Venator Materials (VNTRF) 3 Nov 212021 Q3 Earnings call transcript

Company Profile

Participants

Kate Robertson	Manager of Corporate Finance
Simon Turner	President and CEO
Kurt Ogden	Executive Vice President and CFO
Joe McNulty	BMO Capital Markets
Steven Haynes	Morgan Stanley
Josh Spector	UBS
Edlain Rodriguez	Jefferies
David Begleiter	Deutsche Bank
Matthew DeYoe	Bank of America
Arun Viswanathan	RBC Capital Markets
Hassan Ahmed	Alembic Global
Eric Petrie	Citi
Roger Spitz	Bank of America

Call transcript

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Operator

Good morning, and welcome to the Venator Third Quarter 2021 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Kate Robertson, Investor Relations. ahead. go Please

Kate Robertson

morning, Venator Good earnings Kate Investor Robertson, Thank Welcome everyone. to for Materials. XXXX Venator's Relations you. I'm third call. quarter

President XXXX Ogden, accompanying website on are released CFO. release our us call and the and slides release we Turner, CEO; at third and for quarter the Joining This morning, our and press venatorcorp.com. Vice Executive the Kurt earnings President via and to Simon today posted

or may sold they of make uncertainties the statements the expectations, During expectations this comparisons treatment projections are while for not future which All our and they May call, additives exclude performance reflect water business, we statements such guarantees in we All and are and future. XXXX. on about make call current was performance. involve forward-looking, risks our this

You December any our of the Form ended third second for XX, XX-Q quarter. the quarter for and differ XXXX, X-K of more to should that year statements cause for publicly factors Form other could filings Form our information plan expectations. or the the do and our regarding results XXXX, the first on updating revising SEC projections our in review XX-K for XXXX, not from actual and quarters We these materially the or forward-looking with

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

to financial comparable to posted You pleasure It in can call now to www.venatorcorp.com. find at GAAP earnings the measures website is release, turn reconciliations directly most has over our the our which been to Simon. my

Simon Turner

a slide challenging The earnings increase Welcome was in shipping costs. third to Generally, in most macroeconomic by healthy disruption call. good and energy, environment morning, Beginning third our Thanks, and material been chain everyone. quarter supply Kate, dampened raw quarter. rapid demand the has XXXX X. on and

our associates well hard we and EBITDA navigate would and in efforts for third we these challenges challenges. million thank adjusted continued to compared quarter quarter performed of like continue million XXXX. their in quarter the and the of work third third during I $XX the businesses to XXXX $XX face, of Venator delivered to $XX ongoing Our the second quarter as million despite the in

Titanium to X segment. slide Turning in our Dioxide

quarter for $XX million Dioxide was million from of EBITDA Third adjusted quarter segment year million third TiOX the to our quarter, our sectors. we and XXXX. second regions our $XX into demand for and continued the for to to across the Titanium applications. in improve, see Demand specifically textiles continues products products TiOX compared prior in $XX Throughout robust all TiOX functional quarter specialty

inventory third currency, levels the XX% and quarter price within and successfully XXXX. third further the the quarter. quarter year low local have despite during inventory remain X% initiatives entering during during historically to sales compared declined we increase the volumes In the expect X% increased cohort period implemented TiOX prior extended and and the quarter. compared sequentially. prices year average sequentially increases increased production due impacted increased that selling to maintenance prior Our XX% quarter year low COX the into to levels

During most third and raw shipping materials. cost we of prices pressure energy, the due to saw rising quarter, significant

of we are Although to for our significant cost portion portion we of fix our rates costs. a variable a base, certain market still subject

European at our are are which implementing and routes higher surcharges additional In to are to specific addition quarter These by to selectively implemented impacted our price certain margins. preserve fourth energy apply increase manufactured surcharges on initiatives, costs. facilities we being products shipping

to more normalized expect shipping until We surcharges and place these to energy remain return in levels. costs

outlook for TiOX. the Turning to

our for sectors. across regions see robust TiOX all to products demand expect We functional and

historical to sales albeit averages. quarter, than fourth lower modest more the volumes in be seasonally expect We

Turning to slide X and Additives. Performance

of Seasonally EBITDA period million demand second adjusted with quarter. Additives quarter markets $X $XX our the continued prior strong coatings $X in and was the and functional the Performance regions. year in XXXX segment third additives end into products strong million million in delivered quarter. This compared for all in of into the automotive, electronics supply in demand and color dampened Our and by coatings seasonally logistic construction and applications challenges pigments

We follow expect favorable patterns. demand trends into and seasonal the quarter these to fourth continue normal

fourth third. for Although products we we treatment third return to levels have seen demand segment in timber total, our normal expect expect for to this fourth we be quarter, lower quarter than the the softer the in quarter. seasonal In to volumes demand seasonally

increase seen significantly our costs TiOX we with quarter. over the segment, As have

selling in the mitigate costs. to discussions are energy for surcharges currently with prices implement in customers these higher increased We and to combination of order

offset fully increased prices increased to XXXX. in through early expect selling We these costs

to X programs. cost Turning slide our and

Our XXXX quarter incremental our XXXX $XX million savings remains the program $XX and third and COVID program has the of XXXX delivered XXXX, delivered the $XX business temporary program In of compared from reversed. million to third business the date million from over of of quarter of improvement baseline, XXXX we savings to improvement track. savings on

our restructuring approximately Ogden I $XX comment improvement to deliver now million. over lowering to estimated to will are to costs pass the Kurt program We business our our on call XXXX financials.

Kurt Ogden

Simon. Thanks,

increased by by plant higher EBITDA increased as second primarily year costs. were These our slide improvement material Total and the attributable for period partially to program was primarily program. X% impacted due our selling TiOX Cost year adjusted The costs offset volumes shipping volumes, offset and from our by current million pandemic. sales $XX a prior the utilization increased our to of raw EBITDA and which partially segment. to due favorable improvement within turn mix, improvement third benefits by to shipping goods to the energy, cost higher selling and prices and period. COVID-XX XX% Additives sales increased including period. driven ahead temporary million. up well in average was in raw our energy review increased the was of Adjusted total increase due the material adjusted the This prices, seasonally prior X bridges. reversal TiOX XXXX and the sold and $X go of sold was quarter COVID an increase costs to to compared The Let's our XXXX segment impact average as was primarily XXXX year goods by business of higher Performance quarter, Compared as the savings. lower EBITDA increased benefits from improvement X% in business

flow slide Turning our and to X considerations. cash

Table flow our cash third activity the capital we notes. information we on release, interest our up negative ramped flow We simplified $XX In quarter cash less definition have million to paid semiannual Within free have X. our was summary, provided capital free expenditures expenditures. and earnings additional operating supplemental due on activities our by for cash as included

will We we continue the it closely still in expect cash use for quarter, manage a to of working source million capital, our though XXXX. cash of modest was which a be $XX

We expect XXXX which successfully future of investment total to approximately extended capital and growth. that maturity refinancing a some the completed the million, facility be On projects expenditures discretionary our support $XX includes in October XXXX. ABL to modest XX, we

largest any We pension recently have not XXXX. significant our a until maturities for years. valuation completed do three place debt every plan we that takes Importantly,

of fourth escrow more to representing than receive year compared into result, quarter, took a million expect refund $XX valuation payments while we monies future approximately to in a In $XX we to paid the place. cash expect million, As the this save XXXX.

anticipate turn buyout. We trustees referred We the plan back transfer to are to and one pension concluding two pension a Simon? commonly assets call with from company, the currently as to I'll take Simon years. to working this some remarks. that, insurance to for this liabilities With an could

Simon Turner

Thanks, Kurt.

Turning COX business. to see pleased recovery fundamentals to we continue our further are specialty slide in robust, X. to and be

books order remain Inventories Europe Chinese quarter healthy. stable. fourth and for the Our remained low historically exports seasonally into are

muted production We a And The modest we levels, to the to replenishment have levels. many in has will raw recent quarter, some customers throughout which fourth see these of support remain the prices specifically quarter. up our for inventory materials we to increases expect ramped costs in expect seasonality, and early shipping as our December, in fourth XXXX. unprecedented elevated and energy in cases risen in result

In price freight surcharges which mitigate are preserve closely normal fourth monitor and short of and These the the inflationary continue term, and impact rates, addition are will energy quarter we the within duration. surcharges margins. increase, to our implementing to quarter to determine our we

favorable expect expanding fundamentals TiOX therefore, in further committed remain price increase We to anticipate we continue XXXX our margins. and, to as

as of part work will approach. customer-tailored our continue We with closely customers to

our healthy see demand products pigments functional to from Performance Additives continue for color Avitas and We segment. our

additives and Improvement as and continues to Business normal seen Program. its expect we The have see for Additives softer delivering see Performance and products, our on of to cash fourth in for generative timber timber treatment to demand XXXX functional seasonal the the portion be We quarter expect treatment demand normalized segment color. demand

We additional improvement. continue for EBITDA see to long-term opportunities

Our XXXX benefits to improvement the million of on the continues business remain of deliver program by to £XX full XXXX. track end

of program costs expanded we remain million So far, $XX controlling delivered savings and more on as than margins. our this focused has our

than valuation recently in Venator. cash As mentioned, expect and important and valuation largest $XX for a Kurt savings with of annual was future million outcome compared completed, This our XXXX. an and we plan more milestone pension

strategy continued now our customer-tailored work our for on for working facility to continue capital profile. as your cash our to I improving would optimization pigments approach focus exit reiterate would experts of like our interest thank our to our flow TiOX and open to profile control in our flow improve deliver management cost on Venator. improvement Pori the on We in We I like and call to cash we from as additives. towards questions. deliver and initiatives, you and

Operator

you. Thank

Instructions] Please [Operator question McNulty of now ahead. begin question-and-answer Capital with will go comes the line We BMO Joe Markets. first the session. The from

Joe McNulty

Yeah. Thanks my for taking question.

are of guess in this have percent raw you of on? and at through would you would those kind say cost around side, unusual exposure especially much you're where are spike, you're that So, say energy energy? when European variable of I look the exposed locked you what of in kind And protected it you on the materials how

Simon Turner

on Joe, your thank pick morning, Yeah, for good that, up question. and I'll and you

storage out, Europe. facilities of seen point they forth. us in with a are we've this bit in where There's a course, costs, in limited of particularly been hotspot UK you the so Northern and people increase most As rapid for as energy

Germany, we've So and seen more. UK

I rates at say majority quite of to throwing of and hedged smaller increase even imagine. think costs characterize impact can the that have answer energy And do in portion has we you But when a in. the you look of market. are your floats the question locked our exact without the that an way to as the percentages, portion

exposure, asset say say. TiOX, mainly global lines: of Asia In on paint the sort particularly I'd energy, largely I drift point picture following Additives, feedstock is picture in So pinch mainly some ongoing of the expected, which been in Performance like I the up Europe, have Northern would and different. in somewhat along costs, raws sort some

pattern We send took escalation bit the our of about initiatives in really have in let's significant ourselves seen the remarks, material quarter. terms. Performance three and of sort we exposure across and earlier here we fourth rates very out quite some the on the Additives on out script of in absolute very we've impact the There of of earlier lower energy freight freight hit was we've And Asia focused of increases, in of China range we as quarter a EBITDA implemented to third quarter. increases. in TiOX. the initiated have the energy of in in in surcharges into body And prepared of quarters the the quarter continues specifically top But way differentiated for freight and is price third our energy which basically and and US. talked a And remind call third because we the targeted escalation where a regular the a the

Joe McNulty

kind inventories. on to of I inventories color customer little the for think spoke more And level? levels? be how to where back of that? as replenish terms bit kind helpful give you to or get a about you are take should be more And of then at - How kind we to guess, yourself, That's but us in long reasonable some to both color your thinking can you it. it. what us it also you comfortable think the speak may of it need I to Got own would maybe can

Simon Turner

because I'm Yes. were We that take have presuming that not the sequentially. maintenance we for were I'll lingering quarter John. down XQ TiOX, drifted up both segment, abate. I'll TiOX. to July. effect have the In it We would very TiOX low your in refers question slightly by very, we on take maintenance. into it and entered to volume the At them sequentially. been

going the as the year there'll be running, We very of we're going And as a will So in at our customers replenishment. healthy customers going year curtailed that to going it's little we may entered we bit to question we they're Performance plants volumes remain demand own XQ in really, frankly, see earlier, a we're that But the into Christmas low quite bit quarter. levels, In sort very the think pretty be fourth slight The think of XXXX. be don't in our the have demand. this Additives, TiOX, going XQ carry inventories fourth pre-COVID said inventory degree will to close we though in either. of There not seasonal, in than fourth paused. downtick to in will it customers the to see quarter, And to their for as operations those Europe. back with what because with lighter We more already we we of - healthy inventories, it's levels. fourth the be to seasonal quarter, is to expect lot but break quarter. a But a our possibility a foreseeable, ordering low on and but we our there'll not a get XX% on or and be modest hands typically think improve our is tight. around even the much see

the in We fourth see in further expect to strong the saw demand third. as quarter we

the a going into timber. our that the pro to chance, we will quarter, But somewhat But a on rata improve bit snug the the fourth there's next in inventory better expect to year. of still TiOX. basis We we be said, normalization get going think, pretty

Joe McNulty

much very Thanks it. Got for color. the

Simon Turner

you, Joe. Thank

Operator

comes question with Vincent next of from Adige the Stanley. line The Morgan

Steven Haynes

question. Hey, Vincent. my on for this Steve is Haynes taking for Thanks

to your TiOX. surcharges of follow surcharges. guess, up underlying could some color wanted provide if of bit the little size relative, Just of in price a on I you on to the And maybe the increases

Simon Turner

Europe. and fourth of share year Yes. this enterprise and quarter have high of willing we the got in We're said, Look, first expanding TiOX what parts margins at in expect pretty price of as seen and dominant like in frankly, well. increases in Northern in the TiOX. And TiOX, capture. the energy remains Europe, and price. question, has sequential it. in the That pattern to a fourth I'd method you earlier high capacity show. quarter. dimension in that We've to as third sort that been quarter the about the This seen expect of significant our not quarter Steve, XXXX we're numbers Joe's the that rates we've of the know, continue in I is some of announcements pockets Europe in time, can UK you continue of to say That sort to surcharges this to and as And other think you can into successful

place, So very and regular negotiated surcharges on have exported Europe get we carefully, products those had come we those basically top additional those look in put long-haul And in made we've of to some regions, cases, increases. say. into in particularly the will should that price and

increase TiOX surcharges the major core. think sort the think the regular I cost surcharges, the should price of So TiOX in you about minor and is price to as

the about think that's I think should that. way you

in in is different. them somewhat freight we the energy across-the-board additives, situation saw as nature in with short healthy through badly. expect really some Additives term get pretty we In hurt put taken some We Europe. we've the pretty And us be to measures strong place. surcharges

were also of are those review. pretty probably regular they come mechanisms You But much but from - I characterize major so say customers, would surcharge-type seen competitors if under the themselves the surcharges keep our they cord, in we out it's additives, parts But top and price And to additional those that those will increments. they healthy industry like. on and not have minor increases. other probably there I

Steven Haynes

That's helpful. you. Thank Okay.

Operator

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

Josh Spector

perhaps pricing the the I raw own sequential Thanks And our trying all? guys. if can into the quarter, in on burden fourth at dimensionalize on Hi, if able path face just assumptions this understand lag Yeah. where now, side at we follow Are for things. that that? some question. and guess, that stand to taking things of I guess just kind make quarter you're then look there. to to you to just of one to there's offset going you

Simon Turner

not no pretty flows to we're give numbers fourth Look, through going going to question course, be absolute it. there. it's significant But as the of it Yes. There's quarter. about

quarter. combination plus preserve quite that the we the coming of wave margin there's in volume into it expect and will to fourth our price through We quarter challenging that a which our plus quarter initiatives power get as third it seasonal surcharges make obviously first price we increases of of speaks downtick, sort of as the further to lot because

So and European Energy, Additives, significant. the as of said, from it's is bulk in coming And in it's we Northern pretty it Performance the TiOX, freight.

I can positive. expansion bit the more we pathway quarter a think think within of inventory prospects fourth see margin the the we can surcharges build I the of increases, Additives, pretty of Performance because in nature and Now a because little the remained

slightly TiOX picture. the So different to it's somewhat

Josh Spector

close you in going to XQ Or I ability to opinion by at gap take mean, remain guess, than quarter? longer capture the first that your point? is price this comments do continue guess, to positive. the helpful. on And That's margins I it your Okay. pretty I with

Simon Turner

Josh. the you understand is you're XQ I XQ? XXXX question, repeat comparing margin the likely and outcomes on Sorry, could for

Josh Spector

pretty mean, pricing. conviction get I Yeah. sequential seen on to you've continue to mid-single-digit high ability

think, for mentioned do that levels? And you I'll at you this improvement see enough kind compound with of guess recover quarter. as well all point moving Just to is shaking where pieces? to specialty you trying these that to XQ back out this I margins

Simon Turner

Yeah.

would think levels back will will sort third in is somewhat first to the to the a high. basically I quarter. we And in power be margins we And talking already recover able I quarter course, in question, in those but fourth quarter collapse of that your say to fourth quite in just TiOX, quarter additives. recognize energy about not we're of in recover the

So your yes, I think expect do yes, question answer is to we be. the to

Kurt Ogden

And Josh, would we the I'd through of we certainly as just improvement even track margin to add relative expect quarter and XXXX, progress to levels. to that through course the see that, XXXX, third

that So still we we still are TiOX we recovering, cycle think the is early the and innings. think in

the so space. see TiOX profitability And to would improvement, expect we within specifically continued

Josh Spector

Okay, guys. got it. Thanks,

Operator

The the Jefferies. next line question ahead. comes Please of Rodriguez with go from Edlain

Edlain Rodriguez

good you. Kurt, guys. was this I question Thank morning, going is to a ask.

pricing terms able be believe that mostly the the for push do tight been push will is TiOX, market enough to industry of next year? like now, cost has In fundamental you pricing to

Simon Turner

work there's does of demand. we to in inventories. course, more improve like mouth some push really in absorb living and willing not seen supply-demand-driven up feel so situation. freight really course, cost that. our We, strong hard and I'm energy then as Venator, have Yes. that headwinds I'd blown This half, been a sure course, lately, margins. of And second a been aren't situation. agree of the have of We've some handsome We these to

been I related luckily, more to yes, it's think cost So push.

demand, that of cycle. of look healthy. levels. the in as China. at think sort innings look what We in spec We got saying. we remain capacity we're Kurt inventory our we early We our and what's the improvement are going on look in customers said, look any think haven't at at in fundamentals, network, very We the I further at the

Edlain Rodriguez

Okay.

the next what year? produce look you selling to compared more we this everything next you one. at production if year saw even And for Another for ramp quick up your are year is can year, this you demand capabilities one, now? production than if constructive Like you

Simon Turner

an will sit quarter, situation will we come because Yes, we - within remains production get rest case uplift the the next as have rates, production and here we year year. third that of today the pre-COVID back and the in to

we at imagine were early can those in not you rates. of So the part XXXX when

appropriate uplift XXXX. as So of of pedal we type of of we in this amount to annualize have approach course, that the sort percentage metal

Edlain Rodriguez

Okay. Thank you.

Simon Turner

Thank you.

Kurt Ogden

Thanks, Edlain.

Operator

of line Bank. The David Deutsche ahead. Please next question comes from with go the Begleiter

David Begleiter

morning. to Good just Performance you. $XX was in costs? sequentially decline Additives, higher much freight million EBITDA Thank how at of due Simon, the

Simon Turner

think I got I the question.

sequential a about David? loss, talking You're EBITDA

David Begleiter

due Correct. $XX down In Performance of costs? freight Additives, higher much How EBITDA was to that sequentially. was million

Kurt Ogden

half. Over

David Begleiter

sequentially? the that Got surcharges it. can place, given in be in And you're putting EBITDA segment up

Simon Turner

strong We'd I expect, on said and quarter. the hard it little a out to By of we've initiatives strong able can. initiatives be there production, inventory. bit now, within earlier, build price Yes, fourth as run got to surcharge

expect the in see have our to don't in pretty but expand quarters, years we disappointing fourth seen And been margin we expect the years some where we've XXXX. to So - we three that expect quarter. last in fourth there

a rebound expect to We pretty yet. see decent

David Begleiter

I be year, know XXXX you it's think? flow, Great. cash can Kurt, this do positive but looking free next early, at And

Kurt Ogden

we're what certainly David. for, going that's Well,

largely on think predicated improvement. with associated be happens it the will what I TiOX the that with profitability

think important everything pension largest So, we've can. we as is We that. our care we're indicated, step pension plan for the towards doing taken valuation an having that of

on are hyper-focused all that. we And so

David Begleiter

much. Thank Great. you very

Operator

The Please of with next Bank America. the Matthew question ahead. comes line of from DeYoe go

Matthew DeYoe

have there represents repercussions year the the this what outage earlier little availability planned this or kind market of bit suppliers? far you are of from but seeing from a inflation, outages been of maybe a minority ore and from the high-grade any as buy, market know cost your as upcoming I Thanks.

Simon Turner

past challenges probably number We've years sort time. FM-type to and the the previous Yeah. here decade. We've with. been a more pattern think some has couple there's had grade high supply similar contend for of Look, of been these of made the interruptions on that I and point

We through those. navigated successfully have

in a got of South low in a supply sense we there. out that We exposure Bay in don't are position lower lot Richards a the buy Africa. We've

some exposure, have course. You We've through navigated that. of

continue We and so with it. have about ongoing we got the vendors need forth. But discussions material we've to costs

had. supplied. So we in the It's line have we've been been with expectations price

moves on a we'd high-grade a Of next as to the better be that probably negotiations question vendors. and some position bit these our to in of on, course, that call come give color we further with through more

Matthew DeYoe

your And Okay. know from European Is the what then costs competition you that out freight last term, sorted premium the guess, Thank near you just cost, And change inbound in are to a and price seeing product get was if confidence, you. push local and to we coming pigment I at from give still China? logistics move given decent benchmarks. I lower? case? we that ability but one, the does that does in logistics heard,

Simon Turner

we But sell course, managed that producers they'll Yes. if own and escalation There's freight will Europe, challenges better feel significantly dynamic with challenges that, our I for to question. they've got will the have China may got Look, the within to times continue cost make expect several of territory, their get to that that confident bit our that a and seeing reduce the years. got structures, volumes still way but that back, in to would from of there's don't little this it of they the off, into now. certainly territory, margins. We've were case. of for and get we into ability be higher and lower We've cost the a we're handle dynamic, in of our selling and easier Chinese local be right said even base to believe year, It's of be have I track we've to no course. significant managing a we sort a that number a export with softened but record mean, China that

think that we're I well So placed.

we've in two in years. occasions. years Chinese is many multiple The thing patent three Asian we to The markets like leading broader look and other change over actually price past on seen producers I'd these if as add pushing to being

become what to talks the can positive. And the continue. that to producers that And continue Chinese quite earnings. in to have fundamentals so, again, we And I that should accustomed to this see really think see do expect industry, we sort of to their us

Operator

you coming from next Capital done questions? We'll to question Markets. move with of the Viswanathan Arun RBC Please with Are line your the proceed.

Arun Viswanathan

question. a guess for question around you taking in. the that you my Thanks different I It's is, Great. end guess, markets, first I participate some for could just little go of you some specific has than of production. lack hearing is peers. case the for slightly not we're Obviously, coatings, TiOX. what in other of that's of materials the know availability resulted lower I

end your packaging can just on different coatings maybe some in So you and your of thoughts give markets us and and laminates whatever else.

Simon Turner

lens in coatings do all we'll on strong increasing industrial Sure. I'm add a we mean demand architectural see that. demand of continuing applications. in and the of regional fourth And for regions I happy bit plastics sort or coatings, maybe do that. to a quarter, underlying

the personal Inc.'s across board, in very automotive. So we really do and see care, good, textiles, recovery continued inks packaging

up they've though chain to say from headache of but get biggest lining challenges a our it's And there. with continue now. that's customers. a even to because supply the very have our I the planets all the hear seeing you business, time TiOX our picture that positive at what seeing and across rare So like we're we range supplying that, same right generally challenged perspective from customers, been our that of their customers, we're on isn't closely sort We're working items. And a chain of unusually TiOX supply

hearing the through chain. that's and demand inventories from to profile with light our what expect We this we're customers fairly continue,

because saw business. additives, performance of the In thus Timber terms to it's see little we far earliest our a in softening year the we in different have bit yet Treatment

somewhat Now has of the been dark one Additives if we spot business. the darker across sort spots quarter, Venator the of do fourth in the Performance in that normalizes whole the business, think across of that but our not

construction pigments in strong. positive. good Additives, of demand markets Performance for terms color paints there, And our very seen TiOX, similar automotive good. and recovery seen we've In in to That's very franchises, we've and coatings been

So us. just to the most textiles in spot strong soft it's recovery in and very strong for Timber very Treatment places, being a

Arun Viswanathan

Thanks. a strategy changes I We've of Great. a consolidation. could, to significant follow-up. through pretty industry if maybe period and in And strategy has commercial as move towards The a more seen of pricing gone move? up Do potentially that's you here think through early contracting price positive gone appreciation early cycles. seen we've up as strategy. a long-term in less an than well past cycle been with You've

go there's to you we a this So Or are do and your think old possibility contracting again, more think do the model? model? back preferring customers that you long-term that more

Simon Turner

Well, having in over TiOX XX for been years. well

never things see like comments. things emphasize Venator going et I've trough a has cetera. think We think your these change, sort point, industry to been XXXX, or But here But that any types they're disastrous in others are and Veneto my must practices, sort change. will returns Now to been and to And since comments quite I that it. related see I has saw the significant there situations change. XXXX different way But I XXXX. pretty relate out peak, change the to XXXX not and there change. behaviors of of ruled said, a of significant

nuanced We various parts of between energy conflict to more have XXXX, We on with in was chain. there expended arrangement our because think substitutions and sort the of negative of back devise a the value lot working elected customers. and a bespoke it's

future getting. approach the And they're is some what was complaint in the believe more we will the we that time back with than come rather XXXX. And more overall a and ourselves of You in and a certainly better know large because while companies big Look, capture as increases, short-term uncertainty. about passing paint margins. They from can confident been like our least price vis-a-vis our us. their what and managing through and consistent whether planning behaviors that having spend better at any now We've feel time quite customers, getting it's investing through increases they them like. never price they're they can I longer-term and they the supply an cycle, see for are approach, it tell think regularly

a definitely of accept we're play us. several is we've these it's still innings we I'd very And the thing we're build we the as But some as captures for to good early But I So of diminished strength. that past in the on at right long-term quarters, type that announcements and think the quarters, feel you more if encouraged seen out. look path. cyclicality

Arun Viswanathan

you. Thank

Operator

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

Hassan Ahmed

Kurt. Simon morning, Good and

Simon Turner

Hey, morning, good Ahmed.

Kurt Ogden

morning. Good

Hassan Ahmed

be cuts. cost going prices, in And a China, rationalization in natural again, in they QX strange a particular, backdrop the Question this gold doing chlorine what all across mean, of was was it doing with quarter. here gas We were on that to but as what globe, around the I doing, obviously, U.S. there was the is Look, also doing. well. capacity saw

on high-grade So have declining. side, is one which that you ore, of availability

the gas situation. have You natural

shifts production, in So there you there have producers wondering, and in more they for market sit been as versus share? curve? major XXXX? will TiOX capture And maybe production I'm to sulfate-based be the sulfate-based continue opportunities will cost just chlorine-based there And about TiOX think

Simon Turner

our cost significant question, a of capacity, I sulfate apply question that deal Hassan, intimates. having course, to the through it complex possibly all think comes the others. of significant and some other have and European on backwards and profile. as from escalation there's been producers when high-grade parts plus a gone year sulfate gone we've Chinese had we've with It's doubt mean with something raw and material more curve comments able perspective. larger and ilmenite from there's have about better no than energy number Yeah. producers US ilmenite plant, And to that and the their moving energy energy hold in the capacity Venator of and broad has probably a it standpoint, to help But been doesn't curve. I your to generally challenges so. that freight the

we having I an prices, grade advantage we've sort raw that higher there that profiles. think competitive the will sulfate I that will we resist is feedstock ilmenite of year We to next think with and relative course, continue those. I'd is that accept of opportunities suspect and I in next agitate opportunity gradually. that think of of conversations product, market on early issues to of material will feedstock in acid that's advantage, course, for So the I seen sort think of the of and I curve and supplies in our and sort biggest that makes And see quite see we're think of energy think vigorous relate that enough but aberration. continuation But I if more And some be return gone us year. of and some competitive. I and a those mean, people. terms see we XXXX too. of these probably the dynamic sort the cost chloride as we high year, opportunities the that, continue block the believe sulfate reduce relatively will that we But in part was more to

Hassan Ahmed

the situation the you have on going share of that and I Simon. I shifts. mean, surprised particular, flows based about bit market talking was you're electricity shifts helpful, if any stable, you the relative Very have guys I share Chinese you more freight And sort being the with market a in mean, on. primarily a correctly, share in and supply particularly exports market logistics where Europe gained question to around heard situation, of Chinese sort I obviously reliability was seen like.

Simon Turner

question. Yeah, I think it's a great

related My Europe, I stability think to presence. to Asia. mainly not have and have Chinese to a broader were the elected earlier certain comments about US producers

us have or in have keep competitiveness. to gone deselected backwards some certain by have think a customers, which share. terms have I presence. come elected of picked indirectly been we And some directly. up They to They of many they've

the could forth. more we agreement in think even at third so have July maintenance sold the I quarter not and have

that with we're to compete of to parts we're more truth tonnes. returns. picked to Asia they market I and more their profitable going a course, they elected certain some think of at differentiated we've the tried head And up be that the specialty export have bit of the they position. directly aren't there. not where less. those you yes, and significant think there's to But because them looking I on But competing So where they tend most retrench these onboarded certainly They've have better necessarily say, into can as keep broader make a challenges,

to So we've Europe not they're that dynamic. going seen But evaporate either. in clearly,

Hassan Ahmed

Thank Very you so helpful, Simon. much.

Simon Turner

Pleasure.

Operator

ahead. of next Citi. go comes The Please from with question the PJ line Juvekar

Eric Petrie

Good It's Kurt. PJ. Simon morning, Eric for Petrie on and

Simon Turner

morning. Good hi. Eric,

Eric Petrie

consultant of $XXX reading up a kind the put predicting pricing industry And in decline? mid-$X,XXX was leading another will increases an per cycle tonne level, ton demand is down but I your not pricing in TiOX and start believe per before to would is price that shallow of what cycle, outlook? point at people do you at to levels what peak last of reformulating

Simon Turner

too overage But either underage words industry to not say to I they're out of Yes. like number than customers. I to mean, positioned read, to talking more look, optimistic. ones in And price consultants to pessimistic are consultants any will suggests think the be price, a sort temper going that we're I I put on their think take I'm to directly there, here. the but or I on trying the we're is a we all better amplify and think, evidence tend because

margin. where sort So fundamentally that will fundamentally located the inflation of we question the because way the and I focus on that see price is in rules to answer it determine And is is. trajectory our contribution

customers our the same. think doing probably are I

at price You're looking initiatives. their

it's So pricing. partly about

profile got this inflationary price look the we greater run mean, And I see at projections, at also, numbers, likely still case on our to 'XX significant you could I continue sort those up got we around year the and where we at back in a depend these and on put it to it partly the this least say look to numbers, But you you of than types to that just next we if to $X,XXX that if movements look at mark that. material we're we've ways too. if run. continue of year, were will think see some trajectories right of fact pricing. we to environment a You're want make But of what we price be raw could that still

Eric Petrie

question maybe year-over-year. the on raw with split $XX of Okay. a million related. maybe What's was sounds X freight Helpful. for remainder increase the Kurt of million And material that basket? and It that between like the in then for COGS slide $XX energy

Kurt Ogden

Yeah.

I all think that freight the in.

what based that said got has I a on already. think you've Simon pretty feel good for

headwind. looking so $XX million And you're specifically year-on-year at the

Eric Petrie

Yes.

Kurt Ogden

outside you're is of for specifically Yeah. what looking your Eric, question? freight,

Eric Petrie

versus Yeah. that larger component? Outside energy of the baskets or freight, rate

Kurt Ogden

energy in now. are seeing increase our It's is energy. most specifically we where And within Europe the right costs direct

our feedstock energy, those biggest is managing up, challenge are of our although raw So really combination materials costs the and three factors, here freight.

Eric Petrie

Thank you.

Operator

line the with question of ahead. next The Roger comes Bank Spitz Please from of America. go

Roger Spitz

much. very you Thank

talked for capital bit maybe was might you QX? financial number in a kind of You've expect what but looking it, release working I a little about more of of

Kurt Ogden

Roger, that. take I'll this is Kurt.

of I to working a the see going actually may capital think be And it's quarter. in use we bit that fact, fourth modest. here in

robust to for would campaign prepared XXXX. inventories so a indicated, our like As we we're actually build that commercial Simon has in

of if be so is to it surprised kind close don't And breakeven.

it's breaks, for to And to whether think are side fourth modest that I looking not think the a we of it's either on going use, position or strong or quarter so But through a that. I want how source and XXXX. be really

And so investment. fourth if that little an early capital means the would worthwhile bit a invest are demand so we of working for to increased meet need in XXXX, able we product to then that that a in be quarter

Roger Spitz

least can at kind CapEx? it. for Got XXXX steer any of give you And

Kurt Ogden

we $XX modestly that today. from to I think have that Well, is the it million up likely be

early days. I think still that's

We the process. budgeting annual have initial begun of our steps

taking are got there spend discretionary we're that what is. And some out opportunities so as some to trying you that now, figure worthwhile. be that and place we've to are think do imagine, right wrestling arm can We going Roger,

XXXX. from say to I modestly million would this spend expect would we up point, at be So, the that it in $XX

Roger Spitz

Thank you much. Great. very

Kurt Ogden

Roger. you, Thank

Operator

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

Simon Turner

as follow-ups, Venator. interest Well, over meeting Please to your through fourth out morning for weeks we free this to further Investor We forward of for and us and or coming to the in continued Relations a to look forward look I'd thank get myself the joining we participants people feel Kurt. Kate, or just reach quarter. to like bunch all into

stay very So, Thanks everyone. and safe. thank you much,

Operator

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

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