VNTR - Earnings call transcript Q2 2019

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Operator

Good morning and welcome to the Venator Materials Second Quarter Earnings Call. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded.

I would now like to turn the call over to your host today, Jeffrey Schnell, Director of Investor Relations. Please go ahead, sir.

Jeffrey Schnell

good and Keith you, morning everyone. Thank Schnell, Jeffrey Director of Materials. Venator for Relations Investor I'm second earnings quarter Venator's to Welcome XXXX call.

CFO. Executive Joining us and President Ogden, President Simon are and Vice on the CEO, call and today Turner, Kurt

XXXX This morning we website accompanying release our earnings at and Venatorcorp.com. posted release to via second the for and slides press the released quarter our

involve forward-looking During risks performance. current future. All the or expectations this call, for are our and we uncertainties reflect may statements and make and, are not statements expectations, future they they about our projections of while such guarantees

should SEC could regarding You review differ or more our results actual the filings materially that for factors these projections with expectations. the to from information cause

plan We on publicly do the forward-looking not quarter. revising or any updating statements during

to EBITDA, non-GAAP EBITDA, flow, refer free cash as such adjusted net income, also debt. adjusted and measures will net We

directly You GAAP has posted the to comparable our release, financial measures can to which find our earnings been reconciliations website. most in

over my It pleasure now Simon. is the to call to turn

Simon Turner

morning good pleasure and earnings to Jeff, our to everyone. call. Thanks, you welcome my It's

slide begin X. Let's on

our economic and of TiXX persisted and EBITDA. plastics. the applications, fixed including a XXXX electronics TiXX adjusted of quarter. million environment were challenging the volumes absorption, than offset some $XX in average observed additives more lower selling environment sales prices, second delivered and quarter these in first Notwithstanding Higher in of by cost challenges, industry Venator The lower challenging automotive, demand

free and customers work on positive simultaneously to focused price which our remaining tailored cash to while outflows flow. to in return our to continue business volatility with cash reducing we TiXX Importantly, reduce formulate aim our solutions, intensely

excluding And compared the therefore Finland full adjusted EBITDA our by our attributable we titanium Turning generated XXXX, going of proceeds payment. Pori, dioxide $XXX second received XXXX and in comparison. quarter have the to to when this second our we the EBITDA million $XX EBITDA reimbursed after of at was titanium million quarter slide dioxide segment, the will segment insurance not on facility. Pori in second final manufacturing Lost our through quarter of to X forward,

selling Excluding but and foreign of approach volatility. tailored to remained primarily region network our of a for the supply in quarter XXXX. X% currency which were the period. reduce compared result translation, This was TiXX the price managing customer the to price prior most furthering products in Prices function year declined flat average was first to compared our the Europe, priced highest year prior functional impacted

of quarter's moved China. in region. more As indicated And slightly expected, exited in of lackluster XXXX, by on Europe in lower the Prices American that quarter quarter primarily to the compared Asia we of also with that the second prices stable towards prices driven North in below demand as America. shifted last Europe call, North we second

value applications. continue These further see products higher compared and We our these strengthen in TiXX stable Pori network. TiXX sites to position production dynamics functional to higher our pricing in underscoring leadership more to commitment other from actions specialty for transferring to our will our products,

and broadly products, delayed. TiXX and increased were the increased patterns to applications customer was higher dioxide and availability order differentiated geographies. volumes easier products, Titanium year value sales X% of period result new compared of prior specialty the as This year-over-year of increased comparisons across

low and first year in the single-digit to in of volumes due to effect to the sequential compared part seasonal at new the sales The below the improved increase, Brexit percentage however, to Sales products due the seasonality. of Sales volumes increased quarter was period. specialty prior products XXXX. higher compared of of average pull-forward moderately TiXX prior quarter a

stable customers and in industry North sales the we mainly most Demand remained new America, In clear sell and demand including in a by to region. non-slurry of TiXX plastics, across coatings our the TiXX and quarter have applications, seasonal impacting supplemented second by higher we smaller saw trends applications. The improvement differences into products.

a As in in Louisiana earlier, sold-out our with Lake position in I volume value, America. pricing region smaller applications. North exports principally Charles, our specialty mentioned to We manufacturing asset remain and remained are to stable the higher limited

to and forecast of We continue America demand stable trends second North for the XXXX. half pricing in

weakness manufacturing of higher remained fragmented highly market is capability ongoing sluggish Asian Asia TiXX quarter Demand in the due TiXX remains which a specialty value limited consumer pressure the and Malaysia exposure to put on in consolidation. market recent of exports limited to pricing. and to large our the in despite China, second Venator's and is products.

largest for regions. in of impacted modest comps the accounting sales half was our the increased and we second is segment's new market of Growth other observed quarter easier by as and XXXX supplemented products of Europe the for destocking TiXX, in ahead Europe sales.

costs, by raw quarter, offset partially from particularly In high-grade our ores, second higher million XXXX, The mostly remain retail will the on material cost including were materials we approximately variable a improvement of the for which incurred raw inflation, of $XX of our slag. basket half benefit business in high-grade and million pressures program. higher inflationary $X second

environment Turning to and promoting trends. outlook demand challenging in TiXX, term for to near expect remain, we impeding the the current uncertainty the in macroeconomic and visibility

volatility, tailored to our network approach, will production reduce to which customer manage with designed price align We our to commitments. to and customer continue is implement

sequentially remain We expect pricing trends in to third the quarter. stable

higher trade resolutions modest of demand barring sales due negatively partially any in offset production North strength seasonality Asia, will expect new Volumes increased and continued in actions. in products of products. primarily incremental stimulus America, weak potential impacted By demand and region, and/or we specialty and to Europe, TiXX our relative be by

second phasing from the of mentioned, As will in our year to half production inflation sites. and cost raw material persist the manufacturing previously contracts the mix of the due of

in the negatively million quarter second outages EBITDA XXXX. impact approximately $X the compared planned will of by Additionally, third to quarter

normal TiXX XXXX, fundamentals TiXX of in and line additions favorable. and rates. second in with normalized capacity the understood half are industry well are apparent soft longer-term remain an industry growth Notwithstanding levels inventory economic backdrop industry

our business program, improvement continue Pori, part are position transfer and with and on our strengthening to transfer cost the from these to leadership We higher applications. of efficiencies our delivering our focused manage the production on meet approach, technology specialty operational our customer in with tailored track are network of value as

three and additives, in Turning by decline XX% to performance compared in to additives. and by I'll volumes, average on Sales volumes period, slide benefit headwind strong a XX% X businesses prior mix. declined businesses across currency, X% a provide selling to main revenues quarter. partially within X% driven offset all foreign performance a additional comments compared decline prior from the declined the X% a year year the from broadly price, a some

Europe America North improved Color pigments impacted volumes by Nonetheless, lower volumes and construction activity demand. plastics lower were primarily sequentially. in and

We some years will more delayed in third expect seasonality manifests. be as compared to tempered the activity prior quarter

to Pricing quarter compared prior slightly second in period. the declined the year

in we have to However, of pricing stabilize in actions place the half second XXXX.

are activity. XXXX volumes primarily U.S. compared sales a treatment lower and customer prior the to to quarter as the lost large down construction due lower year, result third of a to tender a Timber in of

likely continue the impacted automotive and fourth by Functional for appear weaker XXXX. the to applications, in expected into half These demand headwinds additives second began which quarter electronic were than of XXXX. of volumes negatively

$X $X in quarter, EBITDA quarter benefit year performance lower in The of million from the million down and the but offset by the headwinds improvement partially from a The program. prior sequential $XX described segment resulting year-over-year primarily I sales attributable additives XXXX adjusted of business improvement decline generated a to volumes was EBITDA million. $XX million our earlier, in from

cost within including our We to each realigning global structure additives have taken the steps performance business leadership. in streamline meaningful our segment,

We to longer-term expect enhancing pathway improvement to business growth. realize additional ongoing the accelerating the business its to and from continue program, the benefits

to We planned business. are actions in savings further also this assessing possible increase

are in will for year now market are light In performance EBITDA in our level full the expectations be tempering achieved of current we the forecasting to XXXX similar additives XXXX. conditions, and

will over financials. call our I to pass now discuss to Kurt the

Kurt Ogden

Thanks, Simon.

program. number business to ahead Let's discuss to X turn and slide our go improvement

We our improvement We continue focused our of following commenced of strengthening program completion to our successful quarter the the business be XXXX in our XXXX cash prior on business fourth improving flow. and intensely program.

of to the through and TiXX other deliver full the to reduction improvement million in necessary operational program an XXXX, of in performance manufacturing our and designed improvements on actions additives and the SG&A, EBITDA at segment. This a to by intend complete all level. target end in the year the $XX We is operational run benefits ending cost improvement efficiencies, manufacturing generate annual rate

a of million, our TiXX business XXXX In program. additives. of have $X benefit million XXXX, Year date, we and of captured in we from cumulative EBITDA $X million $X in performance quarter benefit the additional to an improvement $X million realized second

the with than schedule XXXX million delivering of fiscal current $XX ahead year. benefit We of are tracking and anticipate expected in capture more our

the to attributable after turn of second adjusted to to sold absorption. selling lower slide Total Let's carbon costs, fixed decline the of in quarter segment, impact prior compared lower higher raw cost X. year is dioxide the our declined million the The average period we of and price excluding majority and EBITDA credits the Pori in material the XXXX. $XX titanium

as availability additives a we improvement as The the on deliver offset Simon dioxide lower initiatives. from business described. titanium our were segment improvement positive, new in to our and our certain more higher were due volumes sales products also performance of of net volumes products than manifest program Sales aggressive factors increased benefits

sequential Compared volumes performance to to the the titanium increased prior the Seasonally $X largest dioxide higher million. quarter, in sales additives were EBITDA both adjusted by and contributor total improvement.

program addition, movements lower foreign In translation, improvement offset and and cost more more production. higher than our ongoing prices, SG&A of sequential impact the foreign and currency of benefits business lower selling the from stable currency

third the prices look quarter, we be expect stable. As we TiXX into to

have lower. will maintenance EBITDA a cause million previously be seasonally $X we mentioned, And that headwind. volumes negative TiXX planned Simon as will However,

costs. expect higher We also raw material

Turning to adjusted our XX resources, the second X was and quarter at times trailing EBITDA. capital our of debt net net slide the ratio month our end and leverage approximately was million $XXX X

to quarter, principal aggregate $XXX our amount asset-based of revolving During million. we the the from increased facility credit million $XXX

approximately was end The million facility. quarter, of revolving million liquidity million and under at our asset-based $XX lending the $XXX at cash of un-drawn the consisting of in total $XXX availability

have not maturities debt Importantly, until significant XXXX. we any do

the $X.X relatively enjoy countries is tax is to primarily billion operating in which a generated losses income rates. and continue We benefit. of we function the net cash from where This low

is affected jurisdictions expense in allowances valuation tax operate income and by jurisdictions. we certain in and in significantly which of the losses tax mix Our

second current reflects the under which XXXX, various weighted adjusted rate rate average are better higher which tax the In approximately in of expect applying effective see Beginning in we adjusted quarter, applicable the a rate we normalized operate. jurisdictions to XX%. a tax effective we tax

the in XXXX XX% forecast effective between adjusted our which rate guidance at rate to steady long-term continue We cash tax our to Most remains to tax importantly, XX% with will long-term. our tax guidance. consistent be XX% XX%, is cash

flow was with our timing cash significantly typical seasonality was expenses, quarter in which $XX and in of Pori related free This line a use million. working Total second were of the impacted capital both the by expectations. of

for outlook follows. updated as Our of cash XXXX uses are

Total transfer. expected expenditures million million, approximately be capital CapEx, approximately the to expenditures, related $XXX includes $XX technology of capital to are which specialty

we outflow warrant. CapEx balanced reduce market the within ability previously, will said, or conditions this we budget That without stated integrity I've As assets. our compromising should have operability our on the being reason of remain to

of paid $XX XX% be to Cash Cash within and pension expected million, are $XX interest approximately million be million. be are is expected to to million. our to $XX range to expected Cash other is expenses $XX cash $XX expected be million XXXX $XX taxes to restructuring and XXXX and to for XX%. million long-term in to

in than reduction million the the the laminates $XX of quarter guidance in to titanium with in to second of more dioxide to the lower XXXX anticipated million a $XX working was the paper to product relative million in Based volumes capital XXXX, stronger a line current acquisition use TiXX outlook, cash quarter build prior the deliver receivable. compared forecast. we and sales for $XX XXXX Working This the on full accounts inventory capital year to industry a of second offsetting our expect our XXXX. change valuations line of reflects related of

XXXX. $XX total which Finally, million to the half XXXX, in of in million spent first to was of our Pori expected $XX related expenses are $XX million

a actions, As down. is the spend Pori slowing dramatically of cash at our result

With to Simon back concluding remarks. for that, it I'll turn

Simon Turner

in our challenging Kurt. you, on Thank industry quarter, strategic we remain and macroeconomic but global The remained TiXX the objectives. focused second

volume This our producer to performance stable our We rollouts, of in margins. to the of advancement we to our can and continue network. the differentiated in drive more and of from TiXX, specialty TiXX, and business technology the be achieve transfer the higher of of seen premier new our be the other sites success where specialty product our specialty Pori

carefully aligns while We customer on containing prudently program volumes in have flow. to tailored generating a inventories resulted that approach a higher This positive network compared levels focused intense executed prior effective focus cash appropriate meet free an at a also our to price and production cycles. floor has maintaining

off as Our continue XXXX strong is competitiveness start long-standing across program commitment a to our portfolio. improvement business our to we improved

We necessary next the run year plan by will $XX and to we are complete on full benefit. actions confident deliver that of the rate end million the EBITDA

favorable us and our remain fundamentals. applications, we the expect the to demand end-use capitalize long-term significantly on ongoing our enable will the business reflecting in term near subdued, actions uncertainty While somewhat above to affecting the strengthen

interest With questions. that, to the call now would Venator like for in continued we and your for thank open you

Operator

you. with first the question comes Fischer Barclays. Duffy [Operator Thank Instructions] from And Yes.

Duffy Fischer

In to volume? of through year-over-year, Yeah. you the the specifically walk volume do X% Good each can morning. gain on region How reference did kind regions?

Simon Turner

we little color bit Duffy. give a Yes, to can that, of

bit think balance around way roughly I the little as a think that new laminates that saw regions of mainly was in product characterize little different introductions. to spread Europe. We and That business, is new about a our increment half the from the I the saw that from that European with of world. would bit we

Duffy Fischer

Okay.

regions X%? X% that's it and did other did Europe how to better So than out And averages less. the the

Simon Turner

No.

that saying what regions. did is we So than a better Europe the in probably little other bit I'm

Duffy Fischer

you if how at a year, then as And mix, versus specialty look Okay. this and year that your functional last percentage change? did

Simon Turner

is so as business the relatively mix specialty characterize comparison small, unchanged. the I'd Well, flat,

Duffy Fischer

Thank great. guys. Okay, you,

Operator

Thank Markets. you. McNulty comes from And Capital with John BMO the next question

John McNulty

questions. for my good Yeah, morning. taking Thanks

tight push and to that headwinds like think pushing like when material or offset sounds be destocking seems going raw started the markets stabilize you maybe market's to done. materials and of to start at industry higher, it facing? enough to hikes help point, With price do to stable rest So raw you the enough through is the are the European have the this starting the

Simon Turner

statements let's there. mean, on I Yes, pick up those both of

As seen stabilization. you have we say, Europe, some

We confirm run have course, can its so seen the destock that. I

$XX recall year-over-year which to expect outlook that said for are raw about relates to And We feedstocks. back million view largely a of unchanged headwind, of materials. our in while our the we we you'll three-quarters onboard around

is And are what we out seeing is that playing in the second half.

grade some stability, see higher increases of And digit single our seeing We will flattish low in some ores. more are our in sulfate a we ores. outlook,

the into picture pretty you So the as feedstock now half. stability that and second the painted through I clear there is scene think of we look of

see that of answer I could a characterizing we based continued your lot What uncertainty. demand term we in is prepared our going has with at would to a floor careful to would stabilizing we would as out into higher trying as success you say triggers stabilization we very to to We putting this XQ. under on further we be in question successful a of focus about prior mentioned compared what about a expect near level to on see earlier, see And be prices been cycles. there prices volatility. result --

demand, initiatives in see further Directionally, pickup more I to target a of is of bit what course, need allow a we us to price to think, fundamentally.

our days. and and at careful kept low in to level, around very We range have XX% our the with we the have stocks been utilization a appropriate in XX quarter, network, the disciplined very second manage our of network

seen pickup in and nominal have demand. only a flat pricing sequential We

believe lead seeing factors stabilization to successful program. us are all So those that a we of

John McNulty

the very much Thanks Great. for color.

Operator

next SunTrust. Thank you. the Sheehan Jim comes And from with question

Jim Sheehan

Morning. Thanks for taking my question.

increased looks TiXX it capacity? China Europe bit start expect up So exports in as like elevated. a into major two from inventories are of producers Do China you ramping new

Simon Turner

specialty We we some within markets. Yes, China, China. but a feel I of China way continued think don't into compete large in We weaker is we effects the what see in softening. export certainly product

of the As notably Jim, out. I Most Asian of increased to noted of pick been the we around midyear directed India tune region, out point, has this exports into China have the X%. would

you exports States, exports into both down. those And And XX%. it's both the basis taken a take on when United Europe that together, down by to they clear and are year-on-year regions are

So yes, there to out it's with that possible, exports. painted demand some capacity ramp do longer. take that going are ups We slower, be of course, this we think could profile exist see we've increased

And we applications, should dynamic you specialized compete play business more robust forth. our that makes such in targeting in particularly differentiated put think the way because out more market, and Europe of that the a we

Jim Sheehan

helpful. options portfolio for thinking are about And your at you as this also, Very M&A Simon, how and point? strategic

Simon Turner

focusing to out A: rollouts relates I our that product challenging focus technology, continue And mainly to the weak a our sites that will focusing on in other strategic quite Pori our specialty priorities. of the lead actions is stronger value think and demand by environment. on creating internal we building from what and a technology, on and to to transfer business

Jim Sheehan

Thank you.

Simon Turner

Thanks, Jim.

Operator

Thank comes the you. Nomura. And next Yefremov Aleksey from with question

Aleksey Yefremov

TiXX raw good you morning. next you, inflation will slow completely to in year? any reason believe or down stop that Do Thank have materials

Simon Turner

runway XXXX. the second earlier, second What now we're as the mentioned much I see and a we've can half, out got I half contracted is fairly pretty we think of clear for

So slowing onboarding seen we of some costs. of have

half. onboarding we around occur expected the to we the think two-thirds in see I first previous spoke earlier, of calls,

So, directionally certainly come yes, some has slowing, pass. that that seen we in some other we've categories to and non-ore there would already been say

So that's half. what the second in we're seeing

bear of to think it's I demand still is sulfate we'd to next but strong too around high weaker grade some ores. materials. too, for We in pricing this other fundamental to be environment ore what in amount a feedstock I early and there available comment on capacity there's year see think that know brought raw fundamentally reasonably

Aleksey Yefremov

there change And relocation in costs beyond you, related so XXXX XXXX, was Thank any Kurt, Pori Simon. plus? or in closure

Kurt Ogden

There that we And as our either. those forecasts had certainly we project in any changes has XXXX. costs been estimated change we have, in in not not have forward, no

do those but we ways reduce to now in say, expected will years, can that have we Aleksey, further future to outflows I that explore right not outflows. change we estimated the continue

Aleksey Yefremov

Thanks, Kurt.

Operator

comes you. Thank UBS. question next with Roberts from And the John

John Roberts

Tronox the on and update any be and court should there of? Is dates we lawsuits aware between you Morning. that any

Simon Turner

there's meaningful break to due $XX update The remains The John, agreement answer no, from with is payable no that, under in had that. and the to they Venator. million fee full Tronox

Contrary to definitive Tronox' for have times a we that in at the purchase here Ashtabula want to agreement reiterate just acted Venator site. pay, faith excuses I to at to their failure reach to all good

So are unfounded. believe update counterclaims milestones in that no continue roster provide your meaningful to we There's to the question. any the

John Roberts

disclosed weakness some area? sunscreen broadly or Ashland of associate TiXX in consumer that specialty as their were applications. that market in I you some strong secondly, well, And Did demand any see other then products. you the some of end specialty and with

Simon Turner

specialty we're strong in area. broadly Yes, the

of course, a key is have products, such we not product, Our ingredient those softness. and into seen

John Roberts

you. Thank

Operator

comes Deutsche Thank question you. Bank. from with next the And Begleiter David

Simon Turner

David. Morning,

Katherine Griffin

is David. my on Hi. Thanks Griffin for questions. taking for Katherine This

about contract QX. first to So question, wanted talk prices just for

had implemented environment. that I some given been increases demand not maybe may be as think successful the there

and they prices are not back kind flat, see increases the then on that? some of on not of buying do are you successful. that, expectation are kind prices you of if those summer stabilize wondering I'm if And of So that assumes think your to late could top

Simon Turner

around but the part with start question, return of to Katherine, Yes, your to I might increases. second have off price let's first that part

under a tailored do more is I now we've program out ever set have and to individualized, what of think to each stabilization people full approaches customer. that we every range to our than tried

a down agreement. So quarter, the within you it's some entirely quarters, can have moving on conceivable up or that across customers depending

And target have markets, are the United expect the speaking, broadly is to level through QX. that's increases in still notably the consider Europe in into QX. But achieve. targeted in certainly increases aggregate But the that stability outcome retain put States, targeting we key we selected along in we some with we and to and at

didn't like to you I'd understand. your kindly of ask question, the which to restate part fully I second

Katherine Griffin

lower expectation curious, you I demand those I that now those in just see increases than be released you Sure. if and that if think increases are had price QX, was not could there if up maybe that late increases the some flat mean, been price there settles pent in do for maybe successful even could -- aren't expected? that an summer successful, or

Simon Turner

pent No, think mean, that. demand. see of don't up talking I we you're I

to think any I or as into underlying increase inventory levels. factors now. noise would we're TiXX, no that decrease or it There's relates demand that real

probably the at can't days. are we restate, targeted, course, we on of We we end are. that's sure industry of level. of to level think XX be And the the that, inventory but lower around We that's where

we And to think you summer. that in late don't so going those seen dynamics type suggest that of be are

Katherine Griffin

more, one then I And Okay. if could.

just curious. are realize seasonally I but pull in have into improvement are we additional levers I'm demand So can a that? place, improvement the gets materially macro weaker, you that business to period, business the beyond you heading offset If there program lower that

Simon Turner

terms the in in we touch extra on assessing demand. the the helping what certainly prepared main remarks did to for see range would additives weakness as combat Well, the itself. certainly of a the business I fact improvement in area, is activities, we business are A: avenue ongoing in of that

the condition as are business other target we But cash on inventories, target levers to largely cash in in. of metrics capital relates it we're and expenditures. metrics there items, on other in with And focus on, are course, we our our think appropriate could line plan certainly that our for speaking,

Katherine Griffin

you. Thank

Operator

And Juvekar from P.J. comes the with question Citi. you. next Thank

Simon Turner

P.J. Morning,

Eric Petrie

do you, you chloride? any are? P.J. And away have seen for you Hi. Petrie Eric on think TiXX from Simon. is for inventory customer your sulfate reformulate This then A customers days question to What

Simon Turner

inventories on Yes. got Look, have we custom what to our visibility are. limited

elevated level are at to reduced. think And piece, across goes I they are think. believe yes. they that We or now, normalized the have no reason We

it's of and terms it We In formulation, questions see of quality one. through quality regard. this pigments. lens couple in We've interesting heard lower an higher a of the

So we both buy are supply pigments, chloride quality in customers where from sulfate us. frequently overweight and high plastics we and

type it So quality as a chloride don't be sulfate they of It's can or supplied. the that always product issue. see about more

that's our And by would focus sulfate, course, have Chinese of China, sulfate. is, most gains definition and exports question where the like don't own true sulfate this presumably course be that then production significant But China, we almost significant chloride. so by almost and would some mean, in of I producers in chloride between recognize which seen with and be areas of it's some positions we of switching sulfate. some sulfate expensive tiered losses of of our which is in

business about quality. and as I think applications So have in we target which differentiated more our robustness this And to specialty more switchability.

Eric Petrie

there? looks Okay. as and balance? cash It $XX your like any a is to declined a million, for question cash follow-up, equivalents color target What Kurt. And so

Kurt Ogden

Eric, Don't Yes. $XX that surprised, million we bring be the range. to around if down closer

And we'll million. hand the lower so than capital little between during as think our $XX $XX a about million, that. the and fluctuate Certainly into ABL working it tap cash $XX on the to necessary. we'll use But bit million access will somewhere periods

Eric Petrie

you. Thank

Operator

Byrne Steve comes next Bank the Thank you. And of America. from question with

Steve Byrne

prices two And to categories you What supply lead and could Morning. in chloride-based for your see realizations been those fundamentals diverging versus to you. in demand that European have for TiXX your product sulfate-based products? price region? Thank business products

Simon Turner

is So sulfate. specialty ourselves in elevated and in stability is area, our what let's say which products stable specialty We've our I our off that seen would prices at specialty area, sequentially remain all first remind prices.

have technology not As It's my driven chloride would to the any the we earlier into issue. specificity realized that the the Largely discussion are the they to great divergence, and Europe, related areas. It's fundamentally by that comments, with more the potential sulfate dynamics of there's demographic customer applications. across put in same. a as their use no prices where or different

and not performance us we looking earlier, I don't said expect end And do we because and are this our to simple at I between the any sulfate higher customers. any divergence see of the for as might time divergence chloride add, products, at range with see,

Steve Byrne

seeing And iron are you European pigments dumping the oxide into Chinese of any market?

Simon Turner

that time. seeing not this at We're

Steve Byrne

then And the market? out are coming incremental one more of seeing into you any just that please, for is you, Saudi and product European

Simon Turner

either. that of any observed haven't We

Steve Byrne

Okay. you. Thank

Operator

with you. comes the Hassan Ahmed And next Global. Alembic from Thank question

Hassan Ahmed

Simon, Kurt. Morning,

Simon Turner

Morning, Hassan.

Kurt Ogden

morning. Good

Hassan Ahmed

A just of things. quick side question cost curve on the

As I curve you take very XXXX you is cost on a in this the based global the at EBITDA being are Obviously guy’s look QX sulfate placed. XXXX, XX.X% around primarily margins, segment. QX TiXX and XX%, producers, for very, competitively guys

So my macroeconomic question and talking really is everyone's the conditions like. about uncertain

this the Your have margins doing come isn't down imagine hard, own EBITDA so in producer well I'd too environment. marginal

are about So seeing any curtailment, think of we should that? imminent? you early signs they shutdowns? Are I mean, how

Simon Turner

the China. with anything not seeing of within that Hassan, nature, exception We possibly are

within there's could China, been local been think demand be more pricing's squeezed. down lower, margin the profiles because that no China doubt because has I within

of price place is last front But set more months point, where floor of been Hassan, the pricing point year earlier XX put I in our has half we've seen year, cycles. which against cohesive my this remain taken come a at And we've of from a destock, taking a in in elevated level to the stabilization backdrop. a of challenging price. view a delivered through such is actions under And the Venator, which than previous that very back half demand and back has to in program been a

been, distressed XXXX the not we kind or significantly we'd margins have prices of the for where producer of front margins, those as -- presumably, and like where of to want end not the would level were while back of of XXXX seeing them marginal So margins. we higher that course, are we're end were as instance, would lower, at others

Hassan Ahmed

understood. Understood,

raw Obviously, between and Simon, all we right? of about the ore know a material currents, the lag side, cross on Now, couple prices TiXX prices.

play. with that up So But then consolidation in came a bit couple being there a some relatively sort of into of of low last was and lag the quarters, the over was within catch price, there industry. ore, effect

understanding of ore buying consolidators was is acquire the that to prep one over sort in there. of sort patterns building these actually My changing assets some of inventory,

question pre-bought. wise, seem effect were uncertainty economy the seems played again players is through, to lag the the macro So some who to have of have pre-buying

in a should crack we more not So, I in mean, pricing? uncertain time, see ore this immediate

Simon Turner

so, think don't I Hassan.

because might that price it are own producers slightly this I be think their version different time running stabilization. feedstock out I the of think

increments towards out think is trend lower with yes, what aim driving So, a more volatility. frequent but I we're seeing the of

notably the some been higher to and trend that consolidation, And particularly grade I has think in There set continue. is areas.

Hassan Ahmed

much Thanks Understood. so Simon.

Simon Turner

you. Thank

Operator

the you, Zekauskas. And question comes Thank from next Jeff

Unidentified Analyst

much. very Thanks

Simon Turner

Jeff. Morning,

Unidentified Analyst

good morning. up the your them half, How much raw do and first expect up be the much how year? to in for Hi, material you were costs

Kurt Ogden

Kurt. this Jeff, is

As ore increased materials indicated we $XX we About Simon anticipating has that is million that already be of $XX million headwinds. think XXXX. generally of around XXXX raw were year-on-year, about raw from going to materials over

we we in of a think half. the $XX that call break headwinds million If down first more into it halves, we've than little ore seen

will costs we are such impact other onboarding as back the material the into XXXX, of half which see XXXX. second XXXX. as will in half ore compare of ourselves the some to headwind go we acid, As decrease higher we sulfuric we raw the But

Unidentified Analyst

for Aren't related sulfuric prices down, or coming acid derivatives?

Kurt Ogden

site, where We we those specific acid sulfuric and at have prices. facility, an increase in site that have contracted an one Malaysian arrangement our specifically

seeing. the what trend that's primarily that are so And we is driving

Unidentified Analyst

next current lastly, raw to at And are or material all do up prices expect prices material raw year? environment? why you guess the down go I in costs

Simon Turner

on of I answer think, of key for year's And tough But the headwind Jeff, material. can range. what do, three-quarters responsible key raw that focus feedstock. course, raw this we material is our across it's our is to

down going up. is And version of those up, it dynamics, posed through vendors going a you own creep see on to the range And why they for limited been of we're and price gently see there are consolidation lag, working I think. their has their course, but we And utilization, going are we stabilization. not there. is of do seeing it chloride going different there a question The and why very of materials, course. Well, is high-grade are reality materials, that

not materials, product they drop, say we seeing be cost any general. be Demand only we're we of a I amount point, then materials won't for sulfate not ilmenite that it, lag. Therefore, or or this when year, has would increases time. been increases, at should to For That's to is of your time it's next this materials available. yet that And that, say, this in there course not are that price relatively see to at start see there'd not and we possible but do should weaker. seeing a sulfate -- large

stable So now. we it's see as landscape, it right a fairly

Unidentified Analyst

exporting to Okay. And for they are And choosing How in the they up of demand in where China, that? exporting, lastly, more? are holding dioxide you market weak producers, a And titanium characterize can state would export because you domestic characterize China is itself? to? in then Or pretty are of China TiXX if well? demand

Simon Turner

some been time I slowing and gradually would of demand for is is think the really quite couple in last weak say But that very years. probably it now, right I now. domestic has weak, China

see We at last this point. export as continue the year we profiles to saw midyear year similar

up all it's on up, basis. think an I up X% all

think But to you when from particularly years these of America. particular of increase. East, some we flat, it's Middle year-on-year course previous exports the saw terms the Asia, that mainly In which Latin particularly around India as out as color has in four a see percentage compare of growing one well, I'd or exports parts high pick China. destinations, absolute largely of three kilotons, them I

It's would group the the larger for said I most exports percentage. I ones combined to producers USA date as one are the that which is responsible the year of by of stronger down that Europe what would XX has I a America say, and North particularly earlier, exports. Chinese drive repeat to same of of though, a into But markets and XX%. are top Europe

Unidentified Analyst

much. very Thanks

Simon Turner

Jeff. Thanks,

Operator

And you. Andrews the from next Vincent question Morgan comes Stanley. Thank with

Steve Haynes

actually on This Haynes Hi. Steve for Vincent.

what volumes, to I of the should level thinking demand was Should or so, had demand. kind we XXXX or curious, underlying of is cycles comment of do about that mean, be you the just past kind be that being the kind I guys thinking X% in X% about pretty something how guys You made years before destocking of a of and few restocking intense we've is characterize over after as? underlying off? range? at we

Simon Turner

TiXX that have course, we're everywhere. with a question saying as course, do is going of But Just different of such not restock/destock that segments additive related, our demand a seeing to predominantly TiXX taking some here, this we're the of we assumption confirm, as basis, I'm it some automotive. phenomena because characteristics in for from products different

Asia which seeing and to demand We in weaker are in weakness general, a is concern us. underlying broader China in

growth; pretty bit been modest growth. Europe think, that has pushed some it amount. hesitate delay, There North in quarter, I has third and construction, gets continue see And we a small call America, of pretty the growth. of little of decent a possibly a to in demand modest level to solid, demand pretty but into

go you say that's on the basis, X% assumption. I would back good But range X% to that, a if to a XXXX

this recovery. expect We than more the We start we'd gradual at of be to just hope year. it expect

Steve Haynes

Thank helpful. you. Its very

Operator

Thank you. with next Arun And the Viswanathan from Markets. Capital RBC comes question

Arun Viswanathan

Thanks, good morning.

because the on business. that, loss any of is your and curious pretty extra serious able gain? that volume pick It seems your Were competitors to up there. and reflected share of Just laminates one had that some plastics quarterly in you large

Simon Turner

up We scale. picking don't of share ourselves as any see any

sold We in are fully North Asia America. and

bit Brexit slightly up sequential a lower. little lower quarter. There than Our we'd went of was modestly, anticipated, into volumes probably first the effect have

XX good we've We've days second certain on was back focused on at pulled the quarter. production. flat. we pricing achieved. level, Our the target set which positions as we exit We've our inventories a our believe We've

prices plan game focused our our and a remained have has of much been value So execution very about flat. stabilization

mentioned in in be have segments could some some the we were course, Of others that targeted noted dynamics where those market having approaches. some

laminates our market Tronox We product recipients share than was the rather XXXX contribution acquisition the not in other that. of by anything do more those from have driven any than a which we've from positions sector, of We noticed the fundamentally. with small believe been to do

Arun Viswanathan

think out you the that the deterioration this year just environment bottom, a when of there in of as is up, look into would then along you you further XXXX? rest bouncing into And and materialize could do current characterize as kind or the follow XXXX,

Simon Turner

continue given the to way Yes, seeing challenging deliver some program tell to of up, similar the have you reticent and we we through we're the stabilization some year of still turbulence of events very are out expect played right experience, into the that year of the term. level's get this near we've has patterns by been demand noise on And the out gone about can course, experienced discussions some and and is XXXX we to there fairly What despite now. region.

Operator

with you. the from next comes of And Thank Bank Spitz Roger question America.

Roger Spitz

not you've the volumes in gave segments, the on percentage two two indication. each sequential TiXX some For change the I'm the performance given you segments additives. and sure of for

Simon Turner

out we Yes, gains break by didn't the segment. sequential

Roger Spitz

have Okay. Are And there or -- that impact in in other in the QX had the or TAR QX which TAR XXXX? any XXXX so, if And going plant turnarounds TiXX to might XXXX? expected what be? is

Simon Turner

in in impact million our $X the planned about spoke QX. the We'd outage in plants

it always As any roster further planned given have a year. relates scheduled would we to outages,

get three be two there to once equipment every planned so the in or Some has years, year off taken outages will XXXX. of

I those, would course. but We've those schedule describe yet to as normal

clear In field the XQ. terms in facility in is got, we've our at our most Duisburg, German outage on the that the here outage game basically of major

Roger Spitz

ABL what Duisburg, drove $XXX $XXX Germany, million million? okay. to you from lastly, And increase then to your

Kurt Ogden

was this the under it do Kurt. We ability the Roger, had do. We as credit is you're agreement, prudent so aware. to to like felt

And a to more so we or at move for it ahead the liquidity, opportunistic inject was least an availability bit and little felt business. like go

Roger Spitz

very you Thank much.

Operator

from Lalli with question the Thank you. Brian And comes next Barclays.

Brian Lalli

Hey. Good morning, guys. How are you?

Simon Turner

Brian. Morning,

Brian Lalli

Kurt. for couple a Maybe

you've from into possible notable cash some changes the CapEx past maybe cash of would models. move what us namely of remind to restructuring Pori on to expenses, around but this technology in that know for in up flow as we is be front XXXX, I the I be calls, some size It highlighted First, will it good maybe XXXX our the costs, guess transfer, etc.? free

Kurt Ogden

are we guidance out to XXXX as point ready at with go this Simon Well, Sure. not mentioned, in time. specific

the into up we process a sharpen models as We here budgeting process. are a go to go going fall and through our through

it and is to think this relates the with year to sense be. to you be that I as we'll to CapEx So as associated back quantum coming give a going what that, later

we down rate million reduce as XXXX. associated planned are to outflow additional in we $XX $XX take XXXX that cash that million million around any continue we for And think right now, of from $XX those further absent with that ought in about As the the to Pori expenditures to Pori have Pori actions into go cash to well, expenses around expected XXXX to cash amounts.

Brian Lalli

then that exact to the down? Got is ready you're restructuring reason not maybe there it. come down? year $XX $XX And to an any assume come for XXXX, should that million directionally, to And number, doesn't but million fiscal give

Kurt Ogden

expect less to. $XX than we come Right now Yes, down it look XXXX. into it we as million to to ought

a business. taking indicated close look has that we're Simon to at Now, some additives our additional address actions

some to that is process that of that. We're and order assessing potential But to that as we in the is improve there strengthen determined. business be funding have may So in well. the

Brian Lalli

quick just or EBITDA. Got ones, ups first it. last And then two on follow

the million you to you run end going think actually year capture year something your EBITDA exiting the reported savings. $XX of greater you're $XX on in at numbers say, do How cost you As than can the this get rate? with XXXX versus million much

Kurt Ogden

will have Well, ought of Yes. us to amount an $XX put that we million. an incremental north incremental

be think that I pretty number so to use. a And that would good

Brian Lalli

EBITDA free term of on then and thoughts you the you current as takes, other then with are is end might to the in a the me. versus negative And last for start guess profile do these working I generally of puts longer helpful. of have net leverage normalize? where what cash on the one with things flow, you of where of Obviously, year leverage? for some that's capital the some thought terms And release Okay, business sort some

Kurt Ogden

is generation. a focused, we It Yes. what cash out flow We're we've indicated, our high far. not free improve to XXXX. guidance leverage it going on for with Suffice priority specific intensely have for the are around improving to business go to we as thus say

certainly we as XXXX, we And the And organization. forward in that you'll a XXXX the think move that capital second have half. in an have as we we focus so reflected I and concentration into half that then that high of working as release continue see will second

Operator

Okay, there thank questions, no for Turner to at more Simon comments. to you. are return present floor would closing like And any the so I

Simon Turner

if thanks you much. everyone to call. to for any Well, joining have very free Please Thank questions. out Jeff you reach the feel

you We for to meeting will Thank forward be attending. on and look shortly, the road your to you and much further. taking very very together questions we

Operator

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

may your lines. disconnect You

Venator Materials (VNTRF) 10 Aug 192019 Q2 Earnings call transcript