Venator Materials PLC Ordinary Shares

Good morning, and welcome to the Venator second quarter 2022 earnings conference call. All participants will be in a listen-only mode. Should you need any 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 that this event is being recorded today. I would now like to turn the conference over to Kate Robertson, Venator Investor Relations. Please go ahead.

Thanks, Joe, and good morning, everyone. I'm Kate Robertson, Investor Relations for Venator Materials. Welcome to Venator's second quarter 2022 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 of 2022 via press release and posted the release and accompanying slides to our website at venetorp.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. All performance additive comparisons we make on this call exclude the water treatment business, which was sold in May 2021. You should review our annual report on Form 20F for the year ended December 31st, 2021, Form 6K for the quarters ended March 31st, 2022, and June 30th, 2022, 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 in 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 for the most directly comparable GAAP financial measures in our earnings release, which has been posted to our website at www.venatorcorp.com. I would now like to turn the call over to Simon.

Thank you, Kate, and welcome everyone to our second quarter 2022 earnings call. Being on slide three, we've made significant progress strengthening our underlying business through delivery of our business improvement programs and a shift to customer-tailored monthly pricing reviews. Total company-adjusted EBITDA in the second quarter increased to $61 million from $57 million in the first quarter and $43 million in the prior year period. Our team of dedicated associates continue to manage the significant external supply chain center challenges and deliver strong results. Turning to slide four on our titanium dioxide segment. Second quarter 2022 TIO2 segment adjusted EBITDA was 49 million compared to 49 million in the first quarter of 2022 and 36 million in the prior year quarter. Strong demand for all TIO2 sectors continued throughout the second quarter in North America. We saw normalized demand in Europe into plastics and inks end market. Demands for products into coatings end market application was softer in Europe and Asia. As we discussed in our last earnings call, during the second quarter, we partially suspended production of our Scarlino Italy facility by one-third. As a result of the above factors, sales volumes decreased 9% sequentially and 7% compared to the prior year period. We continue to see cost inflation in the second quarter, primarily from feedstocks, energy, and other raw materials, and our monthly customer-tailored price reviews continue to bring flexibility to manage our margins in this volatile cost environment. Our average selling prices increased 7% sequentially and 31% compared to the prior year period in local currency. In the near term, we expect demand to remain strong in North America, remain intact in Europe, and softer in Asia. We plan to continue with our monthly customer-tailored pricing reviews for all our customers. We see market rates for energy, primarily in Europe, remaining elevated and volatile. We also see further pressure from feedstocks and other raw materials. Underlying TiO2 fundamentals remain broadly positive, and we expect this favorable dynamic to continue. I would like to provide a further update on our Scarlino TiO2 facility in Italy. Our Scarlino facility generates gypsum as a byproduct of the manufacturing process. which has been landfilled on site and also transported for use in the reclamation of a nearby former quarry owned and operated by third parties. We continue to work with Italian governmental authorities for the authorization of continued gypsum disposal. While we continue these efforts, we have now suspended two-thirds of the production from this site to preserve our remaining available landfill capacity. We have a pathway and are hopeful that authorizations will be granted Otherwise, we may be compelled to close the site entirely. We continue to explore all options to avoid that outcome, and we will continue to optimize production to ensure we create the most value out of our network. Turning to slide five and our performance additive segment. Our performance additive segment delivered $19 million of adjusted EBITDA in the second quarter of 2022, compared with $20 million in the prior quarter and $18 million in the prior year period. This segment continues to perform well, which has been achieved through organic growth, improved product mix of sales, successful delivery of our business improvement programs, and focus on our customer-tailored approach to mitigate cost pressures. Segment sales volumes decreased 3% sequentially and 16% compared to the prior year period. Volumes were impacted by product availability and softer demand for products into construction. Globally, demand remains strong for our ultramarine blue products, which go primarily into plastics and use applications. During the second quarter, cost inflation persisted, particularly on raw materials, energy, shipping, and logistics, which was offset by our monthly pricing actions to reduce the impact to our margins. Average selling prices increased 10% sequentially and 26% compared to the prior year quarter in local currency. As I mentioned earlier, we expect demand for ultramarine blue products to remain strong globally and third-quarter demand in other end markets to be similar to the second quarter. We continue to see cost inflation, which we expect to recover through our customer-tailored monthly pricing initiatives. I will now pass the call over to Kurt.