Q2 2024 Tronox Holdings PLC Earnings Call

Operator: Good morning, ladies and gentlemen, and welcome to the Tronox Holdings second quarter 2024 earnings call conference. At this time, all lines are in listen-only mode.

Operator: Good morning, ladies and gentlemen, and welcome to the Tronox Holdings 2nd quarter 2024 earnings call conference. At this time, all lines are in listen-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 0 for the operator.

Good morning, ladies and gentlemen, and welcome to the Tronox Holdings second quarter 'twenty 'twenty four earnings call conference at this time all lines are in listen only mode.

Operator: 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. This call is being recorded on Friday, August 2nd, 2024. I would now like to turn the conference over to Jennifer Guenther. Please do so.

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.

Operator: This call is being recorded on Friday, August 2nd, 2024.

This call is being recorded on Friday August the second at 'twenty 'twenty four.

Jennifer Gunther: I would now like to turn the conference over to Jennifer Gunther. Please go ahead. Thank you and welcome to our second quarter 2024 conference call and webcast.

I would now like to turn the conference over to Jennifer Gunther. Please go ahead.

Jennifer Guenther: Thank you and welcome to our second quarter 2024 conference call and webcast. Turning to slide two, on our call today are John Romano, Chief Executive Officer, and John Srivastava, 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.

Jennifer Gunther: Thank you and welcome to our second quarter 2024 conference call and webcast turning to slide two on our call today are John Romano, Chief Executive Officer, and John I'm, Sorry, That's all 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.

Jennifer Gunther: Turning to slide 2 on our call today, our John Romano, Chief Executive Officer, and John Service, All 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.

Mr Doctorow knocked out moving.

Jennifer Guenther: Moving to slide three, a friendly 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 filings. This information represents our best judgment based on what we know today. However, actual results may vary based on these risks and uncertainties.

Jennifer Gunther: Moving to slide 3, a friendly 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 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.

Speaker Change: Moving to slide three.

Speaker Change: A friendly 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 filings.

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.

Jennifer Guenther: The company undertakes no obligation to update or revise any forward-looking statement. 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 U.S. 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. It is now my pleasure to turn the call over to John Romano. John?

Jennifer Gunther: During the conference call, we will refer to certain on U.S. gaps in Ansel terms that we use in the management of our business and believe our useful to investors in evaluating the company's performance. Reconciliation to their nearest U.S. gap 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.

During the conference call, we will refer to certain non U S. GAAP financial terms that we use in the management of our business and believe are useful to investors in evaluating the company's performance.

Speaker Change: Reconciliations to their nearest U S. GAAP terms are provided in our earnings release and in the appendix of the accompanying presentation.

Please note that all financial comparisons made during the call are on a year over year basis, unless otherwise noted. It is now my pleasure to turn the call over to John Romano John.

Jennifer Gunther: It is now my pleasure to turn the call over to John Romano. John?

John Romano: Thanks, Jennifer, and good morning, everyone. We'll begin this morning on slide 5 with some key messages from the quarter. We delivered the second quarter performance within our previously guided ranges. To2 volumes improved sequentially by 8% over a strong Q1 performance, and this represented a 16% increase over the prior year as volumes continued to recover from the low levels realized in 2023. The sequential growth reflects an increase in demand that is consistent with our seasonal trend.

John Romano: Thanks, Jennifer.

John Romano: Good morning, everyone. We'll begin this morning on slide 5 with some messages from the quarter. We delivered the second quarter performance within our previously guided ranges. T.O. two volumes improved sequentially 8% over a strong Q1 performance, and this represented a 16% increase over the prior year as volumes continued to recover from the low levels realized in 2023. This sequential growth reflects an increase in demand that is consistent with our seasonal trends. Zerk on demand was relatively stable compared to the first quarter, which factored into a shipment at the end of the quarter that rolled into Q3.

John Romano: Thanks, Jennifer and good morning, everyone. We'll begin this morning on slide five with some key messages from the quarter we.

Speaker Change: We delivered the second quarter performance within our previously guided ranges T O two volumes improved sequentially, 8% over a strong Q1 performance and this represented a 16% increase over the prior year as volumes continue to recover from the levels realized in 2023. This.

The sequential growth reflects an increase in demand that is consistent with our seasonal trends.

John Romano: Zircon demand was relatively stable compared to the first quarter, which factored in a shipment at the end of the quarter that rolled into Q3. However, pricing for both TIO2 and zircon increased sequentially, but were both partially offset by unfavorable measures. On the operations side, our total pigment plant utilization rate in the second quarter was lower than targeted, driven by short-term challenges relating to ramping up our assets. As a result, we incurred higher costs in the second quarter than anticipated and delivered adjusted EBITDA of $161 million at the lower end of our guided range and margins just under 20%.

Work on demand was relatively stable compared to the first quarter.

Which factored into shipment at the end of the quarter that rolled into Q3.

John Romano: Pricing for both T.O. two in Zerk on increased sequentially, but we're both partially offset by unplayable mix. On the operation side, our total pigment plant utilization rate in the second quarter was lower than targeted, driven by short-term challenges relating to ramping up our assets. As a result, we incurred higher costs in the second quarter than anticipated and delivered adjusted EBITDA of $161 million at the lower end of our guided range and margins just under 20%. Well, this will impact the margins of pigment sold in the third quarter. The operating chain challenged as we experienced during the ramp up in the second quarter are now resolved. Now average pigment plant utilization rate for July was in the 80% range, and we expected to continue for the balance of the year.

Speaker Change: Pricing for both T O two in zircon increased sequentially, but were both partially offset by unfavorable mix on the operation side, our total pigment plant utilization rate in the second quarter was lower than targeted driven by short term challenges relating to ramping up our assets.

Speaker Change: As a result, we incurred higher costs in the second quarter than anticipated and delivered adjusted EBITDA of $161 million at the lower end of our guided range and margins just under 20%.

John Romano: While this will impact the margins of pigments sold in the third quarter, the operating challenges we experienced during the ramp-up in the second quarter are now resolved, and our average pigment plant utilization rate for July was in the 80% range, and we expect this to continue for the balance of the year. We'll discuss these operational dynamics and how they will impact the third quarter cost later in the call. Our free cash flow for the quarter was $84 million, and we expect to continue to generate positive free cash flow for the second half and full year.

Speaker Change: While this will impact the margins of pigment sold in the third quarter. The operating change challenges we experienced during the ramp up in the second quarter. Our work now resolved our average pigment plant utilization rate for July was in the 80% range and we expect this to continue for the balance of the year.

John Romano: We'll discuss these operational dynamics and how will impact the third quarter cost later in the call. Our free cash flow for the quarter was a source of $84 million, and we expect to continue to generate positive free cash flow for the second half and for a year.

Speaker Change: We'll discuss these operational dynamics and how it will impact the third quarter costs later in the call.

Speaker Change: Our free cash flow for the quarter was a source of $84 million and we expect to continue to generate positive free cash flow for the second half and full year.

John Romano: on the Sustainability Front. We published our 2023 Sustainability Report earlier this week. Starting the slide six, I'll briefly review the sustainability-related goals and targets. Our 2023 report, on our 2023 report details, meaningful accomplishments achieved in the past year driving continued progress toward our previously established sustainability goals. It also reinforces the unwavering commitment to our sustainability strategy and our purposeful investments and our people, operations, and product portfolio. In this report, we reinforce our carbon emissions reduction targets, including reducing scope one and two carbon emissions intensity by 50% by 2030 against a 2019 baseline and achieving carbon neutrality by 2050, and reducing scope three carbon emissions by 9% by 2025 and 16% by 2030 against a 2021 baseline.

John Romano: On the sustainability front, we published our 2023 Sustainability Report earlier this week. Turning to slide 6, I'll briefly review the sustainability-related goals and targets. Our 2023 report details meaningful accomplishments achieved in the past year driving continued progress toward our previously established sustainability goals. It also reinforces our unwavering commitment to our sustainability strategy and our purposeful investments in our people, operations, and product portfolio. In this report, we reinforce our carbon emissions reduction targets, including reducing scope one and two carbon emissions intensity by 50% by 2030 against a 2019 baseline and achieving carbon neutrality by 2050, and reducing scope three carbon emissions by 9% by 2025 and 16% by 2030 against a 2021 baseline.

Speaker Change: On the sustainability front, we published our 2023 sustainability report earlier this week.

Speaker Change: Going to slide six I'll briefly review the sustainability related goals and targets.

Speaker Change: Our 2023 report on our 2023 report details meaningful accomplishments achieved in the past year driving continued progress toward our previously established sustainability goals.

Speaker Change: It also reinforces the unwavering commitment to our sustainability strategy and our purposeful investments in our people operations and product portfolio.

Speaker Change: In this report, we reinforced our carbon emissions reduction targets, including reducing scope, one and two carbon emissions intensity by 50% by 'twenty 30 against that 2019 baseline and achieving carbon neutrality by 2050, and reducing scope three carbon emissions by 9% by 2025 and 16 by 2030.

Speaker Change: Against a 2021 baseline.

John Romano: We've made significant progress on our carbon emissions reduction targets this year with two renewable energy contracts in South Africa that will convert, on a combined basis, a total of 70% of our electricity in the region from coal-based to renewable sources when the second project comes online in 2027. As a result of this latest expected project timeline, we adjusted our scope one and two emissions reduction target for 2025 to 25% from 35%. We're focused on numerous other initiatives, including reducing waste external landfills, partnering with our top and meeting suppliers to help reduce emissions across the value chain, and our continuous involvement and partnership with the community in which we operate.

John Romano: We've made significant progress on our carbon emissions reduction targets this year with two renewable energy contracts in South Africa that will convert, on a combined basis, a total of 70% of our electricity in the region from coal-based to renewable sources when the second project comes online in 2027. As a result of this latest expected project timeline, we adjusted our scope 1 and 2 emissions reduction target for 2025 to 25% from 35%.

Speaker Change: We've made significant progress on our carbon emissions reduction targets. This year with two renewable energy contracts in South Africa that will convert on a combined basis, a total of 70% of our electricity in the region from KOL base to renewable sources. When the second project comes online in 2027 as a result of this latest expected project timeline.

Speaker Change: We adjusted our scope, one and two emissions reduction target for 2025% to 25% from 35%.

John Romano: We're focused on numerous other initiatives, including reducing waste to external landfills, partnering with our top emitting suppliers to help reduce emissions across the value chain, and our continuous involvement and partnership with the communities in which we operate. We firmly believe in the importance of safeguarding our operational privileges, both now and in the future. This is why we ensure that sustainability is seamlessly integrated into our business strategy, operations, and culture, and will continue to support our priority to grow the business and create lasting value for stakeholders. I'll now turn the call over to John to review some of our financials from the quarter in more detail. John?

Speaker Change: We're focused on numerous other initiatives, including reducing waste external landfills partnering on top partnering with our top and meeting suppliers to help reduce emissions across the value chain and our continuous involvement in partnership with the communities in which we operate we firmly believe in the importance of safeguarding our operational privilege, both now and in the future.

John Romano: We firmly believe in the importance of safeguarding our operational privilege both now and in the future. This is why we ensure that sustainability is seamlessly integrated through our business strategy, operations, and culture and will continue to support our priority to grow the business and create lasting value for stakeholders.

John Romano: This is why we ensure that sustainability is seamlessly integrated into our business strategy operations and culture and will continue to support our priority to grow the business and create lasting value for stakeholders I will now turn the call over to John to review some of our financials from the quarter in more detail John Thank you John turning to slide seven we <unk>.

John Service: I'll now turn the call over to John to review some of our financials from the quarter in more detail. John.

John Srivastava: Thank you, John. Turning to slide 7. We generated revenue of $820 million, an increase of 3% compared to the prior year and 6% sequentially, driven primarily by higher TO2 volumes. Income from operations was $76 million in the quarter, and we reported net income attributable to Tronox of $16 million. While our profit before tax was $55 million, our tax expense was $45 million in the quarter. This was driven by a $16 million valuation allowance in Brazil and losses in jurisdictions where we have pre-existing valuation allowances.

John Service: Thank you, John. Turning to slide seven, we generated revenue of 820 million and increased a 3% compared to the prior year or 6% sequentially, driven primarily by higher TO2 volumes. Income from operations was 76 million in the quarter, and reported net income attributable to Tronox of 16 million. While our profit before tax was 55 million, our tax expense was 45 million in the quarter.

John Romano: <unk> revenue of $820 million, an increase of 3% compared to the prior year or 6% sequentially driven primarily by higher T. O. Two volumes and income from operations was 76 million in the quarter and we reported net income attributable to Tronox a $16 million.

Speaker Change: Our profit before tax was 55 million our tax expense was 45 million in the quarter. This was driven by a $16 million valuation allowance in Brazil and losses in jurisdictions, where we have preexisting valuation allowances.

John Service: This was driven by a $16 million valuation allowance in Brazil and losses and jurisdictions where we have pre-existing valuation allowances. As a result, our adjusted related earnings per share was seven cents. As John previously mentioned, our adjusted EBITDA on the quarter was 161 million, and our adjusted EBITDA margin was 19.6%. CapEx for the quarter was 76 million, and we generated free cash flow of 84 million in the quarter.

John Srivastava: As a result, our adjusted diluted earnings per share was $0.07. As John previously mentioned, our adjusted EBITDA in the quarter was $161 million, and our adjusted EBITDA margin was 19.6%. CapEx for the quarter was $76 million, and we generated a free cash flow of $84 million in the quarter. Now, let's move to slide eight for a review of our commercial performance.

Speaker Change: As a result, our adjusted diluted earnings per share was seven cents.

Speaker Change: As John previously mentioned, our adjusted EBITDA in the quarter was $161 million and our adjusted EBITDA margin was 19, 6%.

John Romano: Capex for the quarter was $76 million and we generated free cash flow of 84 million in the quarter.

John Service: Now, let's move to slide eight for a review of our commercial performance. Q2 came in relatively in line with expectations. TO2 revenues increased 7% versus the year-ago quarter as sales volumes improved 16%, partially offset by an 8% decline in price and mix. On a sequential basis, TO2 revenues increased 8%, driven by improved sales volumes in all regions. Pricing increased 1% over Q1, as expected, while unfavorable mix partially offset this increase.

John Romano: Now, let's move to slide eight for a review of our commercial performance.

John Srivastava: Q2 came in relatively in line with expectations. TIO2 revenues increased 7% versus the year-ago quarter, as sales volumes improved 16%, partially offset by an 8% decline in price and mix. On a sequential basis, TIO2 revenues increased 8% driven by improved sales volumes in all regions. Pricing increased 1% over Q1, as expected, while unfavorable mix partially offset this increase. Zircon demand remained relatively flat in Q1, as expected, with a slight decrease driven by a shipment rolling into the third quarter.

Speaker Change: Q2 came in relatively in line with expectations.

Speaker Change: Iot revenues increased 7% versus the year ago quarter as sales volumes improved 16%, partially offset by 8% decline in price and mix.

Speaker Change: On a sequential basis T. Iot revenues increased 8% driven by improved sales volumes in all regions.

Speaker Change: <unk> increased 1% over Q1 as expected while unfavorable mix, partially offset this increase.

John Service: Cris. Surcon demand remained relatively flat to Q1, as expected, with a slight decrease driven by a shipment rolling into the third quarter. Surcon pricing increased 1% sequentially.

Speaker Change: Zircon demand remained relatively flat to Q1 as expected with a slight decrease driven by a shipment rolling into the third quarter.

John Srivastava: Zircon pricing increased by 1% sequentially. Now turning to slide nine, I will now review our operating performance for the quarter. Our adjusted EBITDA of $161 million represented a 4% decline year-on-year driven by lower average selling prices than net. This was partially offset by improved production costs, including lower input costs for materials such as Coke, chlorine, and caustic soda, higher sales volume, and favorable exchange rates. Additionally, our freight costs continue to see rate decreases on a cost per ton basis.

Speaker Change: So our contracts increased 1% sequentially.

John Service: Now turning to slide 9, I will now review our operating performance for the quarter. Our adjusted EBITDA of 161 million represented a 4% decline year-on-year, driven by lower average selling prices and mix. This was partially offset by improved production costs, including lower input costs from materials such as coke, chlorine, and caustic soda, higher sales volume, and favorable exchange rates. Additionally, our freight costs continued to see rate decreases on a cost per ton basis.

Speaker Change: Turning to slide nine I will now review, our operating performance for the quarter.

Speaker Change: Our adjusted EBITDA of 161 million represented a 4% decline year on year, driven by lower average selling prices and mix.

Speaker Change: This was partially offset by improved production costs, including lower impart input cost for materials, such as Coke chlorine and caustic soda higher sales volume and favorable exchange rates. Additionally, our freight costs continued to see rate decreases on a cost per ton basis.

John Srivastava: sequentially, adjusted EBITDA improved 23%. Compared to Q1, production costs improved an incremental $20 million on a net basis. This was comprised of a $26 million improvement relating to favorable absorption from lower-cost tons produced in the first quarter that were sold in the second quarter. This was partially offset by a net $6 million of period costs taken in Q2 due to the lower operating rate. Other tailwinds versus the prior quarter, as expected, were price mix and volume, while FX was a headwind.

John Service: Sequentially, adjusted EBITDA improved 23%. Compared to Q1, production cost improved an incremental 20 million on a net basis. This was comprised of a $26 million improvement relating to favorable absorption from lower cost tons produced in the first quarter that were sold in the second quarter. This was partially offset by a net 6 million of period costs taken in Q2 due to the lower operating rates.

Speaker Change: Sequentially adjusted EBITDA improved 23%.

Speaker Change: Q1 cut production cost approved an incremental $20 million on a net basis. This was comprised of about $26 million improvement relating to favorable absorption from lower cost tons produced in the first quarter that were sold in the second quarter. This was partially offset by a net $6 million of period costs taken in Q2 due to the lower operate.

Speaker Change: Rates.

John Service: Other tailwinds were still the prior quarter that I expected, where price, mix, and volume, while the FX was a headwind.

Speaker Change: Other tailwind versus the prior quarter as expected where price mix and volume while FX was a headwind.

John Service: Turning to slide 10, I will now review our balance sheet and cash position. We ended the quarter with total debt of 2.8 billion and net debt of 2.6 billion. Our net leverage ratio at the end of June was 5.2 times on a trailing 12-month basis.

John Srivastava: Turning to slide 10, I'll now review our balance sheet and cash position. We ended the quarter with total debt of $2.8 billion and net debt of $2.6 billion. Our net leverage ratio at the end of June was 5.2 times on a trailing 12-month basis. Following a second quarter of sequential growth, our balance sheet remains strong with ample liquidity ahead of anticipated critical vertically integrated integration related capital expenditures. Our weighted average interest rate in Q2 was 5.99%, down from 6.15% in Q1 due to the repricing transaction.

Speaker Change: Turning to slide 10, I'll now I'll review, our balance sheet and cash position.

Speaker Change: We ended the total of the quarter with total debt of $2 8 billion and net debt of $2 6 billion. Our net leverage ratio at the end of June was a was five two times on a trailing 12 month basis.

John Service: Following a second quarter of sequential growth, our balance sheet remained strong with ample liquidity ahead of anticipated critical vertically integrated, integrated, integrated capital expenditures. Our weighted average interest rate in Q2 was 5.99 percent, down from 6.15 percent in Q1 from the repricing transaction. We maintained interest rate swaps age at approximately 73 percent of our interest rates are fixed through 2024, and approximately 64 percent are fixed from 24 through 28, aligning with the maturity of the earliest tranche of our turn loan.

Speaker Change: Following our second quarter sequential growth our balance sheet remains strong with ample liquidity ahead of anticipated critical vertically integrated integration related capital expenditures.

Speaker Change: Our weighted average interest rate in Q2 was $5, 99% down from $6 one 5% in Q1 from the repricing transaction.

John Srivastava: We maintain interest rate swaps such that approximately 73% of our interest rates are fixed through 2024, and approximately 64% are fixed from 2024 through 2028, aligning with the maturity of the earliest tranche of our term loan. Total available liquidity as of June 30 was $680 million, including $201 million in cash and cash equivalents that are well distributed across the globe. Capital expenditures totaled $76 million in the quarter. Approximately 40% of this was for maintenance and safety, and 60% was for strategic growth projects, heavily weighted on the mining side of the business, as previously disclosed. Working capital was a source of $39 million driven by improved accounts payable. We returned $41 million to shareholders, which included the payment for both the first and second quarter declared dividends.

Speaker Change: We maintain interest rate swaps, which had approximately 73% of our interest rates are fixed through 2020 for approximately 64% are fixed from 24 through 28 aligning with the maturity of the earliest tranche of our term loan.

John Service: Total available liquidity as of June 30 was 680 million, including 201 million cash and cash equivalents that are well distributed across the globe. Capital expenditures totaled 76 million in the quarter. Approximately 40 percent of this was for maintenance and safety, and 60 percent was for strategic growth projects, heavily weighted on the mining side of the business, which we previously disclosed. Working capital was a source of 39 million, driven by improved accounts payable.

Speaker Change: Total available liquidity as of June 30th was $680 million, including $201 million in cash and cash equivalents that are well distributed across the globe.

Speaker Change: Capital expenditures totaled 76 million in the quarter approximately 40% of this what's your maintenance and safety and 60% was for strategic growth projects heavily weighted on the mining side of the business, which we previously disclosed.

Speaker Change: Working capital was a source of $39 million driven by improved accounts payable we.

John Service: We returned 41 million to shareholders, which included the payment for both the first and second quarter declared dividends.

Speaker Change: We returned 41 million to shareholders, which included the payment for both the first and second quarter declared dividends I will now turn the call back over to John Romano for comments on the market and our outlook John Thanks, John.

John Romano: They will now turn the call back over to John Romano for comments on the market in our outlook. John? Thanks, John. So the first half of 2024 has already demonstrated a reversal of some of the trends from the prior two years, and we anticipate that we're covered to continue. On a year-to-date basis through Q2, our T02 volumes were up approximately 17 percent, and our Zürkan volumes increased approximately 20 percent compared to the prior year. Although we are not yet back to normalized volume levels on either T02 or Zürkan, the improvement this year's administration that 2023 was indeed a trough year for volume demand.

John Romano: I will now turn the call back over to John Romano for comments on the market and our outlook. John. Thanks.

John Romano: Thanks, John. So, the first half of 2024 has already demonstrated a reversal of some of the trends from the prior two years, and we anticipate that recovery to continue. On a year-to-date basis through Q2, our TO2 volumes were up approximately 17%, and our Zircon volumes increased approximately 20% compared to the prior year. Although we are not yet back to normalized volume levels on either TiO2 or Zircon, the improvement this year is a demonstration that 2023 was indeed a trough year for volume demand. In addition, we have also seen the launch of several anti-dumping investigations. Most notably, the EU announced a provisional duty last month on Chinese imports, while Brazil and India each have investigations underway.

John Romano: So the first half of 'twenty 'twenty 'twenty four it has already demonstrated a reversal of some of the trends from the prior two years and we anticipate that recovery to continue.

Speaker Change: <unk>.

Speaker Change: On a year to date basis through Q2, our T O two volumes were up approximately 17% and our zircon volumes increased approximately 20% compared to the prior year.

Speaker Change: Although we are not yet back to normalized volume levels on either T O two orders there.

Speaker Change: The improvement this year is a demonstration that 2023 was indeed, a trough year for bought from Port volume demand.

John Romano: In addition to the recovery, we have also seen the launch of several anti-dumping investigations. Most notably, the EU announced a provisional duty last month on Chinese imports, while Brazil and India each have investigations underway. We believe these efforts will be a benefit in the medium and long term, and we will continue to monitor the short-term impacts from these announcements. On the operational side this year, we've been ramping up our assets to meet the increased customer demand over 2023. As we were ramping up, we experienced some operational challenges across our sites, which caused Q2 operating rates to come in lower than what we had targeted, and this led to higher costs in Q2 and higher anticipated costs in Q3.

Speaker Change: In addition to the recovery we have also seen the launch of several anti dumping investigations, most notably the you announced a provisional duty last month on Chinese imports, while Brazil, and India. Each have investigations underway. We believe these efforts will be a benefit in the medium and long term and we will continue to monitor the short term impacts from these announcements.

John Romano: We believe these efforts will be beneficial in the medium and long term, and we will continue to monitor the short-term impacts from these announcements. On the operational side, this year, we've been ramping up our assets to meet the increased customer demand in 2023. As we were ramping up, we experienced some operational challenges across our sites which caused Q2 operating rates to come in lower than what we had targeted. This led to higher costs in Q2 and higher anticipated costs in Q3.

Speaker Change: <unk>.

Speaker Change: On the operational side this year, we've been ramping up our assets to meet the increased customer demand over 2023 as we were ramping up we experienced some operational challenges across our sites, which cause Q2 operating rates to come in lower than what we had targeted and this led to higher costs in Q2 and higher anticipated costs in Q3.

John Romano: Due to the breadth of our geographic footprint, we were able to continue to meet customer demand as we resolved these issues. We previously indicated that lower utilization rates impacted our business by $25 to $35 million per quarter, and our startup challenges in Q2 resulted in a similar impact. To put that into context, we incurred roughly half of the impact in the second quarter and expect the remaining half to impact the third quarter, which is included in our outlook. These short term challenges have now been resolved, and our average utilization rates for July were in the 80% range.

John Romano: Due to the breadth of our geographic footprint, we were able to continue to meet customer demand as we resolved these issues. We previously indicated that lower utilization rates impacted our business by $25 to $35 million per quarter, and our startup challenges in Q2 resulted in a similar impact. To put that into context, we incurred roughly half of the impact in the second quarter and expect the remaining half to impact the third quarter, which is included in our outcome. These short-term challenges have now been resolved, and our average utilization rates for July were in the 80% range.

Speaker Change: Due to the breadth of our geographic footprint, we were able to continue to meet customer demand as we resolve these issues. We previously indicated that lower utilization rates impacted our business by 25% to $35 million per quarter and our startup challenges in Q2 resulted in a similar impact.

Speaker Change: To put that into context, we incurred roughly half of the impact in the second quarter and expect the remaining half to impact the third quarter, which is included in our outlook.

Speaker Change: These short term challenges have now been resolved and our average utilization rates for July were in the 80% range. We expect to continue running at this rate through the second half of the year, which was which will result in lower cost and a step up in our earnings momentum in Q4, as we ramp up we're continuing to see the benefits of technology, we have the technology.

John Romano: We expect to continue running at this rate through the second half of the year, which will result in lower cost and a step up in our earnings momentum in Q4. As we ramp up, we're continuing to see the benefits of technology, of the technology we've deployed at our sites to reduce costs and improve efficiencies. As we mentioned in the last two quarters, we're investing $395 million in capital expenditures, primarily in the mining side of the business in South Africa to sustain vertical integration. As a reminder, in 2024, we expect to invest a total of approximately $130 million in our two South African mining projects: the Fairbreeze expansion and the Makwa East OFS.

John Romano: We expect to continue running at this rate through the second half of the year, which will result in lower costs and a step up in our earnings momentum in Q4. As we ramp up, we're continuing to see the benefits of the technology we've deployed at our sites to reduce costs and improve efficiency. As we mentioned, in the last two quarters, we've been investing $395 million in capital expenditures, primarily on the mining side of the business in South Africa to sustain vertical integration.

Speaker Change: We've deployed at our sites to reduce costs and improve efficiencies.

Speaker Change: As we mentioned in the last two quarters, we're investing $395 million in capital expenditures, primarily in the mining side of the business in South Africa to sustained vertical integration.

John Romano: As a reminder, in 2024, we expect to invest a total of approximately $130 million in our two South African mining projects, the Fairbreeze Expansion and the Makwet Yisto FS. These investments will ensure we maintain our $300 to $400 per metric ton advantage for feedstock sourced internally. From a growth perspective, our R&D efforts remain focused on product and process innovations to enhance our profitability, and we're continuing to explore opportunities in the rarer space. Moving to slide 12, I'll now review our output.

Speaker Change: As we as a reminder, in 2024, we expect to invest a total of approximately $130 million and our two south African mining projects. The furbies expansion in the market what you still with us.

John Romano: These investments will ensure we maintain our $3 to $400 per metric ton advantage for feedstock sourced internally. From a growth perspective, our R&D efforts remain focused on product and process innovations to enhance our profitability, and we're continuing to explore opportunities in the rare space.

Speaker Change: These investments will ensure we maintain our third three to $400 per metric ton advantaged feedstock sourced internally.

Speaker Change: From a gross growth perspective or are in the D efforts remain focused on product and process innovations to enhance our profitability and we're continuing to explore opportunities in their aerospace moving.

John Romano: Moving to slide 12, I'll now review our outlook. While the macro backdrop to the second half of 2024 is expected to be less robust than previously anticipated, Tronox has realized and expects to continue to realize considerable growth compared to 2023. For the third quarter, we expect TI2 volumes to decline in line with seasonal norms by approximately 2 to 4% compared to the second quarter. This represents an increase in the high teens range compared to the third quarter of 2023. Regarding zircon, we anticipate stable volumes in the third quarter, which would represent an increase of approximately 160% compared to the trough levels we realized in the third quarter of last year.

Speaker Change: Moving to slide 12, I'll now review our outlook.

John Romano: While the macro backdrop to the second half of 2024 is expected to be less robust than previously anticipated, Tronox has realized and expects to continue to realize considerable growth compared to 2023. For the third quarter, we expect TI2 volumes to decline in line with seasonal norms by approximately 2-4% compared to the second quarter. This represents an increase in the high teens range compared to the third quarter of 2023. Regarding Zircon, we anticipate stable volumes in the third quarter, which would represent an increase of approximately 160% compared to the trough levels we realized in the third quarter of last year.

Speaker Change: While the macro backdrop for the second half of 'twenty 'twenty four is expected to be less robust than previously anticipated tronox has realized and expects to continue to realize considerable growth compared to 2023.

Speaker Change: For the third quarter, we expect T O two volumes to decline and in line with seasonal norms by approximately 2% to 4% compared to the second quarter. This represents an increase in the high teens range compared to the third quarter of 2023 regarding zircon, we anticipate stable volumes in the third quarter, which would represent an increase of approximately 100.

Speaker Change: Third and 60% compared to the trough levels, we realized in the third quarter of last year.

John Romano: We anticipate TI2 prices increase marginally compared to Q2, and we expect TI2 zircon pricing to remain relatively stable. On our cost, the higher cost pigment tons manufactured in the second quarter will impact our profitability as these tons are sold in the third quarter. And this has been factored into the range. Additionally, based on current exchange rates, we expect FX to be a slight headwind in Q3. As a result of these factors and assumptions, we expect third quarter adjusted EBITDAQ to be between 145 million and 165 million, and our adjusted EBITDAQ margin to be in the high teens.

John Romano: We anticipate TIO2 prices to increase marginally compared to Q2, and we expect TIO2 Zircon pricing to remain relatively stable. On our cost, the higher-cost pigment tons manufactured in the second quarter will impact our profitability as these tons are sold in the third quarter, and this has been factored into the range.

Speaker Change: We anticipate T O two prices increased marginally compared to Q2, and we expect T O to zircon pricing to remain relatively stable.

Speaker Change: On our cost the higher cost pigment tons manufactured in the second quarter will impact our profitability at these as these tons are sold in the third quarter and this has been factored into the range.

John Romano: Additionally, based on current exchange rates, we expect FX to be a slight headwind in Q3. As a result of these factors and assumptions, we expect third quarter adjusted EBITDA to be between $145 million and $165 million, and our adjusted EBITDA margin to be in the high teens. As previously referenced, our average utilization rates are now running at 80%, and we expect that to continue through the second half of the year.

Speaker Change: Additionally, based on current exchange rates, we expect FX FX to be a slight headwind in Q3.

Speaker Change: As a result of these factors and assumptions, we expect third quarter, adjusted EBITDA to be between $145 million and $165 million and our adjusted EBITDA margin to be in the high teens.

John Romano: As previously referenced, our average utilization rates are now running at 80% range, and we expect that to continue to the second half of the year. This would result in an improvement in pigment manufacturing costs and a step up in earnings momentum sequentially in the fourth quarter.

Speaker Change: As previously referenced our average utilization rates are now running at 80% range and we expect that to continue through the second half of the year. This would result in an improvement in pigment manufacturing costs and a step up in earnings momentum sequentially in the fourth quarter.

John Romano: This would result in an improvement in pigment manufacturing costs and a step up in earnings momentum sequentially in the fourth quarter. On cash, our expectations for 2024 remain unchanged and are as follows. Our capital expenditures are expected to be approximately $395 million for the year. Our net cash taxes are expected to be less than $10 million, as the significant capital expenditures in South Africa are deductible. Our net cash interest is expected to be $140 million, and we're expecting working capital to be a tailwind.

John Romano: On cash, our expectations for 2024 remain unchanged, and ours follows. Our capital expenditures are expected to be approximately $395 million for the year. Our net cash taxes are expected to be less than 10 million, as the significant capital expenditures in South Africa are deductible. Our net cash interest is expected to be $140 million, and we're expecting working capital to be a tailwind. The magnitude of the cash inflow will depend on the market trends in the second half.

Speaker Change: On cash our expectations for 'twenty 'twenty four remain unchanged and are as follows our capital expenditures are expected to be approximately $395 million for the year. Our net cash taxes are expected to be less than 10 million as the significant capital expenditures and South Africa are deductible, our net cash interest is expected to be a hub.

Speaker Change: Third and $40 million and we're expecting working capital to be a tailwind the magnitude of the cash inflow will depend on the market trends in the second half.

John Romano: The magnitude of the cash inflow will depend on market trends in the second half. Turning to slide 13, I'd like to briefly remind investors of our capital allocation priorities before turning over to questions. Our capital allocation strategy has not changed. We continue to prioritize investments in the business that are essential for advancing our strategy and maximizing value for a vertically integrated business. We also remain focused on strengthening our liquidity and resuming debt repayment as the market recovers, and our dividend remains a priority.

John Romano: Turning to slide 13, I'd like to briefly remind investors of our capital allocation priorities before turning over to questions. Our capital allocation strategy is not changed. We continue to prioritize investments in the business that are essential for advancing our strategy and maximizing value for a vertically integrated business. We also remain focused on strengthening our liquidity and resuming debt paydown as the market recovers, and our dividend remains a priority. And finally, we'll continue to assess strategic high-growth opportunities as they emerge, including the rarer space, which is an active focus for us at the moment. We'll provide more updates on this as developments happen with these projects.

Speaker Change: Turning to slide 13, I'd like to briefly remind investors of our capital allocation priorities before turning over to questions.

Speaker Change: Our capital allocation strategy has not changed we continue to prioritize investments in the business that are essential for advancing our strategy in maximizing value for our vertically integrated business. We also remain focused on strengthening our liquidity and resuming debt pay down as the market recovers and our dividend remains a priority.

John Romano: And finally, we'll continue to assess strategic high growth opportunities as they emerge, including the rarer space, which is an active focus for us at the moment. We will provide more updates on this as developments occur with these projects.

Speaker Change: Finally, we will continue to assess strategic high growth opportunities as they emerge, including the rare aerospace which is an active focus for us at the moment, we'll provide more updates on this as developments happen with these projects.

Operator: That will conclude the prepared remarks, and we'll now move to the Q&A portion of the call, so I will hand the call back over to the operator to facilitate that. Operator. Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press star followed by the number one on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the number two. If you are using a speaker phone, please make sure to lift the handset before pressing any keys.

Operator: That will conclude the prepared remarks, and we'll now move to the Q&A portion of the call. So I will hand the call back over to the operator to facilitate that. Operator.

Speaker Change: That will conclude the prepared remarks, and we'll now move to the Q&A portion of the call. So I will hand, the call back over to the operator to facilitate that operator.

Speaker Change: Thank you.

Operator: Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number 1 on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the number 2. If you are using a speakerphone, please make sure to lift the handset before pressing any key. Your first question comes from the line of John McNulty from BMO Capital Market. Please go ahead.

Speaker Change: Ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by the number one on your Touchtone phone, you'll hear a prompt that your hand hasn't been raised should you wish to decline from the polling process. Please press star followed by the number two.

Speaker Change: If you are using a speaker phone please make sure to lift the handset before pressing any keys.

John Romano: Your first question comes from the line of John McNulty from BMO Capital Markets. Please go ahead. Yeah, good morning. Thanks for taking my questions. So I guess the first question is just on the cost impact of the ramp-up issue. So I think you kind of implied it's about the same as the low utilization rate issues you had over the past few quarters, so 20, 25 million. So when you say it's split between two, Q and three, Q, is that essentially 10 to 15 each quarter, or are you going to see a 20 to 25 million dollar hit in each of those quarters?

Speaker Change: Your first question comes from the line of John Mcnulty from BMO capital markets. Please go ahead.

John Romano: Yeah, good morning. Thanks for taking my questions. So, I guess the first question is just on the cost impact of the ramp-up issue. So, I think you kind of implied it's about the same as the low utilization rate issues you had over the past few quarters, so $20 to $25 million. So, when you say it's split between 2Q and 3Q, is that essentially 10 to 15 per quarter, or are you going to see a $20 to $25 million hit in each of those quarters?

John Mcnulty: Yeah. Good morning, Thanks for taking my questions. So I guess the first question is just on the <unk>.

John Mcnulty: Cost impact of their ramp up issue. So I think you you kind of implied it's about the same as the low utilization rate issues you had over the past few quarters, so $20 million to $25 million and so when you say, it's split between <unk> and <unk> is that essentially tend to 15, each quarter or are you going to see a $20 million to $25 million.

John Romano: And I guess, more importantly, now that you're at utilization rates where you should be kind of in the 80% plus range, should we still be seeing risk of ramp-up issues as demand and utilization rates climb, or have you kind of reached a tipping point where you're running hard enough now where you realistically won't see material impacts or risks around ramping up further?

John Romano: And I guess more importantly, now that you're at utilization rates where you should be kind of in the 80 percent plus range, should we be still seeing risk of ramp-up issues as demand and utilization rates climb, or have you kind of reached a tipping point where you've gotten, you're running hard enough now where you realistically won't see material impacts or risks around ramping up further.

Speaker Change: Each of those quarters and I guess more.

Speaker Change: More importantly, now.

Speaker Change: Now that you are at utilization rates, where you should be kind of in the in the 80% plus range do you should we be still seeing risk of ramp up issues as demand and utilization rates climb or have you kind of reached a tipping point, where you've gotten youre running hard enough now where you realistically won't.

Speaker Change: See material impacts or risks around ramping up further.

John Romano: Yeah, thanks for the question, John. So look on the first one, I would say that split evenly $15 million in the second quarter and about $15 million in the third quarter from a cost perspective. And we also mentioned that there was some FFX impact that could impact the business and that was a headwind, so that could be somewhere in the $5 million range. As far as where we are in the ramp-up. So there wasn't really any one issue that you can point to on that ramp-up issue. We've got nine plants, and even throughout our operations on the mining side of the business, we had some issues ramping up the assets, and we are at that 80% range. We ran the entire month of July at that improved rate. Moving into August, we're seeing the same kinds of things.

John Romano: Thanks for the question, John. So look, on the first one, I would say that split evenly $15 million in the second quarter and about $15 million in the third quarter from a cost perspective. And we also mentioned that, you know, there was some FFX impact that could impact the business. And that was a headwind.

Speaker Change: Yeah. Thanks for the question John So look on the first one.

Speaker Change: I would say that split evenly $15 million in the second quarter and about $15 million in the third quarter from a cost perspective, and we also mentioned that there was some F F X impact that could impact the business and that was a headwind so that could be somewhere in the $5 million range as far as.

John Romano: So that could be, you know, somewhere in the $5 million range as far as where we are in the ramp up. There wasn't really any one issue that you can point to on that ramp-up issue. We've got nine plants, and even throughout our operations on the mining side of the business, we had some issues ramping up the assets, and we are at that 80% range. We ran the entire month of July at that improved rate.

Speaker Change: Where we are in the ramp up.

Speaker Change: There wasn't really any one issue that you can point to on that ramp up issue, we've got nine plants and even throughout our operations on the mining side of the business. We had some issues ramping up the assets and we are at that 80% range. We ran the entire month of July at that improved rate.

John Romano: Moving into August, we're seeing the same kinds of things. So when we think about that 80%, that's on average across those assets. And through the rest of the year, you know, we're going to have planned outages, so those numbers will fluctuate. But on average, yes, we're expecting to be at 80 percent. We feel like the issues that we had during that ramp-up process have run their course. And that's why we said we felt pretty comfortable about where we are on that run rate and that run rate being consistent for the balance of the year.

Speaker Change: Moving into August we're seeing the same kinds of things. So when we think about that 80% that's on average over those assets and through the rest of the year. You know we're gonna have planned that planned outages. So those numbers will fluctuate but on average yes, we're expecting to be at 80%, we feel like the issues that we had during that ramp up process have run their course.

John Romano: So when we think about that 80% that's on average over those assets. And through the rest of the year, we're going to have planned outages, so those numbers will fluctuate. But on average, yes, we're expecting to be at 80%. We feel like the issues that we had during that ramp up process have run their course. And that's why we said we felt pretty comfortable about where we are on that run rate and that run rate being consistent to the balance of the year.

Speaker Change: And that's why we said we felt pretty comfortable about where we are on that run rate in that run rate being consistent through the balance of the year and that's where when we talk a little bit about the fourth quarter and you know typically you will see some seasonality and that we'll talk about that I'm sure later with regards to what demand would be.

John Romano: And that's when we talk a little bit about the fourth quarter, and, you know, typically, you'll see some seasonality in there. We'll talk about that, I'm sure, later with regard to what demand would be, because we're not going to really provide a lot of forward look on the fourth quarter as far as the market is concerned. But the reason we made those comments is that we do feel comfortable that that step-up in earnings momentum is going to come from lower cost tons produced that will be sold throughout the balance of the year, predominantly in the fourth quarter. John, any comments?

John Romano: And that's where, when we talk a little bit about the fourth quarter, and, you know, typically you'll see some seasonality in there. So we'll talk about that. I'm sure later with regards to what demand would be, because we're not going to really provide a lot of forward look on the fourth quarter as far as the market. But the reason we made those comments is because we do feel comfortable that that step up and earnings momentum is going to come from lower cost tons produced that will be sold throughout the balance of the year, predominantly in the fourth quarter.

Speaker Change: Because we're not going to really provide a lot of forward look on the.

Speaker Change: The fourth quarter as far as the market, but the reason we made those comments is because we do feel comfortable that that step up in earnings momentum is going to come from lower cost tons produced that will be sold throughout the balance of the year predominantly in the fourth quarter John in your comments.

John Service: John, any comments? No, nothing else.

John: There are not enough yet.

John Service: Got it. Okay, now that's helpful. And then maybe just as the follow-up, so you list on the outlook page, working capital is going to be a source of cash.

John Srivastava: Got it. Okay. No, that's that's helpful. And then maybe just as a follow up. So you list on the Outlook page that working capital is going to be a source of cash. I guess, can you help to frame that a little bit? It does seem like, you know, you should have a decent amount of inventory release. I guess, can you help us to think about how big that working capital cash source could be as we look to the back half of the year and for a full year 24?

John: Got it okay. That's helpful.

John: And then maybe just as the follow up so you list on the outlook page working capital is going to be a source of cash.

John Service: I guess, can you help to frame that a little bit? It does seem like, you know, you should have a decent amount of inventory release. I guess can you help us to think about how big that working capital cash source could be as we look to the back after the year and for a full year 24? Yeah, I think we've mentioned that in John's comments that working capital expect to be a slight tailwind for the full year. And frankly, you know, it just will depend on the market recovery and how Q3, you know, we obviously have guided on volume slightly down there, but also Q4, you know, depends on where that ends up; that will determine the scope and size of the working capital benefit.

John: Can you help to frame that a little bit. It does seem like you should have a decent amount of inventory release.

Speaker Change: I guess can you help us to think about how big that working capital cash source could be as we look to the back half of the year and for a full year 'twenty four.

John Srivastava: Yeah, I think we've mentioned in John's comments that working capital is expected to be a slight tailwind for the full year. And frankly, you know, it just will depend on the market recovery and how Q3, we obviously have guided on volume slightly down there, but also Q4, depends on where that ends up, which will determine the scope and size of the working capital benefit. But, as we did mention, we are ramping up our facilities.

Speaker Change: Yes, I think we've mentioned that are in John's comments that working capital, we expect to be a slight tailwind for the full year.

Speaker Change: And frankly, it will depend on the market recovery and how Q3, we obviously guided on volumes slightly down there, but also Q4 it depends on where that ends up at Welch will determine the scope and size of the working capital benefit, but as we did mentioned we are ramping up our facilities. So.

John Service: But, as we didn't mention, we are ramping up our facilities. So we are building a bit of inventory throughout the rest of the year. But, you know, obviously, if that converts to cash, it will flow, you know, much to the free cash flow and be able to use that to pay down, you know, to build cash and have our net leverage go down. But from an AR perspective, you know, we are seeing increased sales in Q1 and Q2 that drove higher AR in the quarter. Good use of working capital that will ultimately convert to cash.

Speaker Change: We are building a bit of inventory throughout the rest of the year.

John Srivastava: So we are building a bit of inventory throughout the rest of the year. But, obviously, if that converts to cash, it will flow much to the free cash flow and be able to use that to pay down, you know, to build cash and have our net leverage go down.

Speaker Change: But obviously if that converts to cash flow you know much.

Speaker Change: To the free cash flow and be able to use that to pay down.

Speaker Change: To build cash and how their net leverage go down but from an <unk> perspective, we are seeing increased sales in Q1, and Q2 that drove higher <unk> in the quarter.

Speaker Change: Could we use of working capital that will ultimately convert to cash.

John Service: We are seeing that kind of half of the year based on what I mentioned on the commercial side that we would recover some of that on the second half of the year.

Speaker Change: We are seeing second half of the year based on what I mentioned on the commercial side that we would recover some of that in the second half of the year.

John Srivastava: But from an AR perspective, you know, we are seeing increased sales in Q1 and Q2 that drove higher AR in the quarter, good use of working capital that will ultimately convert to cash. We are seeing the second half of the year based on what I mentioned on the commercial side, that we would recover some of that in the second half of the year. And secondly, and finally, sorry, AP, was the use of cash in Q1. What we mentioned is that it would claw back throughout the rest of the year. We saw that in Q2 and expect to see a bit more in the second half of the year.

John Service: And secondly, and finally, sorry, AP was use of cash, and Q1, what we mentioned is that we'd clawed back throughout the rest of the year. We saw that in Q2 and expect to see a bit more in the second half of the year.

Speaker Change: And finally, sorry a P.

Speaker Change: Was the use of cash in Q1, what we mentioned is that wood clawed back throughout the rest of the year, we saw that in Q2 and expect to see a bit more in the second half of the year, maybe just a little bit more color on that.

John Service: Maybe just a little bit more color on that. You know, in the first quarter, we saw a big bump in our sales; 18% was 8% in the second quarter. And we started ramping up, and we didn't hit the targets we were looking at from a production perspective. So, in the second quarter, we actually drew inventory down. So there is a need, John. Make reference to building some inventory. We've got some plants that actually need to build some of that inventory to make sure we can continue to meet the demand assets forecast.

John Romano: Maybe just a little bit more color on that. You know, in the first quarter, we saw a big bump in our sales. It was 18%, and it was 8% in the second quarter. And we started ramping up, and we didn't hit the targets we were looking at from a production perspective. So in the second quarter, we actually drew inventory down. So there is a need, John, to make reference to building some inventory. We've got some plants that actually need to build some of that inventory to make sure we can continue to meet the demand as it's forecasted.

Speaker Change: First quarter, we saw a big bump in our sales was at 18% was 8% in the second quarter and we started ramping up and we didn't hit the targets. We were looking at from a production perspective. So in the second quarter, we actually drew inventory down. So there is a need John make reference to building some inventory we've got some plants that.

John: I actually need to build some of that inventory to make sure. We can continue to meet the demand as its forecasted.

Unknown Executive: Thank you.

John Mcnulty: Got it. Okay, now that makes sense. Thanks for the caller.

John: Got it okay now that makes sense thanks for the color.

Frank Mitsch: Your next question comes from the line of Frank Mitsch from Firmium Research. Please go ahead.

Speaker Change: Your next question comes from the line of Frank Mitsch from Fermium Research. Please go ahead.

John Romano: Good morning, folks. John, if I could just follow up and get a clarification of what exactly you are referring to when you talk about a step up in earnings momentum in the fourth quarter, you've used that phrase a couple of times. What exactly are you referring to? Are you referring to that Q4? Your expectation is that it might be more than Q3? Well, what I'm referring to is that we're going to have lower costs, and those lower costs will reflect higher margins in the fourth quarter as we sell those tons. So we're selling higher cost tons in the third quarter because we had lower production rates, which we talked about.

John Romano: Good morning folks. John, if I could just follow up and get a clarification of what exactly you are referring to when you talk about a step up in earnings momentum in the fourth quarter. You've used that phrase a couple of times. What exactly are you referring to? Are you referring that in Q4, your expectation is that it might be more than Q3?

Frank Mitsch: Hi, Good morning folks John if I could just a follow up and get a clarification of what exactly you are referring to when you talk about a step up.

Frank Mitsch: And earnings momentum in the fourth quarter, you've used that phrase a couple of times.

Speaker Change: What exactly are you referring to are you referring that are that Q4, your expectation is that it might be more than than than Q3.

John Romano: Well, what I'm referring to is that we're going to have lower costs, and those lower costs will reflect higher margins in the fourth quarter as we sell those tons. So we're selling higher-cost tons in the third quarter because we have lower production, which we talked about. Plants are now running at rates, and the lower cost inventory that we will be selling in the fourth quarter will generate better margins.

Speaker Change: Well, what I am referring to is that we're going to have lower costs in those lower costs will reflect higher.

John: Margins in the fourth quarter as we sell those tons. So we're selling higher cost tons in the third quarter, because we had lower production slowed production rates, which we talked about.

John Romano: Plans are now running at rate, and the lower cost inventory that we will be selling in the fourth quarter will generate better margins.

John: Plants are now running at rate and.

John: The lower cost inventory that we will be selling in the fourth quarter will generate better margins. So.

John Romano: So, you know, when we made the comments and, I think, the release, we made some reference to the second half being stronger than the first half, but there are lots of things. Again, as a practice, we don't provide any color on things beyond 90 days.

John Romano: So when we made the comments in I think the release, we made some reference about the second half being stronger than the first half, but there's lots of things, again, as a practice, we don't provide any color beyond 90 days. So one quarter out, we're not providing guidance on the fourth quarter, but there's lots of things that are going to drive fourth quarter. I mean you've got the economy, the election, the jobs reports just came out which are an impact, there's inflation, you've also got dumping; pricing may have an impact on that if there's opportunities to do that.

Speaker Change: When we made the comment and I think the release, we made some reference about the second half being stronger than the first half.

John Romano: So one quarter out doesn't provide guidance. So we're not providing guidance for the fourth quarter, but there are lots of things that are going to drive the fourth quarter. I mean, you've got the economy, the election jobs reports just came out, which have an impact. There's inflation. You've also got dumping.

Speaker Change: Theres lots of things again.

John: As a practice, we don't provide any color on the beyond 90 days. So one quarter out we don't provide so we're not providing guidance on the fourth quarter, but theres lots of things that are going to drive fourth quarter I mean, you've got the economy.

Speaker Change: The election jobs reports just came out which are an impact there is.

John: Place and you've also got dumping.

Speaker Change: Pricing may have an impact on that if there's opportunities to do that so just think about normal seasonal fluctuations in the fourth quarter and defining normal seasonal fluctuations in the fourth quarter, it's kind of difficult because I'd say over the last 10 years, there's been lots of anomalies in the fourth quarter, but if you kind of pull all of those out and I looked at this last night going back to.

John Romano: Pricing may have an impact on that if there are opportunities to do that. So just think about normal seasonal fluctuations in the fourth quarter and define normal seasonal fluctuations in the fourth quarter. It's kind of difficult because, over the last 10 years, there have been lots of anomalies in the fourth quarter. But if you kind of pull all of those out, and I looked at this last night, going back to 2007, call it, you know, in a normal season, if you can define normal seasonal adjustments in the fourth quarter, down 5 to 10 percent, sometimes we've seen it go up significantly.

John Romano: So just think about normal seasonal fluctuations in the fourth quarter, and defining normal seasonal fluctuations in the fourth quarter is kind of difficult because I'd say over the last 10 years there's been lots of anomalies in the fourth quarter. But if you kind of pull all of those out, and I looked at this last night going back to 2007, call it, you know, in a normal season, if you can define normal seasonal adjustments in the fourth quarter, down 5 to 10 percent. Sometimes we've seen it up significantly, sometimes it's down significantly. So pull 5 to 10 percent. One of the assumptions, that even with the volume being down, we're expecting to get earnings potential over and above what we would have in the third quarter because the tons that we're going to be selling are being a lower cost.

John: <unk> 2007 call it.

Speaker Change: Normal season, if you can define normal season is seasonal adjustments in the fourth quarter down 5% to 10%, sometimes we've seen it up significantly sometimes it's down significantly so pull 5% to 10%.

John Romano: Sometimes it's down significantly. So pull 5 to 10 percent. Those are one of the assumptions that even with the volume being down, we're expecting to get earnings potential over and above what we would have in the third quarter because the tons that we're going to be selling are going to be at a lower cost.

Speaker Change: I wanted the assumptions that even with the volume being down we're expecting to get earnings potential over and above what we would have in the third quarter because of the tons that we're gonna be selling or be at a lower cost.

John Romano: I think you asked a similar question in the last quarter, and I think the way you asked it was appropriate because, all things being equal, if we continue to run in July for the rest of the year, you will see that add back a 15 million to your earnings. But obviously, as John mentioned, there's lots of things that go into our results, obviously, both on the cost side as well as the commercial side that can impact that. But you know, we are confident that that running higher rates will have a step change in our cost position. When you did see it in our Q2 bridge, Q1 over Q2, you know, there's a bump up in that operating cost bar there.

John Srivastava: I think, Frankie, I think you asked a similar question last quarter. And I think the way you asked it was appropriate, because all things being equal, if we did run, if we continue to run in July, for the rest of the year, you will see that add back of 15 million to your earnings. But obviously, as John mentioned, there are lots of things that go into our results, obviously, both on the cost side and the commercial side that can impact that.

Speaker Change: Yes, I think frankly, I think you asked a similar question last quarter and I think the way you ask it was appropriate because all things being equal if we did run if we can continue to run in July for.

John: For the rest of the year, you will see it that add back of $15 million to your earnings, but obviously as John mentioned, there's lots of things that go into our results obviously, both on the cost side as well as the commercial side that can impact that but.

Speaker Change: We are confident that that running tire rates will have a step change in our cost position. When you did see it in our Q2 bridge Q1 over Q2, you know there is a bump up in that operating cost.

John Srivastava: But, you know, we are confident that running higher rates will have a step change in our cost position. When you did see it in our Q2 bridge, Q1 over Q2, you know, there's a bump up in that operating cost bar there.

Speaker Change: Bar there so so and I guess at this stage. It's just it's really hard to determine what our volumes are going to look like because of all these factors that are just a bit just a bit early for us to be projecting what that number is going to look like in the fourth quarter, So that's where that color camera.

John Romano: And I guess at this stage, it's really hard to determine what our volumes are going to look like because of all these factors that are just a bit early for us to be projecting what that number is going to look like in the fourth quarter. So that's where that color came from.

John Romano: And I guess at this stage, it's really hard to determine what our volumes are going to look like because of all these factors that are just a bit early for us to be projecting what that number is going to look like in the fourth quarter. So that's where that color came from.

John Romano: Okay, very helpful, Johns, on the response. And if I could just ask about anti-dumping, given the favorable news out of the EU, are you seeing any customer, are you hearing of any customer behavior changes in the EU, you know, what is your expectation as to how that may play out in terms of pricing and volumes for the Western producers, including yourselves, into that region, and then, just lastly on that, any sort of time frame as to when we might be hearing something regarding Brazil and India.

Unknown Executive: O.K., very helpful. John's on the response.

John: Okay very helpful. John's on the on our response and if I could just.

John Romano: And if I could just ask about anti-dumping, given the favorable news out of the EU, are you seeing any customer, or are you hearing of any customer behavior changes in the EU? What is your expectation as to how that may play out in terms of pricing and volumes for the Western producers, including yourselves, into that region, and then just lastly on that, any sort of time frame as to when we might be hearing something regarding Brazil and India? Okay, so Frank, the EU, you know, provisional duties were put in place in July, and there's still a lot of time to go through between now and July, but you can now, in the end of the year, before provisional could turn into permanent duties.

Speaker Change: Ask about antidumping, given the favorable news out of the EU are you seeing any.

Speaker Change: Customer or are you hearing of any customer behavior changes in the EU. What is your expectation as to how that may play out in terms of pricing and volumes for the western producers, including yourselves into that region and then and then just lastly on that any sort of timeframe as to when we might be hearing something regarding Brazil and India.

John Romano: Okay, yeah, so Frank. The EU provisional duties were put in place, and in July. And there's still a lot of time to go through between now and July, but you could be down at the end of the year before provisionals could turn into permanent duty. But you've already seen a lot of movement. EU exports from China in the last two months have dropped significantly. You saw a big pickup in exports into India, and a pretty big pickup into Brazil.

Speaker Change: Okay, Yeah, so break they.

Speaker Change: <unk> provisional duties were put in place.

Speaker Change: In July and there's still a lot of time to go through between now and July but you can now and the end of the year before professionals could turn into permanent duties.

John Romano: But you've seen already a lot of movement, right? EU exports from China in the last two months have dropped significantly. You saw a big pickup and exports into India, a pretty big pickup into Brazil. And there is some, I'd say, movement going on in China, inside China, for instance, which is not a big market for us. We've seen the Chinese pushing hard to try to pick up more market share, and that's why, you know, there's some noise around pricing. Although we saw a bit of a lift in the second quarter, and we talked about a lift in the third quarter, a marginal one.

Speaker Change: But you've seen already a lot of movement right EU exports from China in the last two months have dropped significantly you saw a big pick up in exports into India, a pretty big pickup into Brazil.

John Romano: And there is some, I'd say, movement going on inside China, for instance, which is not a big market for us. We've seen the Chinese pushing hard to try to pick up more market share. And that's why there's some noise around pricing, although we saw a bit of a lift in the second quarter, and we talked about a lift in the third quarter, a marginal one. There's still a lot of movement regionally due to that, you know, activity that's going on on the assumption that duties in the EU would go into place.

Speaker Change: And there is some I'd say movement going on in China inside China for instance, which is not a big market for us.

Speaker Change: <unk> seen the Chinese pushing hard to try to pick up more market share and that's why even though there's some noise around pricing, although we saw a bit of a lift in the second quarter and we talked about a lift in the third quarter a marginal one.

John Romano: There's still a lot of movement regionally due to that, you know, activity that's going on on the assumption that duties in the EU would go into place. So we are seeing some activity. I would say, you know, right now there's still a fair amount of volume that needs to get kind of absorbed. There's a lot of Chinese material sitting over there. But I think on the mid to long term, we would see that as a lift to the business if they're put in place effectively, because ultimately the volume and the price implications that are attached should lead to better margins for us.

Speaker Change: There is still a lot of movement regionally due to that activity that's going on on the assumption that the duties in the EU would go into place. So we are seeing some activity I would say right now there's still a fair amount of volume that needs to get kind of absorbed there's a lot of Chinese material sitting over there, but I think.

John Romano: So we are seeing some activity, I would say, you know, right now. There's still a fair amount of volume that needs to get kind of absorbed. There's a lot of Chinese material sitting over there, but I think.

John Romano: In the mid to long term, we would see that as a lift for the business if they're put in place effectively. Because ultimately, the volume and the price implications that are attached should lead to better margins for us. And then as far as India and Brazil go, those investigations are underway. It's our expectation that we should see some sort of indication of what's happening in those two countries, sometime maybe late third quarter for Brazil and probably fourth quarter for India. We don't have a tremendous amount of visibility. Those investigations are still, I'd say, more in their infancy as far as the evaluation of what's going to happen there.

John: On the mid to long term, we would see that as a up a lift to the business. If they are put in place effectively.

John: Because ultimately the volume and the price implications that are attached that should lead to better margins for us and then as far as India and.

John Romano: And then, as far as India and Brazil go, those investigations are underway. It's our expectations that we should see some sort of indication on what's happening in those two countries. Sometime, maybe a late third quarter for Brazil, and probably fourth quarter for India. We don't have a tremendous amount of visibility. Those investigations are still, I'd say, more in their infancy as far as the evaluation of what's going to happen there. But those are two big markets, too. If you just think about Brazil's 180,000 market, and there's roughly 100,000 tons of Chinese exports going into Brazil, India is approximately 450,000 tons, and 12 trailing 12-month exports into India from China are 278,000 tons.

John: Brazil go those investigations are underway, it's our expectations that we should see some sort of indication on what's happening in those two countries sometime maybe late third quarter for Brazil, and probably fourth quarter for India, We don't have.

John: A tremendous amount of visibility those investigations are still I would say more in their infancy as far as the evaluation of what's going to happen there, but those are two big markets too. If you just think about Brazil, as a 180000 market and there's roughly 100000 tons of Chinese exports going into Brazil.

John Romano: But those are two big markets, too. If you just think about Brazil's 180,000 market, and there are roughly 100,000 tons of Chinese exports going into Brazil. India's approximately 450,000 tons, and trailing 12-month exports into India from China are 278,000 tons. And those tons can only go so many places. APAC, in general, if you exclude China, it's already 75% to 80% across that region saturated with Chinese material. So I think if those actions go into place, that should be a lift for business. Gotcha. Thank you.

John: India is approximately 450000 tons in 12 trailing 12 months exports into India from China, or 100 or 278000 tons.

Unknown Executive: And, you know, those tons can only go so many places. A pack in general, if you exclude China, it's already 75 to 80 percent across that region saturated with Chinese material. So I think if those actions go into place, that should be a lift for the business. Got you. Thank you.

John: And you know those tons can only go so many places APAC in general if you exclude China.

John: Already 75% to 80% across that region saturated with Chinese material. So I think if those actions go into place that should be a lift for the business.

Speaker Change: Gotcha. Thanks.

Unknown Executive: Thank you so much.

John: Thank you so much.

David Begleiter: Thank you. Your next question is from the line of David Beg, leader from Deutsche Bank. Please go ahead. Thank you. Good morning, John. On Zircon, he sized the shipment that was pushing to Q3. And on volumes here, what do you need to see if he finds improvements? Just training the man or could other factors help drive on improvement? Yeah, thanks for a question. And look, that was a couple of thousand tons. It was not a large volume. That's why we said we were largely flat. And normally you'd see, when we have historically, we've talked about rollovers that might have been bulk shipments.

Speaker Change: Thank you.

David Begleiter: Your next question is from the line of David Begleiter from Deutsche Bank. Please go ahead. Thank you. Good morning.

David Begleiter: Gotcha. Thank you so much. Thank you. Your next question is from the line of David Begleiter.

Speaker Change: Your next question is from the line of David Begleiter from Deutsche Bank. Please go ahead.

John Romano: John, on Zircon, can you size the

David Begleiter: Thank you good morning.

David Begleiter: John on Zircon King size the ship.

Speaker Change: Shipment I wish that was pushed into Q3.

Speaker Change: Volumes here, what do you need to see to see volumes improve its just Chinese demand or other factors helped drive an improvement.

John Romano: Yeah, thanks for the question. Look, that was a couple of thousand tons. It was not a large volume. That's why we said we were largely flat. And normally, you'd see when we talk about rollovers that might have been bulk shipments. These were container shipments, and it wasn't significant. And to your point, you know, we still haven't seen China recovering on the Zircon side of the business to the extent that that's why we're talking about flat volumes. It's pretty much where it was in the second quarter.

Speaker Change: Yeah. Thanks for the question.

Speaker Change: That was a couple of thousand tons. It was not a large volume.

Speaker Change: Why we said we were largely flat.

Speaker Change: Normally you would see when we as historically, we've talked about rollovers that might've been box shipments these where container shipments and it wasn't significant and to your point, we still haven't seen China recovering on the zircon side of the business to the extent that that's why we're talking about flat volumes, it's it's pretty much where it was.

John Romano: These were container shipments that it wasn't significant. And to your point, you know, we still haven't seen China recovering on the zircon side of the business to the extent that that's why we're talking about flat volumes. It's pretty much where it was in the second quarter. And, you know, from a market perspective, zircon consumption globally is about 50% in China, which is because it's heavily influenced by the ceramic market. But our position in China is not as significant as it was before. But in order to get the full potential of the Zircon back, we're going to need China, but we're covered.

John Romano: And from a market perspective, Zircon consumption globally is about 50% in China because it's heavily influenced by the ceramic market. Our position in China is not as significant as it was before. But in order to get the full potential of Zircon back, we're going to need China to recover. And it's just a bit early for us to determine when that's going to be.

John: In the second quarter and four.

John: Our market perspective zircon consumption.

John: Globally is about 50% in China.

John: Which is because it's heavily influenced by.

John: The ceramic market our position in China is not as significant as it was before but in order to get the full potential of the zircon back.

John: We're going to need China to recover it's just a bit early for us to determine when that's going to be.

Unknown Executive: And that's just a bit early for us to determine when that's going to be. Very good.

Unknown Executive: And just on a cat-bex, give me a little bit this year. How should you think about cat-bex in 25 even 26? Thank you. Yeah, 24, obviously, is a pretty sizable amount at 395 million, obviously, from the mining investments in South Africa. We will see some of that spend in 26 or 25, as well as, you know, those are multi-year type of capital projects, but we will see it come down from that level. So we expect to be less than where we were. Then where will be in 2024, probably in the mid 300 level. Thank you.

Speaker Change: Very good interest on our Capex.

Speaker Change: Given the elevated thing this year, how should we thinking about capex in 'twenty five 'twenty six thank you.

John Srivastava: Yeah, you know, 24, obviously, is a pretty sizable amount of 395 million from the mining investments in South Africa. We will see some of that spend in 26, or sorry, 25, as well as, you know, those are multi-year types of capital projects, but we will see it come down from that level. So we expect to be less than where we were when we are, and then we will be in 2024, probably in the mid 300 level. Thank you. 26 should start to trail.

Speaker Change: Yeah.

Speaker Change: 24, obviously is a pretty sizable amount of $395 million, obviously from the mining investments in South Africa.

Speaker Change: We will see some of that spend in 'twenty six 'twenty five as well as you know those are multiyear type of capital projects, but we will see it come down from that level. So we expect to be less than where we were when more than where it will be in 2024, probably in the mid 300 level.

John Srivastava: 26 should start to trail down from there.

Unknown Executive: 26 should start to trail down from there. Thank you.

John: Thank you twenty-six should start to trail down from there.

Speaker Change: Thank you.

Speaker Change: Okay.

Speaker Change: Okay.

Josh Specter: Next question is from the line of Josh Specter from UBS. Please go ahead. Yeah, hi, good morning.

Josh Spector: The next question is from the line of Josh Spector from UBS. Please go ahead. Yeah, hi, good morning.

Speaker Change: Next question is from the line of Josh Spector from UBS. Please go ahead.

James Cannon: Yeah, hi, good morning. This is James Cannon. I'm here for Josh.

James Cannon: I just wanted to poke fun at the guidance. So if you call out the $15 million impact from the ramp-up outage, your guide is only down $6 million, and you're also talking about volumes being slightly down. What is the, what's the offset that Bridges 15 to 6.

Speaker Change: Yes, Hi, good morning. This is James Cameron on for Josh I, just wanted to poke on the guidance. So if you call out the $15 million impact from the.

James Cannon: This is James Cannon of Josh. I just wanted to poke on the guidance. So if you call out the $15 million impact from the ramp up outage, your guide is only down to $6 million. You're also talking about volumes being slightly down. What is the offset that bridges 15 to 6? We did mention, you know, it's 15 million from the fixed cost leverage, but another 5 million of hurt on effects, assuming that rate stayed where they are today. I think on the upside you do, you know, we have said that pricing is expected to increase slightly throughout the quarter as well.

Speaker Change: Wrap up outage.

Speaker Change: Your guide is only down $6 million, you also talked about volumes being slightly down.

Speaker Change: What is the what's the offset.

Speaker Change: Net debt.

Speaker Change: Great is 15% to six.

John Srivastava: We did mention, you know, it's $15 million from the fixed cost leverage, but another $5 million of hurt on FX, assuming that rates stay where they are today. I think on the upside, you know, we have said that pricing is expected to increase slightly throughout the quarter as well.

Speaker Change: But we did mentioned.

Speaker Change: It's 15 million from the fixed cost leverage by another $5 million.

Speaker Change: Hurt on FX, assuming that rates stay where they are today.

Speaker Change: I think on the upside you do we.

Speaker Change: We have said that pricing is expected to increase slightly.

Speaker Change: Slightly throughout the quarter as well.

James Cannon: Did that answer your question? Yeah, thanks.

John Srivastava: Did that answer your question?

Speaker Change: Did that answer your question.

James Cannon: Yeah, thanks. And then just on the.

Speaker Change: Yes. Thanks.

John Service: And then just on the capex guy, I think you lifted that from 350 to 395.

Speaker Change: And then just on the.

John Srivastava: On the CapEx guide, I think you lifted that from 350 to 395. Was that all related to the outage? Or was there anything else? I think if I looked at the second quarter cash flow, you didn't really have any step up in CapEx there.

Speaker Change: On the Capex Guide I think you lifted that from <unk>.

Speaker Change: 350 to 395 was that all related with the outage or was there anything else I think if I looked at the second quarter cash flow you didn't really have any step up in capex there.

John Service: Was that all related with the outage, or was there anything else? I think if I looked at the second quarter cash flow, you didn't really have any step up in capex there. Yeah, now 395 has been our guide, you know, for several quarters now. But nothing to do with any grant up issues.

John Srivastava: Yeah, I know 395 has been our guide, you know, for several quarters now, but that had nothing to do with any ramp-up issues.

Speaker Change: Yes, I know 295 has been our guide.

Speaker Change: For several quarters now that had nothing to do with any ramp up issues.

John Srivastava: That had nothing to do with any ramp-up issues. Okay, thank you. Your next question comes from the line of Mike Leithead from Barclays.

Unknown Executive: Okay, thank you.

Speaker Change: Okay. Thank you.

Mike Leithead: Your next question comes from the line of Mike Leithead from Barclays. Please go ahead. Great, thanks. Good morning, guys. Just one for me. I wanted to follow back up actually on I think with Nulti's working capital question earlier. I think you said you need to rebuild some inventory in the second half. I guess when I look at your income statement, dollar inventories still at all time highs and your days inventories quite high.

Mike Leithead: Your next question comes from the line of Mike Leithead from Barclays. Please go ahead.

Mike <unk>: Your next question comes from the line of Mike <unk> from Barclays. Please go ahead.

Mike <unk>: Great. Thanks, Good morning, guys.

Mike: Just one for me I wanted to follow back up actually.

Mike: Both these working capital question earlier, I think you said you need to rebuild some inventory in the second half.

Speaker Change: I guess when I look at your income statement dollar inventories still at all time high and your days of inventory is quite high. So maybe it's a product mix difference, but can you just help triangulate that for me.

John Service: So maybe it's a product mixed difference, but do you just help triangulate that for me?

John Service: So I'll make a quick comment on what I was referring on inventories, and that was finished good inventories on the pigment side, and I'll let John talk about our overall inventory, John. Yeah, so, you know, obviously pigment inventories have we expect to increase just from the ramp up, and it will depend on what happens the rest of the year from a commercial perspective, similarly on Zircon. We are building Zircon inventory throughout the year. You know, we are at much lower levels than even in this higher environment in Q1 and Q2, much lower than what our production levels are.

John Romano: So I'll make a quick comment on what I was referring to in inventories, and that was finished goods inventories on the pigment side, and then I'll let John talk about our overall inventory, John.

Speaker Change: So I'll make a quick comment on the what I was referring on inventories and that was finished goods inventories on the pigment side and then I'll, let John talk about our overall inventory John.

John Srivastava: Yeah, so, obviously, pigment inventories we expect to increase just from the ramp-up, and it will depend on what happens the rest of the year from a commercial perspective.

John: Yeah. So obviously pigment inventories, we expect to increase just from the ramp up.

John: And it will depend on what happens the rest of the year from a commercial perspective similarly on zircon.

John Srivastava: Similarly, on Zircon, we are building Zircon inventory throughout the year. You know, we are at much lower levels than in this higher environment in Q1 and Q2, much lower than what our production levels are. And then from a feedstock perspective, you know, we do continue to run our mines relatively flat out. So you did see a bit of a jump in Q2, which aligns with our pigment assets being down a bit. So we weren't consuming that feedstock through the cycle. There's also an element of cost attached to that inventory. So it's not just time.

John: Our buildings are kind of inventory throughout the year, we are at much lower levels than.

John: Even in this higher environment in Q1, and Q2 much lower than what our production levels are.

John Service: And then from a few stock perspective, you know, we do continue to run our minds relatively flat out. So, you did see a bit of a jump in Q2, which aligns with our pigment assets being down a bit. So, we weren't consuming that feed stock through the cycle. There's also an element of cost to catch that inventory. So, it's not just tons. Remember, we still have this fixed cost to high fixed cost inventory that we talked about working our way through in the second half of the year. We had the impact that we talked about earlier, that where we were ramping up and we didn't get the benefit of that.

John: And then from a feedstock perspective, we.

Mike: We do continue to run our mines relatively flat out.

Mike: You did see a bit of a jump in Q2.

Mike: Which aligns with our pigment assets being down a bit. So we were consuming that feedstock through the cycle. Theres also an element of cost attached to that inventory. So its not just tons remember we still have this fixed cost the high fixed cost inventory that we talked about working our way through in the second half of the year, we had the impact that we talked about earlier.

John Romano: There's also an element of cost attached to that inventory, so it's not just tons. Remember, we still have this fixed cost, high fixed cost inventory that we talked about working our way through in the second half of the year. We had the impact that we talked about earlier where we were ramping up, and we didn't get the benefit of that. So it's not only the tons, it's the actual cost of that inventory that's sitting on them on the balance sheet that we will continue to work through as we migrate through the year and into next Okay, thank you. Your next question is:

Mike: Where we were ramping up and we didn't get the benefit of that so it's not only the tons. It's the actual cost of that inventory that's sitting on them on the balance sheet that will continue to work through as we migrate through the year and into next.

John Service: So, it's not only the tons. It's the actual cost of that inventory that's sitting on the balance sheet that will continue to work through as we migrate to the year and into the next.

John Roberts: Okay, thank you. Your next question is from the line of John Robert from Miso. Please go ahead. Yeah, thank you. John, I just wanted to follow up back on the earlier tariff discussion. There are you suggesting that China is going to turn down its production because of the European tariffs and not be able to find new export markets for their volume?

Speaker Change: Okay. Thank you.

John Robert: Your next question is from the line of John Robert from Mizuho. Please go ahead.

Mike: Your next question is from the line of John Roberts from Mizuho. Please go ahead.

John Roberts: Yes. Thank you John I, just wanted to follow up back on the earlier tariffs discussion there or are you, suggesting that China is going to turn down its production because of the European tariffs and not be able to find new export markets for their volume.

John Romano: Well, I won't presuppose what China is going to do because I've been kind of pondering what they've been doing for the last three years and haven't been right yet. That being said, they're already starting to slow production now. We have a plant over there. We're pretty aware of what's happening in China. So, there will be an impact. I mean, if you think about it from a cost perspective, they're moving volumes into other regions of the world on the assumption that EU duties are going to go into place, and they're doing that with price. At the same time, you haven't seen any improvement in cost.

Mike: Yeah.

John Romano: Well, I won't presuppose what China is going to do because I've been, you know, kind of Pondering what they've been doing for the last three years and I haven't been around yet. That being said, they're already starting to slow production down. We have a plant over there, and we're pretty aware of what's happening in China. So there will be an impact.

Speaker Change: Well I won't presuppose, what China is going to do because I've been kind of <unk>.

Speaker Change: Wondering what they've been doing for the last three years.

Speaker Change: I haven't been right yet.

Speaker Change: Being said, they're already starting to slow production down.

Speaker Change: We have a plant over there were pretty aware of what's happening in China.

Speaker Change: So there will be an impact I mean, if you're thinking about it from a cost perspective.

John Romano: I mean, if you think about it from a cost perspective. They're moving volumes into other regions of the world on the assumption that those EU duties are going to go into place. And they're doing that with price.

Speaker Change: Theyre moving volumes into other regions of the world on the assumption those EU duties are going to go into place and they're doing that with price at the same time, you haven't seen any improvement in cost we've stated.

John Romano: At the same time, you haven't seen any improvement in cost. We've stated many times that at much higher prices, the majority of those Chinese companies or producers are losing money. Ilmenite pricing has not gone down; it's actually starting to trend up. Sulphur pricing, which is another significant input cost for them, is starting to trend in the upward direction. So I think the short answer, John, is that one would have to assume that some sort of consolidation or closures would happen there if there was not a home for what. I mean, if you just do the math real quick, it's call it 250,000 tons in India, 250,000 tons in the EU, and 100,000 tons in Brazil. If all of those were to go into place, there's not another 600,000 tons of demand to fill them.

John Romano: We've stated many times that, at much higher prices, the majority of those Chinese companies or producers are losing money. Elmanite pricing has not gone down. It's actually starting to trend up. Solfer pricing, which is another significant input cost for them, has not; it's starting to trend in the upper direction.

Speaker Change: Many times that at much higher prices the majority of those Chinese companies or producers are losing money.

Speaker Change: <unk> pricing has not gone down it's actually starting to trend up sulfur pricing, which is another significant input cost for them has not it's starting to trend in the upper direction. So I think the short answer John is that.

John Romano: So, I think the short answer, John, is that one would have to assume that some sort of consolidation or closures would happen there if there is not a home for what, I mean, if you just do the math real quick, it's call it 250,000 tons. In India, 250,000 tons; in the EU, and 100,000 tons in Brazil. If all of those were to go into place, there's not another 600,000 tons of demand to fill out.

Speaker Change: One would have to assume that some sort of consolidation or closures what happened. There. If there is not a home for what if you just do the math real quick it's call. It 250000 tons in India 250000 tons in the EU and 100000 tonnes in Brazil, if all of those were to go into.

Speaker Change: It plays into place, there's not another 600000 tons of demand to fill it.

Unknown Executive: OK, then I'm not sure what's going on with Venator and Cronos these days, but are there any other competitive dynamics going on in Europe besides the Chinese competition? We typically don't comment on our competitors. I mean, the only thing that's public out there is that Venator sold their interest in Louisiana pigment plants over to Cronos. That was not a surprise to us. They were the natural buyer. Since that was their joint venture partner, and we don't see that as a negative. Thank you.

John Romano: I'm not sure what's going on with Venator and Kronos these days, but are there any other competitive dynamics going on in Europe besides the Chinese competition? And we typically don't comment on our competitors. I mean, the only thing that's public out there is that Venator sold their interest in the Louisiana pigment plants to Kronos.

Speaker Change: Okay, and then I'm not sure what's going on with Benetton Kronos. These days, but are there any any other competitive dynamics going on in Europe. Besides the Chinese competition.

Speaker Change: And we typically don't comment on our competitors I mean, the only thing that's public out there is that minotaur sold their interest.

Speaker Change: Louisiana pigment plants over to Kronos that was not a surprise to us they were the natural buyer since that was their joint venture partner and we don't see that as a negative.

John Romano: That was not a surprise to us. They were the natural buyer since that was their joint venture partner. And we don't see that as a negative.

Speaker Change: Okay. Thank you.

Speaker Change: Yeah.

Turner Hinrichs: Your next question is from the line of Vincent Andrews for Morgan Stanley. Please go ahead. Hi, this is Turner Hinrichs on for Vincent. I was hoping that you could speak to TIO to inventory levels specifically. Where do you see them in Europe right now relative to normal levels? And what are your expectations as to whether stocking could be a tailwind or a headwind in the near term? Thank you.

Vincent Andrews: Your next question is from the line of Vincent Andrews from Morgan Stanley. Please go ahead.

Speaker Change: Your next question is from the line of Vincent Andrews from Morgan Stanley. Please go ahead.

Turner Hinrichs: Hi, this is Turner Hinrichs speaking on behalf of Vincent. I was hoping that you could speak to TIO2 inventory levels specifically. Where do you see them in Europe right now relative to normal levels? And what are your expectations as to whether stocking could be a tailwind or a headwind in the near term? Thank you.

Turner Hendrix: Hi, This is Turner Hendrix on for Vincent I was hoping that you could speak to tio to inventory levels, specifically, where do you see them in Europe, right now relative to normal levels and what are your expectations as to whether stocking.

Speaker Change: Tailwind or a headwind in the near term. Thank you.

John Romano: I think last quarter, thanks for the call, Turner, that we stayed at last quarter that there were three things that were driving the lift in demand: it was destocking, customers getting back to normal buying patterns, and then it was an element of demand. So we think destocking has in fact run its course. And I'm talking about now customers' inventory, not suppliers' inventory, and I won't talk about industry inventory. I'll talk about hours. Our inventories have trended down in the first half of the year. We sold more in the first quarter than we produced. We sold more in the second quarter than we produced.

John Romano: I think last quarter, and thanks for the call, Turner. We stated last quarter that there were three things that were driving the lift in demand. It was destocking, customers getting back to normal buying patterns, and then there was an element of demand. So we think destocking has, in fact, run its course. And I'm talking now about customers' inventory, not suppliers' inventory, and I won't talk about industry inventory. I'll talk about ours later.

Speaker Change: Yeah, I think last quarter, thanks to the called Turner.

Speaker Change: We stated last quarter that there were three things that were driving the lift in demand. It was destocking customers getting back to normal buying patterns and then there was an element of demand. So we think destocking hasn't in fact run its course, but im talking about now customers inventory not suppliers' inventory and I won't talk about the industry inventory I'll talk about.

John Romano: Our inventories have trended down in the first half of the year. We sold more in the first quarter than we produced. We sold more in the second quarter than we produced, so I made reference to some areas where we actually need to build inventory, but where we feel we are right now, based on the third quarter projection of demand and where we feel we will be in the fourth quarter, we think that our production is in line with making sure we have the inventory that we need to be able to fill our customers' requirements, considering all the other dynamics that are going on in the industry. So I won't comment on other competitors. There are other competitors though. But does that answer your question? Yeah,

Turner Hendrix: Ours are inventories have trended down in the first half of the year.

Turner Hendrix: We sold more in the first quarter than we produce we sold more in the second quarter than we produced.

John Romano: So I made reference that there is some areas where we actually need to build inventory, but where we feel we are right now based on second or the third quarter projection on demand and where we feel we would be in the fourth quarter. We think that our production is in line with making sure we have the inventory that we need to be able to fill our customers' requirements, considering all the other dynamics that are going on in the industry. So I won't comment on other competitors, though. But does that answer your question? Yeah, absolutely appreciate the color.

Turner Hendrix: So I made reference that there is some areas, where we actually need to build inventory, but where we feel we are right now based on second or the third quarter projection on on demand and where we feel we will be in the fourth quarter. We think that our production is in line with making sure. We have the inventory that we need to be able to fill our customers' requirements.

Speaker Change: <unk> all the other dynamics that are going on in the industry. So I wont comment on other competitive.

Speaker Change: Our other competitors, though but does that answer your question.

Turner Hinrichs: Yeah, absolutely. Appreciate the color. Do you mind providing a little or a few thoughts on your medium to long-term capital allocation priorities, just what they'll be following the paydown of debt and mining project investments that you all are doing right now?

Speaker Change: Yeah, absolutely I appreciate the color.

John Romano: Do you mind providing a little or a few thoughts on your medium to long term capital allocation priorities, just what they'll be following the pay down of debt and mining project investments that you all are doing right now? Yeah, so I mean again, we stated in the prepared comments that our capital allocation policy hasn't changed. Yeah, we're going to continue to invest in strategic projects to maintain our vertical integration. When the market starts to return, we will start to focus on paying down debt so we can maintain our liquidity and look at our long-term debt portfolio, which we have talked about getting down close to two billion would be the long-term target.

Speaker Change: Do you mind, providing a little.

Speaker Change: There are a few thoughts on your medium to long term capital allocation priorities, just what they'll be following the pay down of debt.

Speaker Change: Mining project investments that you all are doing right now.

John Romano: Yeah, so I mean, again, we stated in the prepared comments that our capital allocation policy hasn't changed. Yeah, we're going to continue to invest in strategic projects to maintain our vertical integration. You know, when the market starts to return, we will start to focus on paying down debt so we can maintain our liquidity and look at our long-term debt portfolio, which we have talked about getting down close to 2 billion would be the long-term target.

Speaker Change: Yeah. So I mean again, we've stated in the prepared comments that our capital allocation policy Hasnt changed.

Speaker Change: Yeah, we're going to continue to invest in strategic projects to maintain our vertical integration.

Speaker Change: When the market starts to return we will start to focus on paying down debt. So we can maintain our liquidity.

Speaker Change: And look at our long term debt portfolio, which we have talked about getting down close to $2 billion would be a long term target.

John Romano: And then, ultimately and consistently, we've talked about maintaining the dividend. So not a lot of change on our capital allocation projects, and obviously then there are the things that we've talked about: the rare earth business. You know, we don't have a lot more to comment on that, but that's still something that's continuing to evolve. We're taking a pace to approach at that. There's lots of movements going on in that industry as well. We don't want to take a step into that area to work confident that our plan is going to be something that's viable in the long term generating good returns for the business long term.

John Romano: And then ultimately, and consistently, we've talked about maintaining the dividend. So not a lot of change on our capital allocation projects. And obviously, then there are other things that we've talked about in the rare earth business. We don't have a lot more to comment on that, but that's still something that's continuing to evolve. We're taking a slow approach to that. There are lots of movements going on in that industry as well. And we don't want to take a step into that area. So we're confident that our plan is going to be something that's viable in the long term, generating good returns for the business in the long term.

Speaker Change: And then ultimately.

Speaker Change: And consistently we talked about maintaining the dividend so not a lot of change on our capital allocation projects and obviously then there are the things that we've talked about the rare Earth business. So we don't have a lot more to comment on that but that's still something that's continuing to evolve we are taking a paced approach it that theres lots of movements going on in that industry is one of them, we don't want to take a step.

Speaker Change: And of that area till we're confident that our plan is going to be something that's viable long term generating.

Speaker Change: Good returns for the business long term.

Unknown Executive: Great. Thanks. Looking forward to hearing more about it in the future.

Turner Hinrichs: Great. Thanks. Looking forward to hearing more about it in the future.

Speaker Change: Great. Thanks, looking forward to hearing more about it in the future.

Hassan Ahmed: Thank you. Your next question is from the line of Hassan Ahmed from Alembic Global. Please go ahead.

Speaker Change: Thank you.

Hassan Ahmed: Your next question is from the line of Hassan Ahmed from Alembic Global. Please go ahead.

Speaker Change: Your next question is from the line of Hassan Ahmed from Alembic Global. Please go ahead.

John Romano: Morning, John. You know, a bit of a confusing quarter from a demand perspective. I'm just trying to get a better sense. I mean, you obviously talked about your operating rates not being where you wanted them to be, hence coming in at the lower end of the guidance range. I'm just trying to get a better feel for underlying demand, right? I mean, on the one hand, some of your raw material providers, Olin in particular, talked about how the TIO2 industry didn't sort of ramp up the way they had expected it to. So, you know, you know, they were disappointed a bit over there.

Hassan Ahmed: Morning, John. You know, a bit of a confusing quote. I'm from a demand perspective. I'm just trying to get a better sense. I mean, you obviously talked about your operating rates, not being where you wanted them to be; hence, coming in at the lower end of the guidance range. I'm just trying to get a better feel of underlying demand, right? I mean, on one side of fact, some of your raw material providers, you know, Olin in particular, talked about how the TiO2 industry, you know, didn't sort of ramp up the way they had expected it to.

Hassan Ahmed: Good morning, John.

Speaker Change: Yeah.

Hassan Ahmed: A bit of a confusing quarter I'm from from a demand perspective.

Speaker Change: I'm, just trying to get a better sense I mean, you obviously talked about your operating rates not being where you wanted them to be hence coming in at the lower end of the guidance range.

Speaker Change: I'm, just trying to get a better feel of underlying demand right I mean on one side of it some of your raw material providers all in in particular talked about how the tio to industry.

Dan: You know Dan sort of ramp up the way they had expected it to so.

Hassan Ahmed: So, you know, they disappointed a bit over there. Some of the coding guys are also talking about demand not being great. I mean, can you just sort of, you know, give us a better sense of what demand looks like, be it reasonably, be it from an end-market perspective. And, you know, I mean, the added complexity obviously is inventory levels, anti-dumping stuff. You know, there're all these different moving parts. So, I mean, you know, if you could just give us a sense of where underlying demand is regionally and market-wise, could you actually hit high levels of demand even without sort of global economies recovering with this anti-dumping sort of stuff that seems to be expanding across regions and the like?

Speaker Change: They disappointed a bit over than some of the coatings guys are also talking about demand not being great. I mean can you just sort of give us a bit of a sense of what demand looks like be it reasonably be it from an end market perspective.

Hassan Ahmed: Some of the code guys are also talking about demand not being great. I mean, can you just sort of, you know, give us a better sense of what demand looks like, be it regionally, be it from an end market perspective? And, you know, I mean, the added complexity, obviously, is inventory levels and anti-dumping stuff. You know, there are all these different moving parts. So, I mean, you know, if you could just give us a sense of where underlying demand is regionally and market-wise, could you actually hit high levels of demand even without sort of global economies recovering with this anti-dumping sort of stuff that seems to be expanding across regions and the like?

Hassan Ahmed: And you know I mean, the added complexity, obviously is inventory levels anti dumping stuff. There are all these different moving parts. So.

Speaker Change: If you could just give us a sense of where underlying demand is regionally end market wise.

Speaker Change: Could you actually hit high levels of demand, even without sort of global economies recovering with this anti dumping sort of stuff that seems to be expanding across regions and the like.

John Romano: Yeah, thanks, Hassan. That's a great question because, when you think about it, there is no shortage of variables out there that are kind of factoring in that the answer to that question. But I'll start with, you know, your comment on chlorine, right? And that particular supplier that you referenced, you know, would be a supplier in the North American market. North America was a big part of that, you know, 8%. Right? We've talked about 8% growth and T02 usage are sales Q1 to Q2. We saw an increase in demand and sales in the Americas. We saw an increase in supply globally, but in the U.S., I would say that particular asset is running well above 80%.

John Romano: Yeah, thanks, Hassan. It's a great question. Because when you think about it, there is no shortage of variables out there that are kind of factoring in the answer to that question. But I'll start with, you know, your comment on chlorine, right? And that particular supplier that you referenced, you know, would be a supplier in the North American market. North America was a big part of that, you know, 8%. We talked about 8% growth in TiO2 usage, and our sales from Q1 to Q2. We saw an increase in demand and sales in the Americas. We saw an increase in supply globally, but in the U.S., I would say that particular asset is running well above 80%.

Greg: Yeah. Thanks, Greg.

Speaker Change: A great question because.

Speaker Change: When you think about it there is no shortage of variables out there that are kind of factoring in the answer to that question, but I'll start with your comment on chlorine and that particular supplier that you referenced.

Speaker Change: <unk> would be a supplier in the north American market in North America.

Speaker Change: It was a.

Speaker Change: Part of that 8% right, we've talked about 8% growth in T O two usage our sales queue.

Speaker Change: Q1 to Q2, we saw increase in demand and sales in the Americas, we saw an increase in supply globally, but in the U S. I would say or that particular asset is running well above 80%.

John Romano: So, I'm not exactly sure how that correlates to that supplier, but you know, our chlorine consumption has not pulled back. You know, generically, when you just think about the 2 to 4%, I talked about in third quarter demand growth. Last quarter, we kind of gave some general ideas that the third quarter could be up; it could be down, and a lot of that was going to be driven by demand. So, again, the three things that we said were factoring into this recovery were destocking and run its course. Customers were getting back to normal buying patterns, and demand was that other factor.

John Romano: So, I'm not exactly sure how that correlates to that supplier, but, you know, our chlorine consumption has not pulled back. Generically, when you just think about the two to 4% I talked about in third quarter demand growth last quarter, we kind of gave some general ideas that the third quarter could be up, it could be down, and a lot of that was gonna be driven by demand. So again, the three things that we said were factoring into this recovery were de-stocking having run its course, customers were getting back to normal buying patterns, and demand was that other factor.

Speaker Change: So I'm not exactly sure how that correlates to that supplier, but.

Hassan Ahmed: Our chlorine consumption has not pulled back.

Hassan Ahmed: Generically when you just think about the 2% to 4% I talked about.

Hassan Ahmed: In third quarter demand growth last quarter, we kind of gave some general ideas that the third quarter could be up it could be down in a lot of that was going to be driven by demand. So.

Hassan Ahmed: Again, the three things that we said we're factoring into this recovery, where Destocking has run its course customers, we're getting back to normal buying patterns and demand was that other factors. So we didn't see demand pick up as much as we would have maybe initially thought it could happen in the third quarter, so 2% to 4%.

John Romano: So, we didn't see demand pick up as much as we would have maybe initially thought it could have in the third quarter. So, 2 to 4% is absolutely in line with what we would see as far as seasonal demand trends. Europe right now, for instance, August is typically a pretty weak month because people are on holiday; we're not seeing that. August seems to be pretty strong. So, you know, what's going to happen in September? The order book looks reasonably good for September, but it's still a bit early for that one.

John Romano: So we didn't see demand pick up as much as we would have maybe initially thought it could have in the third quarter. So two to 4% is absolutely in line with what we would see as far as seasonal demand trends are concerned. Right now, in Europe, for instance, August is typically a pretty weak month because people are on holiday. But we're not seeing that. August seems to be going pretty strong. So what's going to happen in September? The order book looks reasonably good for September, but it's still a bit early for that one.

Hassan Ahmed: <unk> is absolutely in line with what we would see as far as seasonal demand trends.

Speaker Change: Right now for instance August is typically a pretty weak month because people on holiday, we're not seeing that August seems to be pretty strong. So you know whats going to happen in September the order book looks reasonably good for September, but it's still a bit early for that one Asia Pacific India for Us is can.

John Romano: Asia Pacific, India, for us, it's an interesting comment because we've had even some internal questions with those exports that went into India: what's happening to our demand there? Our demand is still good in India. We have a very significant position in India supported by a free trade agreement with Australia, which provides us, I think, some runway to manage through any kind of maybe pre-positioning of Chinese material, even though there's more exports going into that region.

John Romano: Asia Pacific. India for us is, you know, it's an interesting comment because we've had even some internal questions with those exports that went into India, what's happening to our demand there? Our demand is still good in India. We have a very significant position in India supported by the free trade agreement out of Australia, which provides us, I think, some runway to manage through, you know, any kind of maybe prepositioning of Chinese material, even though there's more exports going into that region. So, it's a bit mixed globally, but when we think about the rest of the year and demand, and why we're continuing to ramp up, it is in fact to make sure we can hit the demand that we're forecasting.

Speaker Change: It's an interesting comment because we've had even some internal questions with those exports that went into India, what's happening to our demand. There are demand is still good in India. We have a very significant position in India supported by the free trade agreement out of Australia, which provides us I think some runway to match.

Hassan Ahmed: <unk> through <unk>.

Hassan Ahmed: Any kind of maybe pre positioning of Chinese material, even though theres more exports going into that region. So it's a bit mixed globally, but when we think about the rest of the year end demand and why we're continuing to ramp up it is in fact to make sure. We can hit the demand that we're forecasting and.

John Romano: So it's a bit mixed globally, but when we think about the rest of the year and demand and why we're continuing to ramp up, it is, in fact, to make sure we can hit the demand that we're forecasting. And I made the comment before, we're not back to where we were. 80% capacity utilization is not...

John Romano: And, you know that I made the comment before we're not back to where we were. 80% capacity utilization is not a recovery by any means. So, we still got some upside. It's a big recovery from a trust of 23, but we still got some runway to move up. There you go.

Hassan Ahmed: I made the comment before we're not back to where we were 80% capacity utilization.

Hassan Ahmed: Is not a recovery by any means so we've still got some upside it's a big recovery from a trough the twenty-three, but we've still got some runway to move up.

John Romano: Hassan, over the past two years, if you recall, we've been doing...

John Romano: Hassan, over the past two years, if you recall, we're down almost 30% from a volume perspective. So, here today we have seen a significant recovery, but still only up 17% versus that 30, roughly 30%. So much more room to grow. No, that makes complete sense.

Hassan Ahmed: Robert has done over the past two years, if you recall, we're down almost 30% from a volume perspective, so year to date, we have seen a significant recovery, but still only up 17% versus that 30, roughly 30% so much more room to grow.

Hassan Ahmed: Now, that makes complete sense. And maybe, you know, I can sort of try to, you know, make you guys put some numbers around that, you know, using some of the stuff that you guys have already talked about, you know, in particular, that 25 to 35 million dollar quarterly hit that you guys talked about, you know, from sort of underutilized assets, you know, if that's the right phrase. So let's assume for a second that you guys continue operating at rates that you hit in July, you know, that 80% figure that you guys talked about. Would that be enough to recover those 25 to 35 million dollars worth of headwinds, I guess, you know, at that sort of run rate? Yes. Fair enough. Okay. Thank you so much.

Speaker Change: That makes complete sense and maybe you know I can sort of.

Hassan Ahmed: And maybe I can sort of try to make you guys put some numbers around that. Using some of the stuff that you guys have already talked about, in particular that 25 to 35 million dollar quarterly hit that you guys talked about from underutilized assets, if that's the right phrase. So let's assume for a second that you guys continue operating at rates that you hit in July. You know that 80% say that you guys talked about, would that be enough to recover those 25 to 35 million dollars worth of headwinds, I guess, you know, at that sort of run rate.

Speaker Change: Try again.

Speaker Change: You guys put some numbers around that.

Speaker Change: Using some of the stuff that you guys have already talked about in particular that 25% to $35 million quarterly hit that you guys talked about.

Speaker Change: You know from sort of underutilized assets.

Hassan Ahmed: If that's the right phrase.

Speaker Change: So, let's let's assume for a second if you guys continue operating at rates that you hit in July.

Speaker Change: 80% figure that you guys talked about would that be enough to recover those 25% to 35 million.

Speaker Change: Does what off the headwinds I guess you know.

Speaker Change: That's sort of run rate.

Hassan Ahmed: Yes.

Speaker Change: Fair enough okay. Thank you so much.

Operator: Thank you.

Hassan Ahmed: Yeah.

Hassan Ahmed: Thank you.

John Romano: There are no further questions at this time.

John Romano: There are no further questions at this time. I'll hand the call over to John Romano for closing remarks. Sir, please go ahead. Thank you.

Hassan Ahmed: There are no further questions at this time I'll hand, the call over to John Romano for closing remarks, Sir. Please go ahead.

John Romano: I'll hand the call over to John Romano for closing remarks. Sir, please go ahead.

John Romano: Thank you, operator. Our team is highly focused on ensuring we deliver our commitments to our stakeholders, and our vertically integrated business model serves as a differentiator for Tronox by providing security supply from a global footprint that we can leverage to our customers' advantage. And co-products that contribute significant value to our portfolio. Our results wouldn't be possible without the ongoing efforts of our Tronox team, though.

John Romano: Thank you operator.

John Romano: Our team is highly focused on ensuring we deliver our commitments to our stakeholders, and our vertically integrated business model serves as a differentiator for Tronox by providing security of supply from a global footprint that we can leverage to our customers' advantage and co-products that contribute significant value to our portfolio. Our results wouldn't be possible without the ongoing efforts of our Tronox team, though. And I'd like to take this opportunity to thank the Tronox team for their dedication to operating safely and their steadfast commitment to fulfilling our customers' needs. I thank you for your support and your interest in Tronox, and that would be the end of the call.

John Romano: Our team is highly focused on ensuring we deliver our commitments to our stakeholders and our vertically integrated business model serves as a differentiator for tronox by providing security of supply from a global footprint that we can leverage to our customers' advantage and co products that contribute significant value to our portfolio our.

Speaker Change: Our results wouldnt be possible without the ongoing efforts of our Tronox team, though and I'd like to take this opportunity to thank the tronox team for their dedication to operating safely and their steadfast commitment to fulfilling our customers' needs.

John Romano: And I'd like to take this opportunity to thank the Tronox team for their dedication to operating safely and their steadfast commitment to fulfilling our customers' needs.

John Romano: I thank you for your support and your interest in Tronox, and that would be the end of the call.

Speaker Change: Thank you for your support and your interest in Tronox and that would be the end of the call have a nice day.

Operator: Have a nice day.

Operator: Ladies and gentlemen, this concludes today's conference. Thank you very much for your participation.

Operator: Ladies and gentlemen, this concludes today's conference. Thank you very much for your participation. You may now disconnect.

Speaker Change: Ladies and gentlemen. This concludes today's conference. Thank you very much for your participation you may now disconnect.

You may now disconnect.