year very no haven't if it zircon there on in demand John -- case it's the earlier from strong and that the supply mines new supply the year, inventory. mentioned of of

John Romano

happened material that Africa port in to on in that the where lot Just here out recently We an South on strike. to add one that more we maybe John. ship of a And went of port our event containers customers. had

get like when a start inventories are we something idea delaying of you that real what orders. So when happens, good

mentioned good one percentage the in fair base of is significantly, our market of supply our We the we what customer focus last think, world. spent in indicator inventories one, during that's time we the are that where chain destock where is. of our think I more China the of in and a not as amount and period the So, optimizing to deemphasize reflective other on regions China And sales other system. call, I of

those other when a down So, markets. other losing in we we see of impact had we're has China although, where and opportunities the volume some displace to moved in China regions plenty sales maybe market,

Tim Carlson

the four at spoken in The would add I've quarters. depleted our inventory for actually that I've six only or here. include the John thing levels the We've seen is, And that zircon inventory last zircon the about every five fact, years are zircon. I in been build does inventory not quarter levels lowest I've

John McNulty

was the of and on I the end on essentially in guess, from on was this -- okay. lot cut we say across question And story kind quarter then, Because earlier And the or surprise other front? level, we seems inventories that’s board then, the it it. inventory is producer X.X I where TiOX Like, like, the the whether magnitude I guess, biggest helpful. production this. are like, front? will? kind pretty when to we questions fast big? two XX% it was and you? just -- where of the consumer of have to XX% to the gotten TiOX all back look coming the year, was of where if you for Okay, a No, paint tied is guess, a of I have Was this name quarter. to is have producers But it and the at you snuck something the saying by hidden, you plastics that the level, up forward in product, would guess, it's the

John Romano

talking the lot had it's delayed. XX caught comment a last snuck right? was months from a regards on that supply to So for on in -- shipments quick you of up with up issues supply So, about the just but chain, us, maybe that chain been standpoint we've the think of -- there I being don't

up across could issue as confident the water. short-lived as been specifically. much what is are I is it's specific So lot have the system there had because, inventory downturn our buildup inventory know demand But we our costs customers, before. there that some have seeing to more of moving happening, from opinion a a was drop. there gone the reason that is this But isn't in event so people we're that

demand by amount. which think, I in think caught up the what, year don't a we It of that's end the destocking, significantly, slow us last bit down. speed the So, the beyond significantly exacerbated drop will with sooner would been was which any did with significant

Jean-Francois Turgeon

us, happening what's unsustainable moment. John, at absolutely Yes, to in it's QX the

Tim Carlson

now if impacts see Again, we And we're based in mentioned, made a seeing Hassan range and pickup $XXX to that's it million when why on between the of depends already. order reference the million that $XXX think, we to I patterns the the then. EBITDA,

John McNulty

Got it.

color. Fair enough. Okay. the Appreciate

Operator

of question from is your JPMorgan. next Zekauskas of is line Our now line open. Jeff, the Jeff

Jeff Zekauskas

Thanks very much.

in to maybe the XX% XX%. sequentially I would down or fourth year-over-year down XX%, are think, they XX% be quarter volumes your If

kind So from geography, volume decrease on basis? is How when North look? look of that different different that at by America does from Europe you Asia, how it

John Romano

John. the Jeff, is that a This question. good -- thanks for

we've think the or do adjustments. goes believe with North particular of But sell destocking there. we a more some pre-dispersed some that seasonal market obviously form to -- in remember America. America, we So you we'll mentioned seen that's have is start there's what We as there slowdown. We some slurry. North in of lot that TiOX

on a So what those visibility we more bit have inventories are.

US. significant it's been in think So the we that don't

you market Pacific saw of where European As we APAC earlier, exports the it market. Then lot saw into out first. of the the I a moving mentioned Asia was

say saw I'd -- East most Europe we the Pacific So Asia and the Middle where are significant is downturn.

exports You months Korea We almost market had really had went to our nothing. good as into for some where us. a sales Korea

Latin Middle So next of would Pacific, America be I North there's we impacting saw that, is but Africa are I'd it's firm. and things say think variety most still a America East reasonably that Europe, say it remains and I'd Asia significantly. where

Jeff Zekauskas

to back my exports So XXX,XXX this step don't year up is mean take recollection XXX,XXX just a know Chinese tons. that are I or I TiOX

So soft case a the by are guys Chinese getting market? the displaced that is it excess you shipments in

John Romano

definitely XX are you they if up months. year-to-date a Well, compare trailing

high three look the direction. they the last with and is And the Chinese is to lower Chinese the I and in market volumes quarters. prices come around when and go we As the mentioned model a tight when four previously, down – extremely there compete have raising they're the other pricing

stability of So has an there every of our and talk one Not element we -- is about agreements. of some Not customers every volatility. of our margin those. them like one customers

answer that customers some amount don't right we lower-priced out a higher-priced TiOX The think displacing now there that's there is Chinese is TiOX? yes volume. of So significant that our to are with

margin only relationships we understand have loyalty previously rebate that good they're And contracts stability, our We based. aren't as mentioned and but based. volume

believe of economic normal get day you I that described you when -- just some of going of end at sustainable. into it's sort a that some the is process but we is mean this also there's So on, the transition. what

Jeff Zekauskas

down a Like what's a asking to be? flat you But want was I going last that be to that. get understand guess I fourth to first quarter what kind go in or do the quarter what's is I'm back going the just XX% be not what a year-over-year down know first you the volumes for instead the I are about forecast question your or demand? for volatility down would like of general quarter said quarter being XXXX my XX% for I some but your we demand trough, to XX%? the of fourth down like where or read of XX% is trough. like on we of feel

Tim Carlson

moment. of view, And And point playbook would question. to from at case. not scenario that confident case is Yes. we're globally volume our Investor probably we're recession production our not our that's that the recession Day at for but guess, had anticipating we we mine is that be of using it's for it our is have our And, year moment. at great this shared going what XXXX a scenario. the be adjusting I And doing what plant And a what the pigment we're great view the Jeff from to a -- feel well like different with to best moment we we're at a

John Romano

as of the We've we variety be when we demand a moving think we in had that into it significant expect we very be expect the And a are first first a you down about number factoring expect relatively into numbers a everything we XX% I'd because V-shape, we quickly. gave a to same first to XX%. got as just all is where through We event. specific moving up to the recovers. don't we would that say quarter quarter. When look of going – your today, -- And it was quarter question When on it's a defined range is that do the – quarter what to models very do what We we the of shape. There kinds into this scenarios U we're see was destocking downside. different fourth process. move different significant COVID we were a on was

into start and going this you up give amount But rate us in we it So won't went a we're it's stop, first think actually particular COVID be at going their the staying COVID, there going quarter estimate a a think home, but stimulus eat. stage. I don't to a the traveling, we COVID early I start of They was to economy way and we they definitely to were it's home. what to And its to bit think hard days is because weren't tremendous of think because it reinvesting on the back And that think money moving weren't was people get kind firm move for to either do out at the up. up. factor will going of

first more return quarter it's to give is this of to we think going at a specific but particular a So hard what we basis believe you time. normalized we'll on to be

Tim Carlson

with case we XX%. talked And Day, we Jeff, approximately at down, about our when demand talked Investor recession

And to item. what that's So a anticipate. the would repeat not is to going QX we that's XX% XX%

So got be to QX's better. definition by

Jeff Zekauskas

Okay. Great. Thanks very much.

Operator

please of go comes Vincent, next Morgan Our Vincent ahead. question from Stanley. Andrews

Will Tang

on Hey, Tang Vincent. for This Will for taking my is guys. Thanks question.

XX% So you side. on your of talked are about the feedstock the XX% being integrated to XX% off taking capacity you've vertically in fourth guys and quarter

utilization So you it do that rates? before you might at look I'm wondering, the how point? or first recover still reducing long be much some might sounds at wiggle If to room have like of you XX% quarter, those left even things X% in feedstock

Jean-Francois Turgeon

talk JF. When Will XX% did we not in to about we QX. it's in it's So, sales, the production. mention inventory we XX% continue Look, build that will to

we do XX% the will don't continue level. either we production. we to stay. plan at and to XX% have to it haven't our we reduce will we don't believe that XX% And it reduced and But that XX% So because

probably we we're and Tim going hope QX inventory even in and obviously, up build move inventory the mentioned, adjust in situation. John XXXX to that QX, to clarify volume. but I expect not As reduce And to

John Romano

Yes.

days XX We When you orders that. having mentioned on we color think different ago more back nine wind placed different at the and we clock XX globally. we inventory bit have were filled little still getting a the maybe days had Just of facilities levels issues ago.

the we happening extensively also what is very JF's to volumes into prepared but going on to to call as going quickly. we reacting year. XXXX, we want Are we're To quarter. to we've So migrate the peak XXXX to back as to that be for believe first we're this into but No the we be what's moving beginning quickly? be happening talked rebound move point, of a about up

have we ready to needs. So our continue to to customer be want service the we sure make ability to

Will Tang

you. Got

factored back scenario ilmenite kind all you into of Okay. some the kind in how June? versus the gave And you what see model? remind earlier. us the different inputs priced we Could in XXXX And had directories then exit you sulfur recessioncase of of you and assumptions you do cost then of that mentioned tracking as your

Tim Carlson

was one the ore reasons goes we those which case the overall to in XX% prices the energy. We've in a seen be our next But continue in of unfolds. of assumed drop X.X% our a yet one Well, we'll what assumptions, industry not perspective recession firm. is see from either that as in year our drop and in how

Will Tang

you. Got it. Thank

Operator

Barclays. line next Michael, Michael open. line your Leithead [Operator of is our the is Instructions] And question from now of

Michael Leithead

Good Great. morning, guys. Thanks.

today. it's a million question First, to it's working is or an appreciate, XX% current I and talk million to earlier plus take. get I don't cap usually market fully And is like early or minus just use back your too which wanted XXXX. know give capital this $XXX of over But $XXX I year, to

is half assume fair roughly it next or of get to back year you least that at no? So

Tim Carlson

Working capital of next cash about as year, specific for the should be a absolute of us our amount more be part source will year-end call.

Michael Leithead

And rare just Okay. then the two on side. earth

need supply is monazite Africa? interest primarily as your or in can commercial supply your here? that And where in of is kind from existing process of to customers do increased South up streams upgrading value you it in of from or ramp Is products, to separation some First your you as mentioned that invest sort then kind is or two, you byproduct geographically? these

John Romano

things. Mike, So two

our and Africa That's South are. from mines comes it Australia. First, where

stage. this two upgrading And significant we doing we're of particular a have at sources. not So amount

move call they're opportunities tailing. that through I development getting in we're doing that streams move to some now look now getting how opportunities We're and that What what revenue opportunities. downstream. significantly selling, So the downstream to at development those is margin looking mentioned we're doing using to that. at And revenue we is margin historically had those right a we're that earlier in and we And we improve the the the invest we're were opportunities. at to looking can from even was the what actually though

them don't a right determine we question other much the how the to say So answer step be the we're of would in I to can now chain. long-term value have streams than in your really up do early, might think Tronox. development for solid And those what or of we change to specifically, we business value

Tim Carlson

And just Mike specific. a to be bit

example, and zircon the that the For talked and tailing ilmenite John's is a waste sand the about cleaning from rutile. the that is

to separating the that So sand exactly doing we it to at a monazite today is sell the tailing that's process the But how moment. from zircon the what that the of tailing. we're same extract type as separate

expertise very to continue for that and it do not And for it we that us a the we be at very if but world. moment, ramp-up obviously would small the we're increase So easy it's have can explore to with John said, from of demand an revenue of and doing the clean to the step and electrification as there's the significantly move, us. and more we'll that see

John Romano

our And expertise chemical our mining it's in also just It's producing. not expertise.

us. real a expand continue strategy on be So steps upside the we separation the develop which as quite is could for thing, there's that but other frankly one could take we to and rares

Michael Leithead

Great. End of Super Q&A helpful. Thanks guys.

Operator

And we questions have no further registered today.

it would my remarks. pleasure be for closing hand So to to any Turgeon Mr. back

Jean-Francois Turgeon

remains Thank projects key a on commitment. executing well thank and portfolio. joining lever against the That concludes our to summary, capital the call. cash, continue call our In delivering and you. our we operational enhance on our integrated strategy, driving managing Have excellence vertical positioned Harry, for day. within delivering you, great Thank our you to on Tronox today. the control, prudently focused remain

Operator

and disconnect Thank QX call lines. joining XXXX earnings Tronox you you the now concludes for everyone. Holdings your may This

Tronox (TROX) 27 Oct 222022 Q3 Earnings call transcript