Tronox Holdings plc

Good morning, ladies and gentlemen, and welcome to the Tronox Holdings Second Quarter 2023 Earnings Call and Webcast. At this time, all lines are in a lesson-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. I would now like to turn the conference over to Jennifer Gunther, Chief Sustainability Officer and Head of Investor Relations and Financial Planning. Please go ahead.

Thank you, and welcome to our second quarter 2023 conference call and webcast. Turning to slide two, on our call today are John Romano and Jean-Francois Turgeon, Co-Chief Executive Officers, and John Srivasal, Senior Vice President, Chief Financial Officer. We will be using slides as we move through today's call. You can access the presentation on our website at investor.tronox.com. Moving to slide three. A friendly reminder that comments made on this call and the information provided in our presentation and on our website includes 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 filings. This information represents our best judgment based on what we know today. 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 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. Additionally, please note that all financial comparisons made during the call are on a year-over-year basis unless otherwise noted. Moving to slide four, it is now my pleasure to turn the call over to John Romano. John?

Thanks, Jennifer, and good morning, everyone. For those joining today who may be a bit newer to Tronox, we're the world's largest vertically integrated TiO2 producer, with sales in 2022 at $3.5 billion that were fairly evenly distributed across the Americas, Europe, Middle East, and Africa, and Asia Pacific. Our strategy is focusing on positioning Tronox as the advantage global TiO2 leader to the production of safe, quality, low-cost, sustainable tons. More information on Tronox is available on the website. We've added a new video to the homepage that does a great job of outlining the value that we bring to our customers through our vertically integrated sustainable mining and upgrading solutions. Now let's turn to slide five for a review of a few key messages from the quarter. Our solid second quarter performance was a result of continued market recovery from the first quarter and our ongoing discipline around costs. Turnox delivered adjusted EBITDA at the high end of our previously guided range and adjusted EBITDA margins above our expectations. Additionally, as a result of the team's proactive approach to aligning the business with the current market conditions, we generated $81 million of free cash flow, above previously anticipated levels. Tronox results continue to demonstrate the strength and advantage of our vertical integration. These results would not be possible without the hard work and dedication of our global employees, and we thank the team for their commitment to Tronox. As an update on our operations at our Atlas mine in Australia, The primary roads are open, and we're currently utilizing them for hauling, which is allowing us to move more material and reduce inventory levels at the mine. Additionally, we published our 2022 sustainability report in the second quarter, outlining the targets that we've set for our business to become an increasingly sustainable operator in our ever-evolving world. Turning to slide six, I'll briefly review the sustainability-related targets we've set for Tronox. We are very focused on our sustainability efforts at Tronox as this area is becoming an increasingly significant focal point and part of our conversations externally with investors, customers, and other key stakeholders. Tronox has reinforced our previously disclosed path to carbon neutrality by 2050. Additionally, we committed for the first time to targets to reduce Scope 3 emissions intensity by 9% by 2025 and 16% by 2030 against the 2021 baseline. We recommitted to our target of zero waste to external dedicated landfills by 2050, and we continue to prioritize safety and have also enhanced efforts internally to improve diversity within our organization. We are excited about the continued progress we make each year to become more fully aligned with the expectations of our key stakeholders. Please review our sustainability report, which is available on our website for more information. Now let's move to slide seven for a review of our second quarter financial performance in more detail. Revenue of $794 million improved 12% sequentially due to the improved sales volumes across all products. This represented a decline of 16% relative to the prior year due to continued market softness. Income from operations was $84 million in the quarter. We reported a net loss in the quarter of $269 million, which included a $293 million evaluation allowance in Australia relating to our deferred tax assets. Our normalized Q2 effective tax rate was 20%, adjusting for the evaluation allowance and non-benefiting items. And our adjusted diluted earnings per share was 16 cents. Adjusted EBITDA on the quarter was $168 million, and our adjusted EBITDA margin was 21.2%. Free cash flow on the quarter was $81 million. Now let's turn to slide eight for a review of our commercial performance. TIO2 revenues increased 9% versus the first quarter, driven by 9% increases in sales volume. TIO2 pricing was 1% lower compared to the first quarter, as expected, which was offset by a 1% tailwind from exchange rates. TIO2 pricing increased 1% compared to the year-ago quarter. We continue to deliver against our commercial strategy and realize relatively stable pricing trends despite volumes remaining well below seasonal normal levels. Zircon volumes increased 33% compared to the first quarter, representing a 21% decline year over year. Zircon pricing was lower by 1% compared to the prior quarter, which represented an increase of 7% year on year. Revenue from other products was $88 million, an increase of 35% to the prior year, largely driven by improved pig iron volumes and higher sales of rare earths, which increased 87% year over year. As a result of our unique portfolio, we are continuing to evaluate a range of options to leverage our expertise to further unlock the value of the rare earths generated from our operations. Our differentiated integrated position sets us apart as a global leader in sustainable mining and upgrading solutions. Looking ahead, we expect pigment volumes to be relatively flat to the second quarter, as we expected our demand to remain higher than the trough levels seen in Q4 of 2022. While we previously anticipated volumes might continue to increase into the third quarter, the weak market conditions in China as well as broader Asia, Europe, and the Middle East have brought our expectations down. Our commercial strategy and differentiated offering have enabled more stable pricing trends than during previous years of demand decline. However, we do anticipate that the softer demand conditions will result in slightly lower TO2 pricing in the third quarter compared to the second quarter. On zircon, we do expect a more challenging second half of 2023 than we previously anticipated. At this time, based on our current market outlook, we expect zircon volumes for the third quarter to decline by 15 to 20,000 tons from the second quarter 23 levels. Zircon is a critical mineral and a key part of our portfolio. Approximately half of the total zircon market is consumed in China, which is heavily influenced by housing market completions. Global supply of demand for Zircon will come back into balance when China recovers. As quickly as the decline has impacted us on the downside, we will see the benefit of the upside when the market improves. We strongly believe in the strategy of being vertically integrated and the value that our Zircon provides to our customers. I'll now turn the call over to JF for a review of our operational performance. JF.