Tronox Holdings plc

Good day and welcome to the Tronox Holdings plc Q2 2020 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist requesting the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Jennifer Guenther, Vice President of Investor Relations. Please go ahead.

Thank you and welcome to our second quarter 2020 conference call and webcast. On our call today are Jeff Quinn, Chairman and Chief Executive Officer, Jean-Francois Trejean, Chief Operating Officer, John Romano, Chief Commercial and Strategy Officer, and Tim Carlson, Chief Financial Officer. We will be using slides as we move through today's call. Those of you listening by internet broadcast through our website should already have them. For those listening by telephone, if you haven't done so already, you can access them on our website at investor.tronox.com. Moving to slide two. A reminder that comments made on this call and the information provided in our presentation and on our website include certain statements that are forward-looking and subject to various risks and uncertainties. including but not limited to the specific factors summarized in our SEC filing. This information represents our best judgment based on today's information. However, actual results may vary based on these risks and uncertainties. The company undertakes no obligation to update or revise any forward-looking statements. During the conference call, we will refer to certain non-US GAAP financial terms that we will use in the management of our business and believe are useful to investors in evaluating the company's performance. Reconciliations to their nearest US GAAP terms are provided in our earnings release and in the appendix of the accompanying presentation. As you saw in our earnings release, we provided our results on both a reported basis and a pro forma basis to assist in our discussion of second quarter 2020 performance compared to the second quarter 2019 performance. Our primary focus on this call will be on the comparison of pro forma results to enhance your understanding of the underlying trends in our business performance and our market. In the appendix of our earnings release and the accompanying presentation are a statement of operations and adjusted EPS and adjusted EBITDA reconciliations, including on a pro forma basis for the second quarter of 2019. Moving to slide three, it's now my pleasure to turn the call over to Jeff Quinn. Jeff?

Thanks, Jennifer. Good morning, everyone, and thank you for joining us today. Tronos delivered solid financial results in the quarter, despite the significant reduction in demand and the other challenges associated with the COVID-19 pandemic. Our results reflect a demand profile consistent with the outlook provided at the time of our first quarter earnings release, all set partially by our crystal transaction synergies, cost reduction initiatives and prudent management of working capital. I will briefly discuss some of the highlights of the quarter before turning it over to the other members of my team for a deeper dive. Revenues in the second quarter declined 30% versus the year-ago quarter and 20% sequentially compared to the first quarter. This decline in revenue was driven by lower sales volumes due to the economic impact of the COVID-19 pandemic in the various world regions. CO2 sales volumes and pricing were consistent with our outlook for quarter two while Zircon volumes and pricing were slightly favorable to our expectations due to shipment timing and favorable product mix. Within the quarter, TO2 volumes reached a low point in May when the full impact of the lockdown was felt before recovering significantly in June, which was the best month of the quarter. We expect that momentum to carry forward into the third quarter. will provide more commentary on the market in a moment. Adjusted EBITDA was 142 million for the quarter and our adjusted EBITDA margin was a very strong 25% attributable to delivery of the synergies from the Crystal transaction and our continued focus on operational excellence. Jean Francois will discuss both of these contributors to our results in a few minutes. But to steal a little bit of his thunder, We achieved total synergies of $107 million year to date, of which $84 million was reflected in EBITDA and $23 million in tax and other synergies. We remain on target for achieving our anticipated synergy targets for the year. Certainly, we are in a very different economic and market situation than what we anticipated at the time the crystal transaction was completed. But the ability to deliver the synergies from the acquisition is making a huge difference in our financial performance. As I have said before, the combined company is much stronger and is weathering the storm much better than either of the predecessor companies would have done on their own. Adjusted EPS of 3 cents was impacted by lower sales volumes as well as an unusually higher effective tax rate for the quarter due to the generation of losses in tax jurisdictions in which we have valuation allowances. Our CFO Tim Carlson will discuss this in further detail in a few minutes. We have over $1.1 billion in available liquidity, which is more than sufficient to sustain our business through any situation. During the quarter, as we previously announced, we signed a definitive agreement to acquire the Tysair TTI business from Aramet for $300 million. This is a highly strategic acquisition, which will further our vertical integration strategy by increasing our titanium feedstock production capacity, thereby enabling us to more fully meet our feedstock requirements internally and better serve our pigment customers with an even lower cost position. The facility will reduce our costs by reducing our reliance on third-party feedstocks and also presents an opportunity for cost and operating synergies. In addition, only TTI will provide technology support for Jizan, increasing the likelihood of success there, even further enhancing our vertical integration and lowering our costs. We are continuing to work through the regulatory approval process and other customary closing conditions associated with the TTI acquisition. Speaking of Jezon, during the quarter, we also entered into an amendment to the technical service agreement related to that facility, as we briefly addressed in our Q1 earnings call. This amendment will allow Tronox to increase technical and managerial resources devoted to the project as the project continues to advance towards startup in the first half of 2021 and sustainable operations in late 2021. The project has experienced some delays due to travel restrictions associated with COVID-19, but we are working with AMIC and Auto Tech to call back some of that time. All in all, it was a very good quarter for Tronox. Solid operating results given a truly unprecedented situation and several significant strategic advancements. I am pleased with our delivery of these results given the challenges the men and women of Tronox overcame in the quarter. As an organization, we have remained relentlessly focused on the health and safety of our employees, managing our ongoing operations, Protecting, preserving, and strengthening our business and laying the foundation for the future. The efforts of my colleagues to proactively implement effective access protocols and other safeguards at all of our worldwide locations have minimized the spread of the virus at our facilities and preserved our ability to operate. As a result, we have continued to meet our customers' needs despite the environment. This focus will not waver as the economic climate improves in the back half of the year. I will now turn the call over to John Romano, our Chief Commercial and Strategy Officer, who will comment on our commercial performance and the trends we are seeing in the global markets. John.