Venator Materials PLC Ordinary Shares

Good day and welcome to the Venator Materials fourth quarter and four-year 2020 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing 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 touchtone phone. And 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 Ms. Kate Robertson. Please go ahead, ma'am.

Thank you, Chuck. And good morning, everyone. I am Kate Robertson, Investor Relations for Venator Materials. Welcome to Venator's fourth quarter 2020 earnings call. Joining us on the call today are Simon Turner, President and CEO, and Kurt Ogden, Executive Vice President and CFO. This morning, we released our earnings for the fourth quarter in full year 2020 via press release. and posted the release and accompanying slides to our website at VenatorCorp.com. During this call, we may make statements about our projections or expectations for the future. All such statements are forward-looking and while they reflect our current expectations, they involve risks and uncertainties and are not guarantees of future performance. You should review our filings with the SEC for more information regarding the factors that could cause Actual results to differ materially from these projections or expectations. We do not plan on publicly updating or revising any forward-looking statements during the quarter. We will also refer to non-GAAP financial measures such as EBITDA, adjusted EBITDA, adjusted net income, free cash flow and net debt. You can find reconciliations to the most directly comparable GAAP financial measures in our earnings release, which has been posted to our website at www.venitorecorp.com. It is now my pleasure to turn the call over to Simon.

Well, thanks, Kate, and good morning, everyone. Welcome to our fourth quarter 2020 earnings call. Let's begin on slide three. 2020 was an unparalleled year with many unique challenges due to the significant impact of the COVID pandemic. and in response we took decisive measures to reduce costs and preserve cash. Our associates rose to the challenges we faced and I'm thankful and proud to work with and represent them. During the year Venator delivered 136 million of adjusted EBITDA and delivered more favorable cash flow than planned. Turning to slide four on our titanium dioxide segment. In the fourth quarter our titanium dioxide sales volume increased 1% compared to the prior quarter declined 2% compared to the prior year period. This represents an improving trend from the third quarter comparison and demonstrates continued recovery from the pandemic. Average TO2 prices were stable year over year and sequentially in all regions and sectors, further demonstrating the benefit of our customer-tailored approach. This is the eighth successive quarter where prices have been stable. Fourth quarter demand for functional TO2 was strong across all sectors. From a regional standpoint, we saw further recovery in the Asia Pacific area and demand in Europe strengthened throughout the quarter, despite the lockdown restrictions imposed. Although demand in North America was strong, our sales volumes were lower than both the third quarter and prior year period due to the lingering impact of the two hurricanes which affected our joint venture facility in Louisiana. Demand for our specialty TO2 products improved in the fourth quarter sequentially, primarily due to a gradual recovery within the textiles and automotive end market applications, which was in line with our expectations. We expect demand for our specialty TO2 products to continue to gradually improve throughout 2021. In the fourth quarter, we generated 25 million of adjusted EBITDA in our titanium dioxide segment, compared to $30 million in the fourth quarter 2019 and $21 million in the prior quarter. The EBITDA decline compared to the prior year period primarily relates to lower fixed cost absorption in the fourth quarter of 2020 and increased feedstock costs, partly offset by benefits from our business improvement programs. I would like to give a short overview as to what we are seeing with regards to China. 2020 has been a strong year for Chinese exports and looking into 2021, we expect exports to return to more normalized levels for a variety of reasons. We have seen monthly price increases for Chinese TO2 since September 2020, which have continued into 2021. These price increases in our view are a result of rising Illmanite costs, increased demand, increasing freight costs out of China, and low inventories across the supply chain. Sales are relatively more attractive in the Asian regions for Chinese producers. Consequently, for the above reasons, we are seeing a pullback in Chinese exports for Europe and America. This reinforces with our customers' mind the benefits of supply reliability consistent with our tailored approach. We feel optimistic given healthy demand in the fourth quarter. In the first quarter, we expect to see volumes improve sequentially following most normal seasonal demand patterns for functional TO2. However, tight inventories could limit our upside. Notably, our joint venture in Louisiana was impacted by the recent southern deep freeze for several days. Brexit also caused some temporary delays of shipments both in and out of the UK. Due to favourable TO2 fundamentals, we are engaged with customers in all regions. in accordance with our customer tailored approach to implement price increases to reclaim lost margin. We expect to see some price capture in the first quarter with further price capture throughout 2021. Looking at our input costs, Illmanite prices are rising and in 2021, Illmanite feedstock costs will be a headwind. We expect to see some relief in pricing from Rutile and SLAG feedstocks. Turning to slide five and performance additives, Revenues in the fourth quarter of 2020 were 16% higher compared to the prior year. This was due to stronger demand, more specifically as it relates to our functional additives business, where we saw a recovery for products used in the automotives and electronics industries. Fourth quarter EBITDA improved by 11 million compared to the prior year period and 10 million compared to the prior quarter. Higher selling prices were the primary reason for the improvement compared to the prior year period, whereas compared to the third quarter we benefited from higher production and fixed cost absorption. In 2020, our performance additives business delivered an additional 8 million of EBITDA compared to 2019. This demonstrates how resilient these businesses have been throughout the pandemic and we are optimistic given the fourth quarter recovery in demand. Our colour pigments and timber treatment business volumes were higher than the prior year period and we did not see the normal seasonal declines due to favorable demand for products from these businesses. As I mentioned earlier, demand for our functional additives benefited from a recovery in automotive and electronic end market applications. Looking forward into 2021, we expect to see a more normal seasonal demand profile in color pigments and timber treatment with increasing demand for functional additives as the automotive industry recovers further. Turning to slide six and our cost programs. We delivered total savings in 2020 of 57 million, 27 million of which related to temporary actions taken to mitigate the effects of the COVID pandemic. $16 million from our new 2020 Business Improvement Program and $14 million from our 2019 Business Improvement Program, which ended the year at full run rate as we expected. All activities encompassed in the 2019 Business Improvement Program have been successfully completed. Our 2020 Business Improvement Program is on track to deliver 55 million of cost reduction by the end of 2022 compared to the 2019 baseline. The timeline of savings in 2021 will be uneven, however, as temporary COVID savings from 2020 roll off and are replaced by new 2020 Business Improvement Savings. This will be the most noticeable in the second and third quarters. As a result of the agreement we reached with representatives of our German employees in December, we now expect future cash restructuring costs to be within the range of 40 to 45 million, which is 5 million lower than previously announced. I will now pass the call over to Kurt to discuss our financials before providing some additional comments. Kurt?