Earnings call transcript Q2 2023

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Operator

Good morning, ladies and gentlemen, and welcome to the Tronox Holdings' Second Quarter 2023 Earnings Call and webcast. At this time, all lines are in a listen-only mode.

Following the presentation, we will conduct a question-and-answer session. [Operator Instructions]

I would now like to turn the conference over to Jennifer Guenther, chief Sustainability Officer and Head of Investor Relations and Financial Planning. ahead. go Please

Jennifer Guenther

welcome and and second XXXX quarter Thank to call webcast. conference you our

slide call John Turning Romano on Officer. X, to our Turgeon, President Chief executive Vice and today co-Chief officers Senior and Srivisal, and Financial Jean-Francois John are

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

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

that subject Moving to and reminder our information SEC various in provided friendly include the not uncertainties, and website made including, on and in filings. comments specific limited slide that X. are certain and risks to statements our our to factors A call on forward-looking presentation but this summarized the

information This we what on judgment our represents based know today. best

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

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

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

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

John Romano

and good Jennifer Thanks, morning, everyone.

today, Middle Americas, the $X.X joining billion the were Africa may world's those that with across who newer in and we're bit Europe, at XXXX For evenly and largest be producer to Tronox, a sales vertically-integrated TiOX East fairly Asia-Pacific. distributed

information is on through positioning video added our does customers safe, job mining solutions. low-cost upgrading TiOX to to We've a of leader homepage bring our focusing Tronox a outlining quality, is value global available that on More tons. to the the the strategy that sustainable as Tronox of vertically-integrated website. new and advantage we the Our great the sustainable production on

a X slide to turn few quarter. for messages from review the a let's of Now, key

end the from EBITDA market EBITDA discipline of previously our a margins and first quarter delivered our ongoing result performance high recovery solid expectations. of around was second range costs. the quarter guided Our adjusted continued our Tronox and above at adjusted

team's free Additionally, aligning above generated of flow with proactive levels. previously approach as we the of $XX anticipated result market current business cash million conditions, a the the to

Tronox strength results continue to to would Tronox. advantage thank demonstrate work results dedication without our of integration. their be for These and the our the employees, and of possible global the and vertical not team hard we commitment

which Atlas Australia, them As primary an utilizing update our reduce on us mine. we're to inventory move material roads more currently at for operations is hauling, the mine in at open, allowing and our are the levels and

we world. our the sustainability published second the set targets in business our our ever-evolving quarter, that to XXXX report operator we've sustainable in Additionally, become outlining increasingly an for

for briefly review X. set we've slide Turning sustainability I'll to related the Tronox. targets

We focused customers previously of has our increasingly an efforts by significant Tronox investors, are other Tronox focal part with carbon on area disclosed at XXXX. becoming reinforced neutrality and to conversations very externally sustainability our stakeholders. path is our as key point and this

Scope reduce to emissions XXXX by XXXX and by targets to XXXX X XX% time first a by the for baseline. committed intensity we Additionally, X% against

efforts recommitted by within landfills continue and dedicated we waste to We of our diversity and also have organization. prioritize to target our to XXXX, zero enhanced safety to external internally improve

more is become more stakeholders. which report, progress review our our expectations the information. about continued Please We we on each our of fully the aligned excited key with make website are year to available for sustainability

products. to a market the relative volumes review due X XX% million slide to This of year to across the sales XX% decline our performance continued represented more second Now, for quarter in all let's to financial improved $XXX detail. due prior Revenue a move of softness. sequentially improved of

quarter. the Australia We tax The quarter income in to million relating from allowance $XXX net assets. $XXX which our reported $XX loss a valuation in of in included the a operations deferred million, was million

diluted QX Adjusted items, our in $XXX XX%, share effective adjusted non-benefiting normalized was flow EBITDA per tax adjusted Free Our rate $XX quarter was was earnings EBITDA was evaluation was allowance the million. adjusting quarter the $X.XX. XX.X%. cash million our on and the for and margin and

lower let's in Now, first the quarter X% first commercial compared revenues was year-ago turn as expected, sales of was the versus review which to X volume. compared by rates. offset X% increased TiOX X% by the TiOX pricing quarter. for TiOX to increases exchange from X% driven slide our a quarter, performance. pricing increased X% a tailwind to

deliver relatively realize seasonal We despite against below levels. trends pricing remaining and continue to stable normal our volumes commercial well strategy

compared was and XX%, XX% X%, higher first million, products improved decline largely which increased pricing year-over-year. by other was year-over-year. an the a year-on-year. increase the prior iron representing increase Zircon pig the XX% to volumes $XX increased quarter, an volumes Zircon to which compared quarter, rare of represented of lower from sales to revenue earths, driven by prior of XX% X% year,

to we value of of rare earths the a unlock our are unique of As our options evaluate to to operations. the range result further leverage a continuing portfolio, our generated expertise from

and Our apart leader sets differentiated upgrading as position solutions. integrated a in us mining global sustainable

of the expected to be in demand trough quarter, remain higher Looking second our seen to relatively expect the than ahead, we we as QX XXXX. levels pigment volumes flat to

we in into brought East our Europe Middle While might as anticipated previously Asia, the down. the well the continue expectations broader third China, weak as have and conditions volumes market increase quarter, to

during demand previous Our commercial enabled and more strategy offering of trends have differentiated decline. pricing stable years than

in anticipate compared result quarter second the do lower third that to the conditions in quarter. will TiOX demand pricing we slightly the However, softer

Approximately, a we China, is our XX,XXX volumes market of challenging quarter influenced do total previously to the half XXXX for Zircon by decline anticipated. based is in this completions. zircon of a second from third on expect to is than by on market zircon At tons 'XX time, zircon, the the key outlook, more of we expect housing portfolio. XX,XXX half tons current quarter we a heavily and which market mineral part second levels. critical consumed our

will China in for the come of market into zircon our on back to decline quickly recovers. when zircon demand supply Global the our the impacted downside, the improves. customers. has benefit We strongly us the of strategy when believe upside balance that see value the as vertically-integrated the as will we and being and provides

operational JF? I'll of now for turn performance. JF review the call a over to our

Jean-Francois Turgeon

Thank you, John good morning. and

Turning X. to slide

and million rate partially decline represent adjusted offset Our by to costs. pig iron unfavorable cost of by production volume lower $XXX absorption freight lower XX% year-on-year, driven sales fixed a rate, lower pricing, lower exchange and favorable due EBITDA

XX% EBITDA average higher offset associated sales to selling product and volume higher rate higher volume. tailwinds, adjusted due and increased partially with costs Sequentially, price freight exchange by lower

operating run site as to reduced level at continuing result manage lower are a demand rate of in order We and cash. our inventory to

includes to to the EBITDA cost of $XX facility result, and quarter million lower a second of charge. idle market impact As

working of adjusting to latest Looking the a million and demand of and the capital $XX the EBITDA manage This outlined, free quarter and to align mining result better flow. both previously EBITDA be third production pigment XXXX our we market million dynamics cash impact adjusted the $XXX to to with resulting quarter, third as includes site level, range rate for market million. anticipate of the to John $XXX from

Turning to slide XX.

we to manage and to success of includes control action the decision right costs. taking ensuring position the the reduce current tronox to balance strategic continue landscape. will short-term is within macroeconomic in need for future discipline while long-term business our the the what are medium We to This against

reduction happening cost different different initiatives XXX world. have We the all at sites around our

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

XX% We our long-term customer vertically-integrated are on working production continuing was a capital. feedstock be target in as and action. lower year-on-year this asset the while level our run which year-on-year are a prudently by XX% driven in lower strategic QX, XX% some is current to in at we built working to of result QX TiOX to quarter, we relieve the our rate. were capital demand, as feedstock approximately result down of of quarter first managing able

highlighted will the we'll million year in environment by second it associated delaying less quarter, which short the unfoiled primarily the volume in investment capital results the quarter continue in to have term. mining upgrading than year. the $XXX macroeconomic third with slightly costs we this and as previously, of to on growth adapt required expenditure, as This higher invest in not

ability delay the will our project, capital benefit ability this to decision appropriate our at our flex spend. from this While capital is business to our key it's this with realize do consistent the believe time and for we

the We do believe to project future is growth the throughout critical continue cycle with business. the business and in business to the to that of important contribute continue to we'll will proceed invest it

to necessary cash We while will future to tronox need positioning meet customer are balance have product effectively and generation for we our ensuring success. the continue

the turn I over, call provide an want briefly update Before Jazan. to I on

in original the loaned XXXX, chloride a the million to our Jazan September As on Agreement in-kind Tronox TASNEE we slag filing, XXth, have Option agree XX, $XXX by be We delivered as until produced May slagger to XXXX. all that with will the repayment disclosed of expired the Tronox project.

expected by January repayment through of third loan is flag balance quarter. of slag in-kind in chloride required The first cash the the XXXX delivery. either chloride Tronox to Full is reduce the shipment loan or in

complex. Technical Service Tronox's XXth extend to continued of September Tronox agreed Jazan's the smelter additionally support enable and to the TASNEE the term Agreement to to

conducting We exercise are market of value on update assessment. a engineering the currently statue keep we'll and this the

for to like John? to our call financial turn Srivisal now a over the John position. of would I review

John Srivisal

quarter JF. we you, XX, with turning ended Thank to billion. of the total debt $X.X slide

are end our rate are XX-month XXXX In and through from times the quarter, X.X at interest the approximately such that swaps, the rates aligning of our first extended June loan. approximately of through was trailing we XX% XXXX interest on XX% leverage net XXXX of Our term maturity fixed and amended a basis. with fixed our

Total our with and our in until equivalents, financial covenants was operations. balance $XXX which loans on available XXXX million million, significant across sheet no remains term our bonds. is maturities at and $XXX including no XXth or cash June well cash global near-term liquidity strong distributed

quarter, $XX the quarter. this and maintenance for in $XX projects. XX% growth for amortization approximately capital, was expense million for Capital strategic the of was million Depreciation and expenditures safety XX%-ish was totaled and

business As million We to in current returned million. conditions. free $XX dividends, shareholders is $XX flow annualized the an was share with to share proactive market John form second due we and in team's second the the primarily per in paid on to approach basis aligning $X.XX our dividends. first earlier, both of cash the expectations, quarter. our This mentioned quarter equivalent above the

we to quarter million. $XXX to cash million adjusted net $XXX our pivoting Moving uses, the million softer expense our to approximately that outlined, on anticipate previously to at expectations $XXX working capital use Slide John increased assumption $XXX XXXX anticipated. to EBITDA a current view than million cash and our our be based for demand due $XXX assumptions million. XX. third interest unchanged JF to of market to remains

expectations lowered at million year. Our cash for taxes million $XXX to for and our capital the $XX expectations less expenditures than remain for unchanged were approximately

to continue operating to the and to can on ensure delivering and assess and against of production will focused our commitments. respond we continued are to remain liquidity alignment the We costs execute we in. sufficient We our on levers pull environment economic

That to turn remarks. Operator? call With like that, prepared for over I'd concludes our questions. the

Operator

Instructions] David line Please [Operator ahead. comes of from from you, Deutsche Your go sir. the first thank Bank. question Begleiter

David Begleiter

how a you and morning little pressure talk John, it's you. region? from that have pricing pricing much some Good mentioned pressure about is coming where you by thank TiOX, in bit more and could

John Srivisal

David. Thanks, Yes.

are provide in So, little quarter last we a competing bit we but region, where little more more bit seeing Middle activity we East, that say the breakdown can in saw Chinese. don't and Latin typically as heavily we with what America, the we're a by pricing is

QX, I'd about Asia, areas to again, America we're of in significant we like a think portion reduction about X% say that that movement X%. and And Latin to globally, QX in when is East. talking Middle

David Begleiter

And to expect do persist? downturn is just you this destocked on good. long zircon, how Very

John Romano

a Yes. it's great question. look,

provided I our some China. is what think previously around position we color in

we is comments sold we inventory; when market. prepared were we up with the we doing. XX% that And of lot a in the were significantly, repositioned aligned mentioned the market about we zircon, what So historically, of picked when down

XX%. into compared this sales only is XX% at to of our total selling zircon about So, China stage, of our

when That second being were much we quarter, were about restricted And the pretty we into everything third said, that's could moving transition and what were making, the we selling by the we talked in quarter. produce. we Atlas

a just So, finished last what's zircon. pretty quickly has happened we strong relatively we say in course would and the China over and happened quarter I had days, quarter, of XX the the on

for now. We a in it's depending relatively chain has pick up seeing have amount expect. although what to start would not down the COVID last the days, quarters, right in not didn't didn't inventory worse Year, we opening China what would I it pick the because upon turn it to there's say we're of And from it's So, seen XX it, do Chinese strong we region. XX and happened after up and China, after two it than New quickly. Call the believe significant been

And so in of seeing some are markets. the China would other have we sold moving that now into zircon been

though freely we is it not as little bit around China say a was, does. zircon even our TiOX more position as So, in moves significant than would

expect better And a a quarter. not we as XX,XXX very feel But tons into we up. range that July should September XX,XXX something question the of. that what's month. to and in excuse customers seeing But answer to your me, low there's we're start dependent see fourth would the happening a that's recovers. quarter. is market the a market, And control in the to in kind China, -- July the to short gave how moving in in pickup largely going that assumed on rebound was is, see for that start in much we happens We're volume the what a recovery tons fourth would be in And of order quickly the September. in see really not already return that get August August that to our just similar there. August expect to and same and So, we'd inventory that we'd in pick start that we

David Begleiter

you. Thank

Operator

Thank you.

Your go the from Please ahead. next of question comes Spector from UBS. line Josh

Joshua Spector

Thanks. Yes. Hi.

taking lower So, the you're the this charge $XX the operates just within from and quarter million. TiOX

we be if extrapolating down your we volumes something threshold inventory quarter what's about charge that stay should until see how basis. pick but million some know two on we Thanks. that go-forward think curious is Just levels, to beyond should the up. I a $XX rates at level, this its bringing of consider? we another XQ And operating or

John Romano

did down Yes. leverage $XX say Josh. were have QX thanks, year you expect take than that if We in primarily fixed to cost we do as and operating we a we less our by that continue expect to see to that this the burdened million, been look, brought our rest be going capacity the production. XX% to we and most at at of of of the year. due

similar expect would we So, in QX. a amount

significant Obviously, we have business. leverage in our

strong. back the As what in saw go not And pretty volumes $XX that think once a in is we below quarter, the quarter. production We and recovery the the the XX% fourth recovers. initially we quarter, we as market just and about charge which coming market will was the recovery bring million the X% in increase expect away increase first anticipated second we again, increase, quickly to called bottom that when

from think QX. to volumes, as seasonal see think we would maybe flattish quarter Because we would historically about this what levels particular fourth than a downturn we we a normally at fourth of third you the stage expect quarter seasonal lower about quarter, So, see are when downturn. where we sort much some referenced have we the been, don't of

John Srivisal

have John and Josh, mine And at mean, upgrading running to on the than side that, capacity. well, I'd add business. lower production plant less we our TiOX, like adjust we the that facility and mentioned, in I as drop to as had XX% of our

as impact our a on will have as soon a us. recovery, it's positive But a there's costs. So, double it for impact double

Joshua Spector

we couple more years? any appreciate the Chinese But back levels holding those I think back the pricing just market in of And recovery means do talking about pricing maybe about total. earlier to that we and going question than you view do I to you're you're and have around that. market if the So, were share. how Understood. lower losing TiOX there's therefore, on prior pressure, share? and some lower what a of than markets the guess, in for pressure versus maybe -- incremental comes better the

John Srivisal

on we mentioned numbers Well, maybe the just pick thanks, the quarter. Josh. up fourth our Again, from

first the increase XX% the if increase year, quarter. look last again, second at exports you And X% at in of were quarter, XX% TiOX, So high last in up if you look which year-to-date. they're the

So, XX% to previously. the compared year-to-date year-to-date

is a at that also rate of Chinese the them at growing would the not operating now. say are I most What suppliers, all loss believe they're So, were. we almost right that of they

pricing, we've are stick. consumption. both we actually believe energy issues which market. other seen down and this increasing of that's have temperatures the China some on week, do to hearing As inside Thus export to to in TiOX we're to plants And recently causing going China, about high as China the anecdotally, slow manage

there happening So, to things that a to are back. that we lot pull believe itself could starting China are lend of

market So, losing our that answer yes. areas? share ensure continuing compete. are short is, is some less probably strategic in also answer to we're we we're business to managing but The

Now, when is that. and X%, small we like different to about Chinese gap talk material price TiOX X% between than Western the significantly reductions price

us looking them. scope doing to valuable value only lot when about we X starting X. we're appreciate we're that pricing clearly making the ESG not a our is us identify at also a we our we're of as we're our to for time than some are we're things at are price. more lot other customers scope and thing small the more what and other and more just are customers So, our what regional effort. become customers They on doing seeing spending strategic but appreciate footprint. adjustments, And X, They our looking on our think Scope as

John Romano

downturn, in but it's important is key to how obviously, a reliable up a things advantage And will think have vertical-integrated I our as has customer regard. so we're and they position choice, a turn that Yes. know supplier. in

Joshua Spector

all. Okay, thank you

Operator

you. Thank

Your comes Fischer ahead. the of next go Goldman question from Please from line Sachs. Duffy

Duffy Fischer

morning. good Yes.

more volume three you much. near Clearly, the last sell-in do longer look plastics at your quarters, down you continue XX% you to your stack significantly on look negative end sell-out, If can folks down a versus at your their XX%. customers that than your customers? over two-year aren't much anywhere and you it's paint be XX%, think how When and

John Romano

It's question, a difficult Duffy.

customer that Chinese in have what's not explained market and as dropped of our as continued share a capacity obviously the the have their built think much export at not did, volume happening no China. to John is they're doing Chinese market in that it I time I Look, that with and we kind mean, profit. at increased increase it in growing. has but

In owned loss. as subsidized, than it in margin fact, kind the doing moved and ore player I in best Tronox mean even government they're down. so, their just entity China. China that lower specifically, more that clear wrong. like a is that a think of I the structure And cost has not LB Look, have it's they're the is moment. at

we competitor. that we because happen. a see on business believe to rebound, costs our will that more sustaining And stronger as have prepared So, a be we and our work we continue don't to for

John Srivisal

they're our the And very you I hear complete. I of not destocking a lot is reality much a great from, about think it don't are because customers, which talking think mean, holding, it's longer. reports can we question, is last

quarter of the next our even customers preparation for year. fourth about building Some coding season inventory are talking in in

to the when We control and control. about that we point. do business can and manage market destocking. lot valid China, can't we then. recovery a recovers, it's the about of talk now So, the what between talk we to was attached A we

of can and downturn moving sequentially china, We X%-ish pricing, but bit. definitely we typically to look about is on should and what think with into look talk when prior is much at year But don't a great. that coming. great beyond you to I from believe in way, that third might we kind stack, don't improvement we happen. midpoint a were flat uncertainty not longer. at continue well think, a that And the just it's quarter second we the it's about of we're on creating again, bit two-year again, point be an first the down where upturn XX% the more It's a it is the which when little we improvement from and a little in it significant But significant were where quarter. quarter quarter, a we we think compared

Duffy Fischer

to but weakness, and zircon Fair you to mentioned enough. seeing then two side, haven't should second talked price, the wane? ore areas low-grade just and pricing of is, those and three seeing JF, you that the both see in with start products One weakness. are in And that ilmenite. is about other high-grade kind the we volume, we're expect

Jean-Francois Turgeon

look, So, ore have truly I'll high talk starting feedstock haven't we with used And slag And cover moved John make ore and the Duffy, about zircon. look, price obviously they side, that's has stable. stopped been is increase, down. like going the grade But down. slag and very but I'll worthwhile. let to on seen ilmenite price Ilmenite They ilmenite. haven't

slag very continued up price fact, rutile same Natural with has thing natural stable. been and slightly creep In rutile. to has

year significantly about invested shortage this new increase. a reflects nobody fact only talking remember that and and mine ago, a has of So, the were I to we think develop material raw

the competition, invest mine Tronox of have to recently differentiate in the I on submarket ourselves side turn, business. advantage in So, market the will price the very a continue and the because own feedstock. moment, slowdown but as business the soon But see in will stable that new enough where like that as TiOX of company its that that's I side the mining the that mine, think obviously, at own is will look think of from there of and you invest

John Romano

zircon. Yes, on

say is that. going we X% that some had zircon, parts of And on as of in that drop to was The referenced There lot to to [ph] end, Zircua in probably movement. lot So quality a grade. be high price refer been we that QX volume. the sell. of I'd there's attached moving lower that to biggest zircon shortfall We opposed QX. the We a the quarter has to a for as the us

movement. has significant. been been So, we pricing has some The not have mix. some seen there

and think to reasons for see the one saw start kind When When lot that's again, so a instance, comes historically the into of there's goes I of of of XX,XXX out China. that lot slowed market slowed China about quoting that inventory typically I you China tons tons what of mean a down, -- Indonesia, down India. much. into XX,XXX that of zircon to down, you that started slowed getting

there's our out think what might in associated this in happens that the So, are I volume some assumptions market. are think with drop-off there driving customers that

lot back we is issue it'll biggest one recovers, the as dropped not I And China movement off our zircon on said it higher on pick margin It's The products. So, quickly. believe a And the price. again, quickly. up volume. as prepared of of comments, on

Duffy Fischer

Great. Thank you, guys.

Operator

Thank you.

McNulty of BMO line next Capital Markets. question the Your from comes ahead. John go from Please

John McNulty

morning. good Yes.

the Just question think through to on year. about progress a flows we as cash how

was to hope guess, capital greater thinking there that pullback free operations, about progresses? off, look, accelerate? that start the the some EBITDA not guess, year you'd some but as we the a good further counterbalance we be the is the see drive that Or how kind in flows is where, of case? should should cash I as I is given think cash and that something certainly working some flow. I your unlock

John Romano

is John, cash. for we market thanks to help We significant drive correct. question. your light down in pretty action Yes. are the what significantly I environment. taking this assertion brought of mean, and production

drive as the rest cost cash year. well think quarter. first improvement that there's Additionally, do we we of we a the we generally of the that lot call use But the significant speaking, have chance we've that can -- will had realistic do chance throughout logical back help in initiatives a

driven QX was use quarter our took. first we see the you clearly that expected. to that quarter, as we do QX. above can Obviously, And expectations. actively a that was by the although actions We in significant was intend and second

John McNulty

Okay.

John Srivisal

From raw to the yet, it materials of cash starting a in starting move perspective, hasn't impacted we're to the although tremendously quarter third down. impacts flow see

So, raw we're move down, not seeing bulk freight, materials, container freight. only freight

we were So, we've And lot we'll to start things momentum to the would expect us quarter and we're fourth got be a long of quarter. way see get a the us a start starting headwinds that start impact to to the that for in that to third although to more go, we'll in tailwind.

John McNulty

Okay.

be 'XX? be source So, full working just this of think year? funds to or full clear, capital Like do use will a you

John Romano

year we've the mean, negative $XXX guided I for Yes. working capital full is negative million. million to $XXX

John McNulty

Okay.

John Romano

But as know, QX. use was the in you biggest

QX the the we're QX net-net, from So, and it's taking to positive flat rest of working slightly capital. the year,

John Srivisal

but still made the were and also inventory we mineral we we're mining, mining JF mean, I which that mines. still building adjusting are in we're TiOX, reference to we've slowed concentrates. down heavy on,

fourth drop-off ago, we only which zircon everything I months we positive returns. inventory, to us allow build selling quarter, will could which the mentioned be make. Because that So, as as before quarter, the two the the a mean, some second also I was market could frankly were quite in

Jean-Francois Turgeon

Yes. cash remember use of $XXX in you earlier talked about And would John, million that the we year.

increased that to We number million have $XXX linked that's to and zircon.

John McNulty

Yes.

rates Okay, going this you're producers, general to industry. lend maybe, have answer producers your you would in we've pricing But or much I if with strategy magnitude, the than that in money, are the running of how the the lapse was to have for just TiOX major enough. downturns, in pricing TiOX that which this actually the that rethink think of losing business follow-up, had I guess, guess, from at it discipline end resiliency ones it. actually going would better Fair believed I in stability seen as Chinese And industries does it the industry? you got then you make that? forward especially level

John Romano

what would I is This think the expected we more have there than It's end weather well just pricing other the not to stick that designed suppliers are with be, that answer talked we at money. But we help had. are We that would strategy more going it's there day, downturn us are than this on downturns. to Chinese known significant out the is ultimately the it of no. Investor It's significant pretty suppliers Day. about through restructuring. losing

in bad the industry is a place. So,

position margins we believe do Our in others. better it significantly are that and this than make we still are better some through a to

much people So, sheet do of an this be the governor to have that. loss think that to I of going manage is there's making the of -- balance be is to how element industry going

what that's think. when I say, some we not so to responding to. that these, of you start necessarily we're And moves aggressive would see

mentioned, targeted X% share. reductions, but need need strategic what significant we that that to they're sure I we're moves when indicated we aren't Those in moves, pricing what we keeping the make our As we think we quarter. X% that to about

John McNulty

clear. it. much. Thanks Got very Very

Operator

Thank you.

next ahead. comes the go of Your from question Please Leithead Mike from Barclays. line

Mike Leithead

thanks. morning, Good Great, guys.

First back back capital, question, go to I John's just wanted to to of sort question working getting now.

of it'd you last think be a quarter, $XXX million. thought use I

have have use is work actions, your higher. Now reduce rightfully yet thought inventories, so, going you're of taking gone I lower. to cash down would would rates to it production working capital

that? is why So,

John Srivisal

$XXX is driving right. what Mike, thing thanks, I million you're million. mentioned of then Part did And end JF up the change for of it and that's is Yes. that that increase. we up ranged question. quarter, the the kept the inventory last zircon guided $XX end being mean, about range and clarification bottom

higher down and are do across So, the down burdened little cost. pigment volume-wise there going we see production bit while pigment are a year, we bringing we from is

we is building So, our overall up. still but inventory. increase, And we you going bit, are zircon slowing dollar the down know, inventory mines as with zircon combined a ton of value are

more do be that's we part will If driving end that So really lower expect, band. up than obviously we our range. selling to zircon we the of able

John Srivisal

And at think referenced, another point it's I on XX% running below been capacity on John slightly when utilization. that. John, we've

ramping expecting last Our a be up plan quarter. see reported production, were we'd when third we to was higher we because

three running anticipated based months So, element today we just ago. inventory on might that's where to were going versus we're of an there's be we costing that what have running

Mike Leithead

Great, thank you.

Operator

you. Thank

question go Fermium the next Your of Research. from Please ahead. line Mitsch comes Frank from

Aziza Gazieva

Good Frank. you. It's on guys. for morning, thank Great, Aziza

So included in the you my strategy long-term remarks. elaborate the think question, on earth Romano I in Can arena? first a on that comment rare prepared John

John Romano

prepared into Yes. as that that now at where continuing in generate. we had Thanks, upgrading look It's feel mining has I and say, Aziza. it. stockpiling monazite to that something, to we're as comments, uniquely a been, I'd Look, waste we're something and a to mentioned we it's that. the a as revenue stream company, continues The turned historically revenue do positioned

think develop we've stages. we that going to on mentioned what from we're start how be initial revenue plan about the when doing. that in a we're that let the So, investment got we come We the to

So, it's we of the there's maybe year, that us end is, to to self-funding. expand we're probably be way But steps, into now But we'll allow position, that. a moving, that. more will that. could give the a you between ease as it'll to opportunities better the steps, be and core around quarter third our that be about clarity And think that we're believe to even of at in our in we looking business. say, measured continue I'd something And taking part absolutely call

business. for how that looking now. at part and on our engaged it you I tremendous self-funding we we're opportunities that our amount a So But exciting people expand And are of an there's can can it's that. of tell right

Aziza Gazieva

thinking flow you. they Atlas Thank how $XX million on contribute about still more we impacts it. XQ flooding from to expecting it And and Australia or as normal year? Got the And a in expected XQ the you through are the lingering in should be project, P&L?

Jean-Francois Turgeon

the We and soon way had and turn I this the can be It's as It was in fine. to as of reality the back at issue. ago XX happening is be the the same what's as with had Aziza, Look, the is up drop. has recover in market, moment, very days out. Zircon, But a to gone flood huge good is and would that July tell very normal. is we market market dried we'll unfortunate to with everything you quickly position. with supply the no I zircon position but in good a answer that the everything mean, kind we can

ready will by As mentioned to be our inventory produce built and we'll John, zircon and market to mine demand. of that have operate meet

John Romano

open material to that now, ready so to to we're able think about you we ship roads and move it Broken that the Atlas zircon. When from it's upgrade being Hill, can as

not ship in say, quarter. where inventory in roads position, a have we us allow fourth that wouldn't quarter. but we So, those build to would opening We it gotten can the in any benefit to third the have,

the should going saying in see But So, market on bounce being we come the back, not inventory which quarter. does quarter. it's bottom. it's that back believe completely, consumed the going we to start we're definitely a off having come fourth third do to it's drag but to the if

John Srivisal

question, once $XX million year, back will million additional give benefit up to $XX million. for the the do Aziza, your $XX in to we're we atlas see normal, us

Aziza Gazieva

you, guys. Thank Perfect.

John Romano

you. Thank

Aziza Gazieva

Thank you.

Operator

Thank you.

Please next bank line the from comes of ahead. Matthew from go America. Your question of DeYoe

Matthew DeYoe

Good morning, everyone.

to obviously, from So, but mine general. just headwinds in there's million you there's benefits the the just rates the $XX million $XX operating said. lower

So, back you XXXX were at the should I Maybe, then get operating to at Whatever how about down of they're to or tailwind rate we just comes to full is and to rates mean they're to what move much XX%, that? mine and whatever. operating the back sites rates monetarily down expect we like If Atlas mine or to XX% a they're the it think company? full full moving back aren't volumes rate, down. if up takes

John Srivisal

at mining, the a Matt, I'd cost of Look, fixed on of is you're the the running it try depends but say, talk simple side. you huge to reason we million that obviously $XX has XX% mentioned operation all at mining And fixed high drag low and on help. mining XX%, when our would it cost. rate more

down, able of limit impact. call say 'XX, could with obviously, XX% not is not convinced them I'd Look down in to to pigment our be. million saving that of much. what place $XX have that with to there's you all it. can we're do but in and recover we're developed downturn, great less and that plant, below operation flexibility a So as slow probably unfortunately, I we turn what we the as you're you a being

Matthew DeYoe

well. quarter It's number a as

John Srivisal

Yes.

Matthew DeYoe

is ready This to a a an And I just additional having Atlas matter now is is from market running. of operational perspective, go. to that mean, mine support all volume. the

John Romano

million and context last quarter. have for $XX million But two $XXX helpful, about headwind been this quarters. the is of I particularly understand, production the for costs the

amount being mine a just fair is below. that other presumably, of rates think operating from I

So, to more just normal environment. contextualize I'm trying a rate operating

John Srivisal

headwinds the obviously when as mean, it $XX to production the We I that, million, seeing seen of Yes. this year. fixed tail leverage quote we our towards of in we the John down. cost costs, but mentioned, are have off really relates end bringing

it view from we obviously is before, $XXX would today costs, we from million material was setting XXXX back be materials levels. said million direct we've but it the XXXX as normal as And So, $XX to even return more up year-over-year. separate direct should to to context

down We're of X% the to mentioned, last closer year 'XX and excluding as potential get quarter see as direct progresses, materials, to QX. 'XX those in levels. back only see in to we we of to we had So, seeing it ore. we're two quoted a being John that more claw would do that seeing more

at now year, to look it overall expect be roughly to you If we year down X%.

progress make to continues it. it on So,

leverage. from further $XX million per decline, you be cost it'll good mentioned, if million a And we the cost quarter. So, see above as is $XX fixed

Jean-Francois Turgeon

little to a the to quarter. a last, take we're color early this that as in record over downturn four market of bit We've going well And the and as maybe down translate just U.S. about to talked on soften chlorine raws. high lot say is I'd into advantage more levels. course the of quarters. The that's chlorine coming starting prices Yes. from positioned contractually the

would position an I'd establishing in we a job team a that us which see opportunity. the will chlorine So, our good say as of done has in well. And procurement relationships, as better put future some really strategic on

Matthew DeYoe

then was what's a driving that? price And segments. to EBITDA. year-over-year price million $X I if think up was or can, that across I but Okay. Is mix both just headwind

John Srivisal

price. iron pig a primarily,

Matthew DeYoe

understood. right. All

John Romano

you. Thank

Operator

you. Thank

line Your of next from from question the Credit Suisse. Roberts comes go ahead. John Please

John Roberts

What's have Jazan in which Thank one. at you. the you rate send I chloride just slag? dollars, can

John Romano

producing we mean, producing I of what I option of at mean, going Jazan, running the at that can when capacity, agreement moment, cost that's Africa. would john, expecting. running as give lapsed. a Well, are think imagine, with And its meeting one similar were to we to compare not that we at the like type it's that original operation be I why details. But we're just you XX% South than level not and And only the in that we furnace

their We're try paying it's the that back meanwhile, it's is previous market us the a the TASNEE in we at year. slag Look, agreed see supply it's like loan. to agreement moment, commercial the running. be to the look, price supplier to to to pay that TASNEE And had slag that slag. And has producing for of asset. could furnace and technology and still improved. that And they with obviously work how

John Srivisal

to debt. for opposed against it, cash And as paying going

John Romano

to mentioned from slag be plus a back, we as that the historically, operates year before apply loan as it we've they now. assuming And expect Jazan paid about that, assuming Yes. it has all to sometime

John Roberts

Thank you.

Operator

Thank you.

ahead. Your line comes from Zekauskas Jeff next the question go from of JPMorgan. Please

Jeffrey Zekauskas

Thanks very much.

down. demand TiOX was Your

was, Your volumes it down, were whatever XX%.

at same you they end markets, you If paper were look decreases different, quarter, tell? demand your were and coatings, plastics, can as or the as the best in the

John Romano

our we're goes weighted on down say XX% a coatings. coatings. and that's we Yes, and than a into saw broken Jeff. into a on I'd applications did downturn coatings, of on said, being That I'd segment heavily about we -- plastics different volume of more variety coatings of say the

paper specialty, So, which and well. was down is than as smaller even plastics

saw in earlier. we paper of Asia-Pacific actually drop market, and the European where and a that is specialty So, lot in

either a than plastics So, maybe I'd and a there bit a specialty, laminate say answer up is, better is huge short and direction. held paper, not has swing coatings but

back demand bit green say although they're shoots it's say directionally, And a I'd probably again, But of we're segment. level. at plastics, was picking to from worst plastics a the customer I'd up all what see down. on little the low the of least, was starting

Jeffrey Zekauskas

going high think about of demand to pretty inventories go things market So, way flat will when the build year go. next inventory your through we're end is is demand or that's coatings customers Is then a it XX% that in at their and something is is you down order that and depending the you whether they their conceptualization TiOX are flat, or magnitude, different? stay period. And to too it on look way your

John Romano

related to was what I Well, and QX. on what going you absolutely said think in QX

we So actually what last happen. year, thinking that did were destocking event was

to So, started we've see pickup.

again. customers are order to starting Our

expected. was talked the had quarter, fourth quarter. in growth, which first what we growth in We the quite XX% we bottom about not X% So, the

the as So, it's it's not quarter. if getting worse third hasn't in just It rebounded.

that I have JF a to of So, significant amount nor we believe, complete believe, do does now. not destocking

heard We'll And influence. market a our a volumes start as inventory; to This quarter. of which but fourth can't going about customers inventory by there building see the building we coding driven I in lot season the control activity, talking the move. to start macroeconomic we've to be market. that's some the people extent, is and is the next said, rebounds, as year

Jean-Francois Turgeon

be year-over-year Yes. we're expecting QX Jeff, I the versus will we mean, QX. improvement drop that had QX this was XX% XXXX. XX% in down XX% year, and was down, an QX in versus of QX down,

where surprise gear ready turns. is to Unfortunately, sales of to when that's time, market is the It's TiOX, increase called with we'll was QX us. the zircon be had still really market in we playing. when look, believe at on there. not but it is the a that mine. we we the bottom, for QX 'XX. this up So, how zircon That a year. our

Jeffrey Zekauskas

we they pricing way up at ton. certain a it I through was prices Like zircon a have stable I What been to zircon XXXX spiked makes optimism the beginning the a prices zircon now $X,XXX and is like they've maybe, $X,XXX why that can't now maybe than And And got around then to mean, $X,XXX from from of you amount ton XXXX, under 'XX. about zircon. like all historically? So, don't we're a $X,XXX. know, in ton? go ton market $X,XXX more a something

John Srivisal

Bloomberg, out more there Yes. of so market. I guess was spot $X,XXX on that number, regularly which the was

So, a of that we volume numbers. market didn't have at spot lot

Jeffrey Zekauskas

it it wherever was, Call yes.

John Srivisal

$X,XXX the in range. Yes,

all think down it comes back I supply. to

we to in We So, into we of sold sold XXXX, ton and footprint. than lot been XXX,XXX produced. exposure adjusted have our XXX,XXX hasn't in market made And actually in 'XX, additional added. these when lower adjustments 'XX; capacity more -- a a the we rebounded we That's tons how China. there

is you're why mentioned, down a the There drop-off going we we as in volatility quarter, of XX% market's China, got July were they in saw at are second system. And now significant said, were not the making. that weren't the thinking prices thinking until pretty point, to say than higher and and what don't of would just think area. that but that in hold China is customers the off. that changing, going if I slows up we much we we now we the expect the where I'm move. that's inventory are have So, to is prices in selling they because reason you've lot a everything we And much been that markets historically. didn't

to into. maybe customer of that believe XX inventory, area and the the days We we're XX there's days selling depending upon

we're lot definitely it's although quarter low market of of amount And was bottom. in not there's a tremendous what it it was repurchasing think happen. was, july a going customers that on fourth why, to was not rebound was again. to where the -- -- to time speculation for a believe So, was going to a wait we start the they that number very before is that's saying we and

Jeffrey Zekauskas

rise are falling? spot So, have still to prices Zircon begun or they

Jean-Francois Turgeon

lot's for at Indonesia a recently move to happening what's in they've indicator rebound started Well, spot would is happening spot were price I how will more the of going out as but And because there's not stimulus. I significant what's quickly talking a say, tell of portion tied that. it, Indonesia and no market. now, talking sure stalled of to China XX% can how I'm things three they starting And A out you, to recovers. again. finishes. the And into put with prices would I And ago, all. infrastructure, on up. continue there. in demand that's about say bit, months China. a that, housing as about China's stimulus their there, back raising depend housing good call to they're and

growth could this that some stimulate So in area.

John Romano

I we over, the that and improve, on happen. to those -- world, Jeff, think material think key the thing things construction as a that the of construction think that zircon essential new will the is rest Same in for is bottom I

not inventory worried I is So, we're there huge think a that pipeline. in that the

Jean-Francois Turgeon

Asia-Pacific up Again, the we second else were what everywhere producing North America, and depressed. America, we already that until Europe, were Latin selling were we quarter, and sell.

in real downturn. recent the China was this So, driver most

Jeffrey Zekauskas

thank very much. Okay. you

Operator

you. Thank

next comes the Spitz from America. Your bank question from of Roger of Please go line ahead.

Roger Spitz

of Thank $XX QX, QX unobserved costs for can you you impact QX EBITDA, in numbers the be the of very the much. to and If fixed is provide about please. going million

Jennifer Guenther

laid was of and it the $XX impacts excluding approximately, million level QX, a for Roger, the QX, Atlas out and we KZN. similar the for

Roger Spitz

XX%, pigment your that running increasing spoke And system. was Got pigment you've to you for been missed that, substantially about to lower entire rates and has the then sequentially, you XX% mentioned. at X% plants sorry. manage been I otherwise although as volume it. maybe inventory,

better this December at at having in because that EBITDA inventory to that have this a is overproduction XXst from still case, or rates? would think pigment volume but run cost low is increase if mean, benefit benefited large pigment I presumably absorption? can a XXXX $XXX had the how fixed which about should of you're sequentially. So, million, And absorb you we from you

Jennifer Guenther

recall, we we're down didn't we market, said to to bring align did because what was not was operating TiOX going was in with were we closely going And Roger, about that QX there. we've XX% from fourth the our with to that. align right that rates sustainable. seen year-on-year to more level we've but believe down and we quarter So rebound decline, the it a that been bring trough

from that tons pigment in step-up continued a expected level. we've So,

working always were expected to balance been because of the we safety which earlier the at demand for then our year some end, to was come. of planning needed. in stocks we've XXXX well inventory replenishment So, below and also

As increase. the might the we a previously versus teens second had thought X% be quarter increase mid-to-high we mentioned, saw percent what

of we previously and lower instead increasing inventory. now, so keeping as So anticipated, them that operating the we're managing rates

significant at incurring all term decision looking build again, believe to the cash, it's short we're generate trade-off But will we've we'll all be short right from and margin our So bring operations. that a charges between been will up. in improvement business the back the term. and the of we quickly back are leverage just impacts when of we in. higher EBITDA. inventory cash, and projects assets to and the these We it's investing manage savings that see back see come up we'll ramp as our the our

John Romano

bigger third uptick in expecting than now, but that's we're the our seasonal inventory And why think another it's a when norms. we reason about where above quarter seeing. we were is

So, we talked about flattish.

enough So, in at would And if first if the production where back see we've up. our one. production that that in that build start the the pickup, inventory, then coding quarter. quarter, start pulling mean, can about there the we had is we'll maintained we season, when the still a we in for second have uptick fourth volumes we when meet quarter, quarter I And same there level we is first thinking

Roger Spitz

Thank very you much.

Operator

you. Thank

Hassan Please the ahead. Global. from of Ahmed comes question from line next Alembic go Your

Hassan Ahmed

JF. me, guys the able obviously, John for TiOX about I parse Good sequential whether you charge sort morning, volumes. and QX. $XX revisit it of you don't be know flat I to to million wanted guys about for because talking talking are out are you'd

down So there. over obviously, production going isn't

obviously around zircon And that's zircon understand in some I'd that I XX,XXX And reduction primarily operations. on run hit high if margin like And business to were you lower for to you're to ton XX,XXX from XX,XXX think sort be hit to me, XX,XXX to my may a to So guys. EBITDA. that of million the $XX is a then volumes mining based to that guiding tons I tons obviously of estimates, volumes. numbers

different of $XX to trying understand just the components I'm that So, million.

John Romano

million the you $XX the reference anyway. part Well, XX not is million on that of zircon

would that cost see just were TiOX let's talk million, we $XX the about on anticipating pickup. the So side. we a moving fixed QX absorption Again, into

X%. XX%, thought that going was more as opposed XX% like to QX We also be to

So, we the increasing and see we that had level. that didn't assumptions to to we as production it saw increase that were were demand going we

of capacity having probably continue cost John referenced which run for utilization, will impact this QX, an XX%-ish is kind absorption So, this on at TiOX. stage, particular to through fixed which at we

John Srivisal

John, you want zircon million $XXX primarily Yes. right. our ask the volumes. exactly to That's And about range related of range add? when $XXX and to you was million,

Hassan Ahmed

range giving of to imply million for understood. views But $XXX million by learning annualized I we're Obviously, on as way a impacts. now? in go moved you sort they the $XXX market stand I obviously million follow-up, I $XX the of getting trough? So, power $XXX basis, where an you all earnings where conditions were $XXX of volatile, were it the guys the just right. keeps to million $XXX with around of guidance, QX the the to I If are guys' in guys million. terms your "trough EBITDA." that of sort hit do million sort million sort that have having and of to stand you if of that $XXX mean, mean, you do annualized quarter, every trough to more imply that seems view company, guys that just your of would credit it would

John Srivisal

think don't a primarily demand against going EBITDA the performance we over. big and our driver KZN, We that more it outlook we and if view rest China, you both of to and cycle, unprecedented control our which have today. of materialize lowering one-off do a that's Yes. stay and to I trough think and think about couple for lot of depressed are it's out where would call, of We TiOX, the through base and that did to market you we don't hasn't. levels. that also is zircon this that are where think And we'll we the know on Atlas year, we of year. are you mentioned John past But entire relating dynamics going the these we're we've as expect from. midpoint to have think start challenges, chatted is we from And starting where of as be. we go Hassan, don't and this did up from our of from on the a are crawl know, view

Jean-Francois Turgeon

Yes.

in further downturn, recession recovery. the out to word We of a and is believe reality the one the word and where is, much short annualized to closer come believe and we an pick in I answer multiplier this to the in use. we think do by we today one. you is not want leads much TiOX a is We number. deeper we're use to the four fact, believe industry we're or recession a much are And

points this call not that were been around. customers at inventories not in the business managed recover. market a the up permanent believe been believe displaced our our on is and down. still reality displaced. It's their the this has TiOX we rates sales dynamics going the have of that to we to So, long-term The brought have thing is do

The demand. that that and one we're is regards to turned was is is, July was bottom the seeing June, was on sure with for And much what in probably market significant stronger quick one which it than the recently zircon as quickest. to the the point, quarter as most piece, this for John's the the one

John Romano

and and the And strong help a I The space, is TiOX on that will that hurt. be it's earth be note rare very to positive a countercyclical our fast. is rare would that positioned of is player that. this add a a business. electrification with business Tronox bit zircon growing very very the world. material like I'd Hassan, Yes. strong for on become demand to and to the finish key And that well would to mean, also is

Hassan Ahmed

Thank helpful. so much. Very you

Operator

There to time. now I'd questions this any over Mr. like to for turn no call Executive further back JF, at closing the Thank are Co-Chief you. Officer remarks.

Jean-Francois Turgeon

Thank joining Lara for you, thank you everyone. and the call,

for unchanged. priority remain key Our XXXX

safety, including long-term with manage and cash reducing of benefit relentless sustainability a great per sight to We will Thank key That you. managing environment. cost align the working call. demand, flow project production Tronox, ton free concludes our cost without customer continue on our accordingly, and capital to and reduce a maintain in losing focus our Have and market prudently current capital day.

Operator

you sir. for you Thank call gentlemen, your disconnect concludes today. ask and Ladies your lines. you, and that for conference We this participating thank please

Tronox (TROX) 27 Jul 232023 Q2 Earnings call transcript