Venator Materials PLC Ordinary Shares

Good morning and welcome to the Venetian Second Quarter 2021 Earnings Call. All participants will be in 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 telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would like to turn the conference over to Kate Robertson. Please go ahead.

Thank you, Francesca, and good morning, everyone. I am Kate Robertson, Investor Relations for Venator Materials. Welcome to Venator's second quarter 2021 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 second quarter 2021 by a press release and posted the release and accompanying slides to our website at www.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 Form 10K for the year ended December 31st, 2020, our Form 10Q for the first quarter 2021, our Form 6K for the second quarter 2021, and our other 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.benatarco.com. It is now my pleasure to turn the call over to Simon.

Thanks, Kate, and good morning, everyone. Welcome to our second quarter 2021 earnings call. Beginning on slide three, the economic environment has improved significantly since this time last year, which was significantly impacted by the COVID-19 pandemic. We saw a strong demand environment across our business in the second quarter of 2021. Venator delivered 43 million of adjusted EBITDA in the second quarter compared to 49 million in the first quarter of 2021 and 37 million in the second quarter of 2020. Turning to slide four and our titanium dioxide segment. EBITDA from our titanium dioxide segment was 36 million in the second quarter of 2021 compared to 35 million in the prior year quarter and 40 million in the first quarter of 2021. TIO2 fundamentals are very encouraging. Underlying demand continues to be strong across all regions and sectors with limited supply of product in the marketplace and stabilization of Chinese exports. Rising raw material, energy, and shipping costs, along with positive industry fundamentals, have created a favorable environment for quarterly selling price increases. Recovery for our specialty TO2 products, mainly in automotive and textile sectors, is underway, albeit at a slower pace than our less differentiated products. We entered the second quarter with historically low inventory levels and sales volumes constrained by production. During the quarter, as part of a routine inspection, we became aware of the need to carry out some essential repairs on our Greetham UK manufacturing facility. This maintenance necessitated a partial closure of the facility for several weeks. The maintenance was completed mid-July, and the facility is now fully operational. However, lost production due to this outage impacted our sales in the second and first part of the third quarter. We also performed meaningful planned maintenance at our joint venture facility in Louisiana. Sales volumes declined 3% in the second quarter compared to the first quarter, and improved 13% year-on-year due to pandemic recovery. Second quarter total TIO2 average selling prices increased 4% sequentially in local currency. Average selling prices for our functional TIO2 products increased 5% sequentially with some adverse mix in our specialty product portfolio. We are pleased with the price capture thus far, and these price increases are enabling us to offset raw material inflation and better position the business for the second half of the year. Turning to the outlook for TO2, we expect to see robust demand for our functional TO2 products across all regions and sectors, and continued high demand for architectural coatings and plastics with increasing demand for industrial coating applications. We expect sales volume in the third quarter to be seasonally lower, which includes maintenance that extended into July. Energy and shipping costs are rising, and the feedstock market remains tight. Therefore, we expect to see some inflationary pressure on TO2 costs for the remainder of the year. We recently announced price increase in all regions for the third quarter to manage our margins as we onboard raw material, energy, and shipping costs inflation. Turning to slide five and performance additives. During the second quarter, we successfully completed the sale of the water treatment business to Feralco for approximately 6 million. All performance additives comparisons we make on this call exclude the water treatment business. Our performance additive segment continues to deliver strong results. In the second quarter, adjusted EBITDA totaled 18 million, which is a year-on-year improvement of 5 million, and a $2 million improvement compared to the same period in 2019. Strong demand continues for our functional additives products into automotive, electronics, and coatings applications. Color pigments demand was strong into coatings and construction end markets in all regions, and timber treatment demand has started to normalize following high DIY demand. We expect these favorable demand trends for functional additives and color pigments to continue in the near term with some seasonality. We expect a softer demand environment for our timber treatment products. Compared to the first quarter of 2021, sales volumes increased 9% and average selling prices increased 2%, which was partially offset by increased energy, raw materials, shipping, and logistics costs. In the near term, we expect to see these costs remaining high and expect to recover margin through increased selling prices. Turning to slide six and our cost programs. Our 2020 business improvement program is delivering benefits in line with our expectations. In the second quarter of 2021, we delivered incremental savings of $8 million from our 2020 Business Improvement Program and $7 million of temporary COVID savings from the second quarter of 2020 reversed, giving a net $1 million benefit in the quarter. In the third quarter, the reversal of one-time COVID-19 savings will be higher than the third quarter benefits from our 2020 Business Improvement Program. Estimated future cash restructuring costs remain within the range of 40 to 45 million. I will now pass the call over to Kurt for him to comment on our financials.