Q1 2025 Tronox Holdings PLC Earnings Call

[music].

Good morning, welcome to the Tronox Holdings Plc, Q1, 2025 earnings conference call.

Operator: Welcome to the Tronox Holdings PLC Q1 2025 Earnings Conference Call. All participants will be in a listen-only mode until the question and answer session begins. Following the presentation, we will conduct a question and answer session.

All participants will be in a listen only mode until the question and answer session begins.

Following the presentation, we will conduct a question and answer session.

Operator: This call is being recorded. If you have any objections, please disconnect at this time.

This call is being recorded.

Speaker Change: You have any objections. Please disconnect at this time.

Jennifer Guenther: I would now like to turn the call over to Jennifer Guenther, Chief Sustainability Officer, Head of Investor Relations and External Affairs. Please go ahead.

Speaker Change: I would now like to turn the call over to Jennifer Zhang Chief Sustainability Officer head of Investor Relations and external Fas. Please go ahead.

Speaker Change: Yes.

Jennifer Guenther: Thank you and welcome to our first quarter 2025 conference call and webcast.

Speaker Change: Thank you and welcome to our first quarter 2025 conference call and webcast turning to slide two on our call today are John Romano, Chief Executive Officer, and John <unk>, Senior Vice President Chief Financial Officer.

Jennifer Guenther: 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.

Speaker Change: We will be using slides as we move through today's call you can access the presentation on our website at Investor Dot Tronox Dotcom 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.

Operator: Moving to slide three.

Jennifer Guenther: 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: 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.

Jennifer Guenther: During the conference call, we will refer to certain non-US GAAP financial terms that we use in the management of our business and believe are useful to investors in evaluating the company's performance. Reconciliations to their nearest US GAAP terms are provided in our earnings release and in the appendix of the accompanying presentation. Additionally, please note that all financial comparisons made during the call are on a year-over-year basis unless otherwise noted.

Speaker Change: 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 companys 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. 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.

John Romano: It is now my pleasure to turn the call over to John Romano. John? Thanks, Jennifer, and good morning, everyone.

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

John Romano: We'll begin this morning on slide four with some key messages from the quarter. We realized a stronger than normal seasonal demand uplift in TIO2 volumes in Q1, with an increase of 12% from the Q- Q4 of 2024. Europe led to sequential growth bolstered by anti-dumping duty. We are beginning to see the expected benefits from the duties that were finalized in the EU in January, resulting in sales volumes recovering to levels not seen since the second quarter of 2021 in Europe. North America also realized stronger seasonable trends while competitive activity in Latin America, the Middle East, and Asia continued to exert pressure on sales.

Speaker Change: We realized a stronger than normal seasonal demand uplift in tier two bonds in Q1 with an increase of 12% from the queue.

John Romano: Q4 2024.

John Romano: Europe led to sequential growth bolstered by anti dumping duties. We are beginning to see the expected benefits from the duties that were finalized in the EU in January resulting in sales volumes recovering to levels not seen since the second quarter of 2021 in Europe.

John Romano: North America also realized stronger seasonable trends, while competitive activity in Latin America, the middle East and Asia continued to exert pressure on sales.

John Romano: Zircon sales were lower both compared to the prior year and sequentially due to a slower start in China as expected. Additionally, despite increased competitive dynamics across all products, average pricing for the quarter came in as anticipated, with TIO2 and Zircon both down 2% sequentially. Our production costs in the first quarter were higher than expected, primarily due to lower operating rates at Botwick and increases in direct material prices. In response to ongoing macroeconomic volatility, we have taken decisive strategic actions to manage the levers within our control to deliver our cost improvement. Our focus on cost reduction initiatives drove lower SG&A in the quarter.

John Romano: <unk> sales were lower both compared to the prior year and sequentially due to a slower start in China as expected.

John Romano: Additionally, despite increased competitive dynamics across all products average pricing for the quarter came in as anticipated with tier two and zircon, both down 2% sequentially.

John Romano: Our production costs in the first quarter were higher than expected, primarily due to lower operating rates at Butler and increase increases in direct material prices.

John Romano: In response to ongoing macro are volatile macroeconomic volatility we have taken decisive strategic actions to manage the levers within our control to deliver our cost improvements.

John Romano: Our focus on cost reduction initiatives drove lower SG&A in the quarter.

John Romano: In addition, in March, we announced a difficult decision to idle our botulic pigment plant in the Netherlands. The decision was a result of an extensive review of our asset footprint driven by the ongoing global supply imbalance caused by Chinese competition, as well as an increasingly challenged operating environment over the last two and a half years. We deeply value our commitments to our employees, the employee unions, local works council, and Key State Hill stakeholders. We appreciate the constructive dialogue and smooth process to date, which is a testament to the professionalism of our employees at the Botwick facility.

John Romano: In addition in March we announced the difficult decision to idle our bottler pigment plant in the Netherlands.

John Romano: The decision was a result of an extensive review of our asset footprint driven by the ongoing global supply imbalance caused by Chinese competition as well as an increasingly challenged operating environment over the last two and a half years.

John Romano: We deeply value our commitments to our employees the employee unions local works Council and key stay Hilco stakeholders.

John Romano: We appreciate the constructive dialogue and smooth process to date, which is a testament to the professionalism of our employees at the Butler facility.

John Romano: These measures and actions underscore our commitment to operational efficiency and enhanced earnings.

John Romano: These measures and actions underscore our commitment to operational efficiency and enhanced earnings.

John Srivastava: I will review these and other actions in more detail a little bit later in the call, but for now, I'll turn the call over to John to review our financials from the quarter in more detail. John.

John Romano: I'll review these and other actions in more detail a little bit later in the call, but for now I'll turn the call over to John to review our financials from the quarter in more detail John. Thank you John turning to slide five we generated revenue of $738 million, an increase of 9% sequentially driven primarily by higher <unk> sales volumes lots from <unk>.

John Srivastava: Thank you, John. Turning to slide five. We generated revenue of $738 million, an increase of 9% sequentially, driven primarily by higher TIO2 sales.

John Srivastava: Loss from operations was $61 million in the quarter. We reported net loss of $111 million, which includes $87 million of restructuring and other charges, primarily non-cash costs relating to the idling of bottles. While our loss before taxes was $106 million, our tax expense was $5 million in the quarter, as we do not realize tax benefits in jurisdictions where we are realizing losses. Adjusted due-loaded earnings per share was a loss of 15 cents. Adjusted EBITDA on the quarter was $112 million and our adjusted EBITDA margin was 15.2%.

John Romano: Operations was 61 million in the quarter, we reported net loss of $111 million, which includes 87 million of restructuring and other charges, primarily noncash costs relating to the idling of outlook.

John Romano: While our loss before taxes was 106 million our tax expense of $5 million in the quarter as we do not realize tax benefits in jurisdictions, where we are realizing losses.

Adjusted diluted earnings per share was a loss of <unk> 15.

John Romano: Adjusted EBITDA in the quarter was $112 million and our adjusted EBITDA margin was 15, 2%.

John Srivastava: Our free cash flow was a use of $142 million, including $110 million of capital expenditures.

John Romano: Our free cash flow was a use of $140 million to $42 million, including $110 million capital expenditures.

John Srivastava: Now let's move to the next slide for a review of our commercial performance. TIO2 revenues decreased 3% versus the year-ago quarter, driven equally by 1% decreases in sales volumes, price including mix, and unfavorable exchange rates.

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

<unk> revenues decreased 3% versus the year ago quarter, driven equally by a 1% decreases in sales volumes price, including mix and unfavorable exchange rates.

John Srivastava: Sequentially, TIG revenues increased 10% as a higher than typical seasonal demand uplift to have a 12% increase in volumes, led by European demand as John referenced earlier. This was partially offset by a 2% decrease in average selling prices, including mix.

Sequentially <unk> revenues increased 10% as a higher than typical seasonal demand uplift drove a 12% increase in volumes led by European demand as John referenced earlier. This was partially offset by a 2% decrease in average selling prices including mix.

John Srivastava: Zircon revenues decreased 22% compared to the prior year, driven by a 15% decrease in sales volume and a 7% decrease due to price including net. Sequentially, Zircon revenues decreased 8%, driven by a 6% decrease in volumes, and a 2% headwind from price, including net.

John Romano: So our account revenues decreased 22% compared to the prior year driven by a $5, 15% decrease in sales volume and a 7% decrease due to price including mix.

John Romano: Sequentially zircon revenues decreased 8% driven by a 6% decrease in volumes and a 2% headwind from price including mix.

John Romano: Revenue from other products increased 5% compared to the prior year and 25% versus the prior quarter due to higher sales of pig iron and opportunistic sales of ilmenite.

John Srivastava: Revenue from other products increased 5% compared to the prior year and 25% versus the prior quarter due to higher sales of pig iron and opportunistic sales of ilmenite.

John Romano: Turning to the next slide I will now review, our operating performance for the quarter.

John Srivastava: Turning to the next slide, I will now review our operating performance for the quarter. Our adjusted EBITDA of $112 million represented a 15% decline year-on-year as favorable production costs and SG&A cost reductions were offset by unfavorable commercial impacts, freight rate increases, and exchange rate headwinds. Production costs were favorable by $9 million compared to the prior year, driven by favorable pigment costs, and partially offset by higher mining Sequentially, adjusted EBITDA declined 13%. Higher production costs and lower average selling prices, including mixed, were partially offset by favorable exchange rate remittance and higher TIO2 sales. Compared to Q4, production costs were a $17 million headwind driven by lower operating rates, primary lead bottling, increases in direct material prices, and higher mining costs.

John Romano: Our adjusted EBITDA of $112 million represented a 15% decline year on year as favorable production costs and SG&A cost reductions were offset by unfavorable commercial impacts freight rate increases and exchange rate headwinds.

John Romano: Production costs were favorable by $9 million compared to the prior year, driven by favorable pigment costs, and partially offset by higher mining costs.

John Romano: Sequentially, adjusted EBITDA declined, 13% higher production costs, and lower average selling prices, including mix were partially offset by a favorable exchange rate movements and higher <unk> sales.

John Romano: Compared to Q4 production costs were a $717 million headwind driven by lower operating rates primary land bottleneck increases in direct material prices and higher mining costs.

John Srivastava: Turn to the next slide. We ended the quarter with total debt of $3.0 billion and net debt of $2.8 billion. Our net leverage ratio at the end of March was 5.2 times on a trailing 12-month basis. Our weighted average interest rate in Q1 was 5.8%, and we maintain interest rate swaps such that approximately 69% of our interest rates are fixed through 2028. Our next significant debt maturity is not until 2029, and we do not have any financial covenants on our term loans or bonds. The equity as of March 31st was $443 million, including $138 million in cash and cash equivalents that are well distributed across the globe.

John Romano: Turning to next slide.

John Romano: We ended the quarter with total debt of $3 <unk> billion and net debt of $2 8 billion. Our net leverage ratio at the end of March was five two times on a trailing 12 months basis.

John Romano: Our weighted average interest rate in Q1 was five 8% and we maintain interest rates rate swaps such that approximately 69% of our interest rates are fixed through 2028.

John Romano: Our next significant debt maturity is not until 2029, and we do not have any financial covenants on our term loans or bonds.

John Romano: Liquidity as of March 31 was $443 million, including $138 million in cash and cash cash and cash equivalents that are well distributed across the globe.

John Srivastava: Working capital was a use of $101 million in the first quarter. This was driven by higher accounts receivable from improved sales, increased finished goods inventories, and a typical Q1 decrease in accounts payable. Our capital expenditures totaled $110 million in the quarter, with approximately 49% allocated to maintenance and safety and 51% to strategic projects, primarily the mining extensions in South Africa, to sustain our integrated cost advantage.

John Romano: Capital was a use of $101 million in the first quarter. This was driven by higher accounts receivable from improved sales increased finished goods inventories and a typical Q1 decrease in accounts payable.

John Romano: Our capital expenditures totaled 110 million in the quarter with approximately 49% allocated to maintenance and safety and 51% of strategic projects, primarily the mining essentials in South Africa to sustain our integrated cost advantage.

John Romano: Finally, we declared a dividend of $12 five per share in the first quarter that was paid to shareholders in the second quarter.

John Srivastava: Finally, we declared a dividend of 12.5 cents per share in the first quarter that was paid to shareholders in the second quarter.

John Romano: I will now turn the call back over to John to talk more about our strategic actions and comments on the year ahead. John? Thanks, John. We're in a period of highly volatile and challenging times from a macroeconomic perspective. Continued inflation, prolonged high interest rates, and escalating tariffs, to name only a few factors, are driving challenged housing markets and muted consumer sentiment against a backdrop of increasing competitive activity. These factors, however, are outside of our control.

Speaker Change: I will now turn the call back over to John to talk more about our strategic actions and comments on the year end head John Thanks, John.

Speaker Change: We're in a period of highly volatile and challenging times from a macroeconomic perspective continued inflation prolonged high interest rates and escalating tariffs to name only a few factors are driving challenged housing markets and muted consumer sentiment.

Speaker Change: Against a backdrop of a backdrop of increasing competitive activity.

Speaker Change: These factors however are outside of our control. We are therefore, continuing to maintain our focus on strategic actions to maintain what is within our control. This.

John Romano: We are therefore continuing to maintain our focus on strategic actions to maintain what is within our control. This includes executing on our Sustainable Cost Improvement Plan as announced last quarter, strategically evaluating our asset footprint, which led to the announcement of the idling of our bottling plant in March, and Investing Capital to complete our South African mining projects that will yield significant cost improvement from 2026 on. We are continually assessing our capital spend, managing our working capital, and driving continuous cost improvement and discipline cost management across our entire business.

Speaker Change: This includes executing on our sustainable cost improvement plan as announced last quarter strategically.

Speaker Change: <unk> evaluating our asset footprint, which led to the announcement of the idling of our bottling plant in March and investing capital to complete our South African mining projects that will yield significant cost improvement from 2026 onward.

Speaker Change: We are continually assessing our capital spend managing our working capital and driving continuous cost improvement and disciplined cost management across our entire business.

John Romano: Together, these actions will secure Tronox's position as a leading vertically integrated titanium mining and upgrading producer and underscore our commitment to operational efficiency and enhancing future earnings.

Speaker Change: Together these actions will secure tronox position as a leading vertically integrated titanium mining and upgrading producer.

Speaker Change: And underscore our commitment to operational efficiency and enhancing future earnings.

Speaker Change: Turning to slide 10.

John Romano: Turning to slide 10. We introduced our cost improvement program last quarter, which is critical to achieving sustainable long-term improvements that will drive structural efficiencies in our business. We expect to deliver $125 to $175 million in sustainable run rate cost improvements by the end of 2026. The majority of these savings will come from our operations through operational excellence and technology to drive efficiencies and innovation. We are also focused on ensuring our SG&A is aligned to ensure resources are strategically positioned to drive the greatest business impact, and we're already seeing the early wins on this front with reduced spend in this area.

Speaker Change: We introduced our cost improvement program last quarter, which is critical to achieving sustainable long term improvements that will drive structural efficiencies in our business, we expect to deliver $125 million to $175 million in sustainable run rate cost improvements by the end of 2026 the.

Speaker Change: The majority of these savings will come from our operations through operational excellence and technology to drive efficiencies and innovation.

Speaker Change: We are also focused on ensuring our SG&A is aligned to ensure resources are strategically positioned to drive the greatest business impact and we're already seeing the early wins on this front, we've reduced spend in this area.

Speaker Change: The bulk of these cost improvements are expected to be realized next year through the actions. We're taking this year. Our team is laser focused on delivering the targets that we've outlined.

John Romano: The bulk of these cost improvements are expected to be realized next year through the actions we're taking this year. Our team is laser-focused on delivering the targets that we've outlined. Reducing our cost is critical to sustaining our long-term advance.

Speaker Change: Reducing our cost is critical to sustaining our long term advantage.

John Romano: Turning to the next slide. A significant contributor to Tronox's cost advantage is our vertical integration. Producing high-grade feedstock internally allows us to realize significant cost advantage. We also receive high-value co-products from our mining activities such as Zircon and rare earth minerals, all of which are accretive to our earnings profile.

Speaker Change: Turning to the next slide.

Speaker Change: A significant contributor to Tronox as cost advantages our vertical integration producing.

Speaker Change: Producing high grade feedstock internally allows us to realize significant cost advantages. We also received high value co products from our mining activities, such as zircon and rare Earth minerals, all of which are accretive to our earnings profile.

John Romano: Sustaining the vertical integration through the replacement of mines as they reach end-of-life is key in maintaining our cost advantage. The expansion at Fairbreeze and Namaqua East OFS have been underway since last year and are expected to be completed this year. While we're realizing a $50 to $60 million headwind this year due to higher costs for mining lower grade ore bodies, we will see this flip to a benefit next year as we mine the new high grade ore. We're excited to see the progress to date at these mines and look forward to the commissioning of Fairbreeze in July and East OFS in November.

Speaker Change: Sustaining the vertical integration through the replacement of mines as they reach end of life is key in maintaining our cost advantage there.

Speaker Change: The expansion at fair Breeze in Denmark, we used Oss have had been underway since last year and are expected to be completed this year, while we're really realizing a $50 million to $60 million headwind. This year due to higher costs for mining lower grade ore bodies, we will see this flip to a benefit next year as we mine the new high grade ore bodies were.

Speaker Change: Cited to see the progress to date at these mines and look forward to the commissioning of fair Breeze in July and <unk> in November.

Speaker Change: Turning to the next slide.

John Romano: Turning to the next slide. We are maintaining our guidance for 2025. Despite the rise in volatility, the changes we've observed so far aren't substantial enough to warrant adjustment to our outlook. To reiterate our previous guidance, we expect 2025 revenue to be in the range of $3 to $3.4 billion, and adjusted EBITDA to be in the range of $525 to $625 million. As mentioned on our last call, the assumptions supporting our ranges include anticipated improvements in pigment and zircon volumes, which will be partially offset by headwinds from non-repeating sales of other products. Our guidance also assumes that the second half of 2025 will be stronger than the first as pricing is expected to be more of a headwind in the first half of the year before recovering in the second half.

Speaker Change: We are maintaining our guidance for 2025, despite the rise in volatility that changes we've observed so far aren't substantial enough to warrant adjustment to our outlook to reiterate our previous guidance. We expect 2025 revenue to be in the range of $3 to $3 4 billion and adjusted EBITDA to be in the range of 500.

Speaker Change: <unk> $25 million to $625 million.

Speaker Change: As mentioned on our last call the assumptions supporting our ranges include anticipated improvements in pigment and zircon volumes, which will be partially offset by headwinds from non repeating sales of other products.

Speaker Change: Our guidance also assumes that the second half of 2025 will be stronger than the first as pricing is expected to be more of a headwind in the first half of the year before recovering in the second half.

John Romano: We also expect volumes to be stronger in the second half of the year, building on the momentum from the anti-dumping measures we're seeing in Europe, and the additional benefits we expect to see in India and Brazil when the duties are finalized. On the operations side, we assume benefits from non-repeating idle and LCM charges and improving pigment production costs are partially offset from higher mining production costs, which are more heavily weighted in the first half of the year as Fairbreeze will be commissioned in July and East OFS will be commissioned in November.

Speaker Change: We also expect volumes to be stronger in the second half of the year building on the momentum from the anti dumping measures, we're seeing in Europe and the additional benefits, we expect to see in India in Brazil, when the duties are finalized.

Speaker Change: On the operation side, we assumed benefits from non repeating idled and LCM charges and improving pigment production costs are partially offset from higher mining production costs, which are more heavily weighted in the first half of the year is fair Breeze will be commissioned in July and <unk> will be commissioned in November.

Speaker Change: In light of the new U S tariff environment, we have assessed their potential impact on our operations. Our primary materials titanium dioxide feedstocks are exempt from the reciprocal tariffs.

John Romano: In light of the new U.S. tariff environment, we have assessed their potential impact on our operations. Our primary materials, titanium dioxide and feedstock, are exempt from the Reciprocal Tariff. Additionally, our geographically diverse asset footprint enables us to produce and sell more locally. As a result, we do not anticipate any significant tariff impacts on direct material purchase. The most substantial effects will be on steel-related inputs and MRO materials due to secondary cost exposure. We anticipate the Ibidi impact to be less than $5 million in 2025 on tariffs based on what we know today.

Speaker Change: Additionally, our geographically diverse asset footprint enables us to produce and sell more locally as.

Speaker Change: As a result, we do not anticipate any significant tariff impacts on direct material purchases.

Speaker Change: The most substantial effects will be on steel related inputs and MRO materials to secondary cost exposure.

Speaker Change: We anticipate the EBITDA impact to be less than $5 million in 2025 on tariffs based on what we know today.

John Romano: With the actions we've taken over the last several months, we now expect free cash flow to be $50 million or greater this year.

Speaker Change: With the actions we've taken over the last several months, we now expect free cash flow to be $50 million are greater this year.

Speaker Change: Turning to the <unk>.

John Romano: Turning to the turning to capital allocation strategy. We continue to prioritize our best investments that are essential to advancing our strategy and maximizing our vertically integrated business. We also remain focused on strengthening our liquidity and resuming debt pay down as the market recovers. We are targeting mid- to long-term net leverage ratio less than three times through the cycle.

Speaker Change: Turning to capital allocation strategy.

Speaker Change: Okay.

Speaker Change: We continue to prioritize our investments that are central to advancing our strategy in maximizing our vertically integrated business.

Speaker Change: We also remain focused on strengthening our liquidity and resuming debt pay down as the market recovers. We are targeting mid to long term net leverage ratio less than three times through the cycle.

John Romano: Our dividend remains a priority. And finally, we'll continue to assess strategic high-growth opportunities as they emerge, including rare-earth dividends. We are already taking steps to improve our cash generation through strategic actions such as idling our Botwick facility to lower inventory, reducing capital expenditures, and executing on our cost improvement program. We will continue to assess our capital allocation strategy and other cash improvement levers at our disposal to ensure that we remain agile and responsive to the market.

Speaker Change: Our dividend remains a priority and finally, we will continue to assess strategic high growth opportunities as they emerge including rare Earths.

Speaker Change: We are already taking steps to improve our cash generation through strategic actions such as idling, our butler facility to lower inventory, reducing capital expenditures and executing on our cost improvement program.

Speaker Change: We will continue to assess our capital allocation strategy and other cash improvement levers at our disposal to ensure that we remain agile and responsive to the market.

John Romano: That will conclude our prepared comments.

Speaker Change: That will include conclude our prepared comments I will now turn the.

Operator: I'll now turn this over to Q&A operator. Thank you.

Speaker Change: Turning this over to Q&A.

Speaker Change: Operator.

Speaker Change: Thank you we will now begin the question and answer session.

Operator: We will now begin the question and answer session. If you're participating in Q&A and have joined via webinar, please use the raise hand icon which can be found at the bottom of your webinar application screen. If you are participating in Q&A and have joined via phone, please press star 9 on your keypad to raise your hand. When you are called on, you will be prompted to unmute your line and ask your question. If you have joined via phone, please dial star six to unmute yourself.

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Speaker Change: Unmeet yourself.

Operator: We will now take a minute to queue the roster.

Speaker Change: We will now take a minute to key the roster.

Speaker Change: Our first question comes from Peter <unk> from <unk> Securities Pizza. Please UN mute your line and ask your question. Thank you.

Peter Osterland: Our first question comes from Peter Osterland from Troost Securities.

John Romano: Peter, please unmute your line and ask your question. Thank you. Hey, good morning. Thanks for taking the question. So first, I was just wondering if we could get an update on how your expectations for TIO2 volume growth are shaping up this year. I know there's a couple of pieces there with underlying end market demand as well as any above market growth from winning market share. How is your outlook for the growth you would get this year from each of those evolved over the last few months?

Speaker Change: Hey, good morning, Thanks for taking the questions.

Speaker Change: So first I was just wondering if we could get an update on how your expectations for tio to volume growth are shaping up this year I know there is a couple of pieces there with underlying end market demand as well as any above market growth from winning market share. How is your outlook for the growth you would get this year from each of those evolved over the last few months.

Speaker Change: Yes, thanks for the question.

John Romano: Yeah, thanks for the question. So from the standpoint of growth, again, we made reference that, you know, as we go through the year, we're going to start to see a lift in the TIO2 demand, and it's largely driven from the duties that are in Europe already on the anti-dumping and the assumptions that we've made with regards to India and Brazil in the second half of the year. So what we're expecting in India is that we should have a final result on duties at the third week of May, and in June, towards the end of June, we should have a decision on Brazil.

Speaker Change: So from the standpoint of growth again, we made reference that work as we go through the year, we're going to start to see a lift in the tio to demand and that's largely driven from the duties that are in Europe already on the antidumping and the assumptions that we've made with regards to India and Brazil.

Speaker Change: <unk> in the second half of the year, so what we're expecting.

Speaker Change: And India is that we should have a final result on duty duties.

Speaker Change: Third week of May and in June towards the end of June we should have a decision on Brazil. So the volume that we're seeing as far as growth is largely driven.

John Romano: So the volume that we're seeing as far as growth is largely driven by the duties in the areas where the anti-dumping has taken effect. We also saw in first quarter, as I mentioned in the prepared comments, North America and Europe was up significantly. Again, Europe was driven by largely the duties, but North America's volume has picked up as it had seasonally, so it was a good move in North America. Still seeing some competitive activity in Latin America, Asia Pacific, and the Middle East, but as we get into the second half of the year, we are still anticipating to see that growth on the TIO2 demand in the regions that I just referenced.

Speaker Change: By their duties and the areas where were they anti dumping has taken effect. We also saw in the first quarter as I mentioned in the prepared comments North America and Europe was up significantly in Europe was driven by.

Speaker Change: Largely the duties, but north America's volume has picked up as it had seasonally so it was a it was a good move in North America still seeing some competitive activity in Latin America Asia Pacific and the Middle East, but as we get into the second half of the year, we are still anticipating to see that growth on the <unk> demand in the regions that I just referenced.

Speaker Change: Yeah.

Operator: Very helpful.

Speaker Change: Very helpful. Thank you and then just as a follow up.

Operator: Thank you.

John Romano: And then just as a follow up, could you share the average utilization rate that you're currently running at and expect to run at for 2025 across your TiO2 production footprint, excluding the bottling plant? Yep. So historically, I think what we've been indicating is our operating rates were north of 80%. And with the closure of the bottling plant, we would expect to continue to run at or above those rates. As the market continues to pick up. You know, we'll continue running rates higher than that. And obviously, we've spent some time preparing for the bottleneck outage, knowing that that plant was going to close.

Speaker Change: Could you share the average utilization rate that you are currently running yet and expect to run at for 2025 across your <unk> production footprint, excluding the Butler plant.

Speaker Change: Yes, so historically I think what we've been indicating as our operating rates were north of 80% and with the closure of the bottling plant.

Speaker Change: We would expect to continue to run at or above those rates as the market continues to pick up.

Speaker Change: We will continue running rates higher than that and obviously, we've spent some time preparing for the Butler outage, knowing that that plant was going to close we've repositioned inventories to be sure that we can fill the needs of the European market from other plants.

John Romano: We've repositioned inventories to be sure that we can fill the needs of the European market from other plants.

Speaker Change: Thanks very much.

Operator: Thanks very much.

Speaker Change: Thank you just as a reminder, you all participating in Q&A and have joined via Webinar. Please use the right hand icon, which can be found at the bottom of your webinar application screen.

Operator: Thank you.

Operator: Just as a reminder, if you are participating in Q&A and have joined via webinar, please use the raise hand icon which can be found at the bottom of your webinar application screen. If you are participating in Q&A and have joined via phone, please press star 9 on your keypad to raise your hand. When you are called on, you will be prompted to unmute your line and ask your question. If you have joined via phone, please dial star 6 to unmute yourself.

Speaker Change: If you are participating in Q&A and have joined via phone. Please press star nine on your key path to raise your hand.

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Speaker Change: Our next question comes from Joshua Spector UBS Securities Joshua Please Amit your line and ask your question.

James Cannon: Our next question comes from Joshua Spector at UBS Securities. Joshua, please unmute your line and ask your question.

James Cannon: Hey guys, this is James Cannon. I'm for Josh. Thanks for taking my question. I just wanted to poke on the European growth you saw in the quarter. Can you size what that what that looked like? Not in percentage basis, but it was double what we would normally see with regards to growth from Q4 to Q1. It was a significant jump. Okay, thank you.

Speaker Change: Hey, guys. This is James Cameron on for Josh Thanks for taking my question.

James Cameron: I just wanted to poke on the European growth you saw in the quarter can you size, what that what that look like.

Speaker Change: Yeah.

Speaker Change: Not in percentage basis, but it was double what we would normally see with regards to growth from Q4 to Q1, there was a significant jump.

Speaker Change: Okay. Thank you.

John Romano: And then just as a follow up to that, as we think about the investigations going on in India and Brazil, knowing that Europe is a much bigger region, Can you size the expectations that you have for maybe? the share opportunity that you can recapture once those come into place. Yeah, sure.

Speaker Change: And then just as a follow up to that.

Speaker Change: As we think about the <unk>.

Speaker Change: Investigations going on in India, and Brazil, knowing that Europe is a much bigger region.

Speaker Change: Can you size the expectation that you have for maybe.

Speaker Change: The share opportunity that you can recapture once those come into place.

Speaker Change: Yes, sure. So let let's go back and take a look at what was historically being exported into the European market from China, and there was call. It 270000 ish tons a year.

John Romano: And so let's go back and take a look at what was historically being exported into the European market from China, and it was call it 270,000 ish tons a year. And so you've seen the lift, and we're getting our share of the growth as China has pulled back on their exports into that region. So India is a 450,000 ton per year market. And at this particular stage, trailing 12 months, the Chinese have been exporting north of 300,000 tons of TiO2 into that region. There's not a significant amount of production there. That is the second largest market that we sell into globally.

Speaker Change: And so you've seen the lift and we're getting our share of the growth is China has pulled back on their exports into that region.

Speaker Change: So India is a 450000 ton per year market.

Speaker Change: And at this particular stage trailing 12 months.

Speaker Change: The Chinese have been exporting north of 300000 tons of tier two into that region.

Speaker Change: Theres not a significant amount of production there that is the second largest market that we sell into globally and we do have a bit of an advantage in that we've got a free trade agreement out of Australia. So when you think about the potential lift from the Indian anti dumping activities, we would expect that to be at or.

John Romano: And we do have a bit of an advantage in that we've got a free trade agreement out of Australia.

Operator: So when you think about the potential lift from the Indian anti-dumping activities, we would expect that to be at or maybe slightly above the magnitude of what we're seeing in Okay, thank you. Thank you.

Speaker Change: Or maybe slightly above the magnitude of what we're seeing in Europe.

Speaker Change: Okay. Thank you.

Speaker Change: Thank you. Our next question comes from Frank Mitsch.

Frank Mitsch: Our next question comes from Frank Mitsch.

Izzy Zahn: Frank, please unmute your line and ask your question. Hi, guys. Good morning.

Speaker Change: Frank Please on mute your line and ask your question.

Speaker Change: Hi, guys. Good morning, it's aziza on for Frank.

Izzy Zahn: It's Izzy Zahn for Frank.

John Romano: I had a question on Zircon. Can you guys just elaborate further on what you're seeing in the Zircon markets and what might revive that market?

Speaker Change: I had a question on zircon and can you guys just elaborate further on what youre seeing in the zircon market.

Speaker Change: Whereby in that market.

Speaker Change: Yes.

John Romano: Yeah, thanks Aziza. So when we, maybe we had to go back and look a little bit about when we think about the year-over-year number. So year-over-year last year, first quarter of 2024, we saw a significant increase in the volume on Zircon, not dissimilar to the larger increase we saw last year on TiO2 on the assumption that the market was starting to recover. So we saw a lot of volume being bought forward, I would say, in the first quarter. So we had a very strong first half on Zircon, and the second half of the year was weaker.

Speaker Change: So when we maybe we have to go back and look a little bit about when you think about the year over year number so year over year last year first quarter of 2024, we saw a significant increase in the volume on zircon not dissimilar to the larger increase we saw last year on tio too on the assumption that the market was starting to recover.

Speaker Change: So we saw a lot of volume being bought forward I would say in the first quarter. So we had a very strong first half on zircon in the second half of the year was weaker.

John Romano: When we look at what we're seeing this year, it's more of a, I'd say, measured growth with regards to what we're seeing year-over-year. So we're not expecting a significant growth, 24 over 25, it's only about 5%. But what we're seeing in the first quarter is more historically what we would see. Again, there's Chinese New Year, which typically has an impact because China is a market for us. That is the one market that has not recovered significantly, so it's still the area where it's got the most opportunity. So I would say it would be more of a balanced move quarter-by-quarter for the rest of the year.

Speaker Change: When we look at what we're seeing this year, it's more of a.

Speaker Change: I would say measured growth with regards to what we're seeing.

Year over year, so we're not expecting a significant growth 24 over 25, it's only about 5%.

Speaker Change: But what we're seeing in the first quarter is more historically, what we would see again there is Chinese new year, which typically has an impact because China is a market for us that is the one market that has not recovered significantly. So it's still the area, where we've got the most opportunity.

Speaker Change: So I would say would be more of a balanced move quarter by quarter for the rest of the year and annual growth is not significant over last year, it's only 5%.

Operator: And annual growth is not significant over last year, it's only 5%. Got it.

Speaker Change: Got it thank you and.

Operator: Thank you.

John Romano: And, you know, following the botless news and looking across your network today, are there any other sites that you might be assessing for idling or possibly reducing rates? Production. So at this particular stage, as I mentioned, we've been preparing for the closure of Botlink for a little while. So I'm repositioning some inventory to make sure that we have inventory as we expect Europe to continue to be strong due to the anti-dumping efforts.

Speaker Change: Following the Bartlett news and looking across your network today are there any other sites that you might be assessing for idling or possibly reducing rates of.

Speaker Change: Production.

Speaker Change: So at this particular stage as I mentioned, we've been.

Speaker Change: Repairing for the closure of bottler for load, while some repositioning some inventory to make sure that we have inventory as we expect Europe to continue to be strong due to the anti dumping efforts.

John Romano: The decision to close the bottleneck was a difficult decision, and it was one that we're obviously looking at our asset footprint constantly and evaluating that at this particular stage. We don't have any plans to close any additional plants. We think we've got the right asset footprint. When we think about the vertical integration, you know, vertical integration is also a very important part of... our strategy and we'll continue to look at what the right level of vertical integration is along with working proactively and collaboratively with our suppliers that continue to supply us with some feedstock to supplement that vertical integration.

Speaker Change: The decision to close the bottleneck was a difficult decision and it was one that we're obviously looking at our asset footprint constantly evaluating that at this particular stage. We don't have any plans to close any additional plants. We think we've got the right asset footprint. When we think about the vertical integration vertical integration is also a very important.

Speaker Change: Part of.

Speaker Change: Our strategy and we'll continue to look at what the right level of vertical integration is along with.

Speaker Change: Working proactively and collaboratively with our suppliers that continued supply us with some feedstock to supplement that vertical integration.

John Romano: And I think Aziz, our focus right now, following the Botwick decision, is to focus on things within our control and focus on our costs. So it's making all of our assets competitive. And while you know, the market, we don't control that and things could change. I think that's our focus right now versus looking at other facilities. We do expect that our plants generally are in the better half of the cost curve, and that there, if there's things that will change in the market should be the higher cost, you know, Chinese plants, and some of the other Western competitors that are more fourth quartile.

Speaker Change: I think as these are focus right now following the <unk> decision is to focus on things within our control and focus on our cost. So it's making all of our assets competitive and while the market, we don't control that and things could change I think that's our focus right now versus looking at other facilities.

Speaker Change: We do expect that our plants generally are in the better half of the cost curve and that if there is things that will change in the market should be the higher cost Chinese plants and some of the other western competitors are more fourth quartile.

Speaker Change: Great. Thank you guys.

Operator: Great, thank you guys.

Speaker Change: Thank you. Our next question comes from Taylor <unk> from BMO capital markets Cana for Keith Amit Your line and ask your question.

Caleb Bonelein: Our next question comes from Caleb Bonelein from BMO Capital Markets.

Caleb Bonelein: Caleb, please unmute your line and ask your question. Hey, good morning. This is Caleb on for John. With the botlet closure, can you help us understand how that impacts your ability to work down inventory levels and then drive free cash flow? Yeah, Caleb, we do expect to generate significant amount of cash from the Boutlik shutdown. As John mentioned, you know, we did build inventory late last year and in the first quarter in anticipation of that shutdown, as we want to make sure that we provide continued service to our customers in Europe. With that being said, with Boutlik going down, we do expect to draw down that inventory over time and service that from our other pigment plants.

Caleb: Hey, Good morning. This is caleb on for John.

Caleb: With the Bartlett closure can you help us understand how that impacts your ability to work down inventory levels and drive free cash flow.

Caleb: Yes.

John Romano: <unk>, we do expect to generate significant amount of cash from them outlet shutdown as John mentioned, we did build inventory late last year and in the first quarter in anticipation of that shutdowns as we want to make sure that we provide.

John Romano: <unk> continued to continued service to our customers in Europe without being said it was about <unk> going down we do expect to draw down that inventory over time and service that from our other.

John Romano: Pigment plants, so inventory should go down surely because volumes are going down, but also leveraging that fixed cost infrastructure by producing more in other plants on a cost per ton should go down.

John Romano: So inventory should go down sheerly because volumes are going down, but also leveraging that fixed cost infrastructure by producing more in other plants, our cost per ton should go down. I mean, between now and also between now and the end of the year, without the bollock plant, we will produce less tons.

John Romano: I mean between now and also between now and the end of the year without embolic plant, we will produce less tonnes. So we will be drawing down inventory.

John Romano: So we will be drying down inventory that had been built previously in anticipation of the closure.

John Romano: Had been built previously in anticipation of the closure.

John Romano: Okay. Thank you.

John Romano: Okay, thank you. And then just on the 50 to 60 million of higher costs you're expecting, are you expecting to get any benefit of that in at all in the second half of the year because Fairbreeze is slated for commissioning in July or is that all just going to be relief that you're expecting in 2026? Yeah, the 50 to 60 million of hurt from in this year, the majority of that is in the first half. We're seeing the majority of the hurt in the first half of this year. And again, when you think about that, that's a bridge from these lower ore bodies into mining into moving into the higher ore bodies.

John Romano: And then just on the 50 to 60.

Speaker Change: Million of higher cost Youre expecting.

Speaker Change: Are you expecting to get any benefit of that in.

Speaker Change: And all in the second half of the year because fair Breeze is slated for machine in July or is that all just can be relief that you're expecting in 2026.

Speaker Change: Yes, the $50 million to $60 million of hurt from the in this year. The majority of that is in the first half we're seeing the majority of the herd in the first half of this year.

Speaker Change: And again when you think about that that's a bridge from these lower ore bodies and are mining into moving into the higher ore bodies. So we'll see.

John Romano: So we'll see, because Fairbreeze is going to be commissioned earlier than East OFS, some of that benefit will come in the latter part of the year, but we will see some benefit from that. And then obviously, with East OFS coming online in November, a bigger portion of that rolls into full year 2026.

Speaker Change: Because February is going to be commissioned earlier than Easter RFS. Some of that benefit will come in the latter part of the year, but we will see some benefit from that and then obviously with <unk> coming online in November.

Speaker Change: Bigger portion of that rolls into full year 2026.

Operator: Okay, thank you.

Speaker Change: Okay. Thank you.

Speaker Change: Yeah.

Speaker Change: Thank you. Our next question comes from Vincent Andrews at Morgan Stanley Vincent on your line and ask your question.

Operator: Thank you.

Vincent Andrews: Our next question comes from Vincent Andrews at Morgan Stanley. Vincent, please unmute your line and ask your question.

John Romano: Hi, this is Justin on for Vincent. You had called out the expected production costs where your production costs were higher than expected, partially because the lower operating rates at Botlik, but also increases in direct material costs. You expected improved production costs in your full year outlook. So can you just help us bridge from the weaker 1Q to the full year improvement? Is that mostly going to be, you know, better fixed cost absorption from other plants as you, you know, wind down Botlik? Or is that going to be a reversal in the cost that the direct material prices that you that you mentioned?

Justin: This is Justin on for Vincent you had called out the <unk>.

Justin: Expected production costs, where are your production costs were higher than expected, partially because of the lower operating rates at Bartlett Bartlett, but also increases in direct material costs.

Speaker Change: You expected improved production costs in your full year outlook. So can you just help us bridge from the weaker <unk> to the full year improvement is that mostly going to be.

Speaker Change: Fixed cost absorption from other plants as you wind down bottleneck or is that gonna be a reversal in the.

Speaker Change: The cost of the direct material prices that you that you mentioned thank you yeah. So from a cost perspective, as we mentioned in the second half is going to be.

John Romano: Thank you. Yeah, so from a cost perspective, as we mentioned, the second half is going to be improved from the first half. And it is a big portion of that is our pigment costs improving. A lot of it relates just to running the plants better, resulting in less lower, less LCM denial facilities. We are being helped as you would expect from shutting down the Botlik plant, which is our highest cost plant, you know, before we shut it down. And obviously leveraging the fixed cost infrastructure as we move those tons to other plants, lowering our cost per ton.

Speaker Change: Proved from the first half and it is a big portion of that is our pigment cost improving a lot of it relates just to running the plants better resulting in less lower less <unk> and idle facilities.

Speaker Change: We are being helped us as you would expect from shutting down the outlet plant, which is our highest cost plant.

Speaker Change: Before we shut it down.

Speaker Change: And obviously leveraging the fixed cost infrastructure as we move those tons to other plants lowering our cost per ton.

John Romano: I mentioned the mining headwinds, 50 to 60 million, the majority of that is in the first half. So you'll see a benefit in the second half of the year from that cost. Then generally, you're aware of our cost improvement program that we launched last quarter. We're working hard and having seen results, improvements already, but those actions will ramp up and see more savings in the second half of the year. So all of that is driving, you know, our statement that we expect the second half to be more robust than the first half from a cost perspective.

Speaker Change: Well I mentioned, the mining headwinds $50 million to $60 million. The majority of that is in the first half so youll see a benefit in the second half of the year from that cost. Then generally you are aware of our cost improvement program that we launched last quarter.

Speaker Change: We're working hard and having seen results improvements already but.

Speaker Change: Those actions will ramp up and see more savings in the second half of the year. So all of that is driving our statement that we expect the second half to be more robust than the first half from a cost perspective, and if you'll remember from the last call. We indicated it's a $125 million to $175 million net cost reduction program and we were targeting to.

John Romano: And if you'll remember from the last call, we indicated it's $125 to $175 million in that cost reduction program, and we were targeting 25 to 35 million run rate by the end of 2026. As we mentioned in the prepared comments, we've already made some progress on SG&A, and we're making progress from an operating perspective too. Every one of our sites, has a prescriptive reduction plan in place, and we're making good progress on that. So there is an element of back half of the year where we'll start to see some of those costs roll through the volume as well.

Speaker Change: 25% to $35 million run rate by the end of 2026 and as we mentioned in the prepared comments, we've already made some progress on SG&A and we're making progress from an operating perspective to every one of our sites has a prescriptive reduction plan in place and we're making good progress on that so there is an element of Bakken.

Speaker Change: Half of the year, where we'll start to see some of those costs rolling through the volume as well.

Speaker Change: Wonderful thank you for the time.

Operator: Wonderful. Thank you for the time. Thank you.

Speaker Change: Okay.

Speaker Change: Thank you.

Mike Leithead: Our next question comes from Mike Leithead from Barclays. Mike, please unmute your line and ask your question. Great, thanks. Good morning, guys.

Speaker Change: Next question comes from Mike Lee Hudson Barclays, Mike. Please UN mute your line and ask your question.

Speaker Change: Great. Thanks, Good morning, guys.

Mike Leithead: I wanted to ask a question on the outlook. I think you had mentioned as part of the second half some additional benefits in India and Brazil if anti-dumping duty measures are finalized. So, can you just remind us kind of what your expectations are there and what you're making into guidance in regards to that? Yeah, so with regards to India, I'd say it's probably the biggest opportunity for us because that is our second largest market that we sell into. And it's one that is it's the largest market foreign 50,000 tons a year, largely with 300,000 tons of Chinese material being supplied into that market.

Speaker Change: I wanted to ask a question on the outlook I think you had mentioned as part of the second half.

Speaker Change: Some additional benefits in India, and Brazil anti dumping duty measures are finalized. So can you just remind us kind of what your expectations are there and what you're baking into guidance in regards to that.

Speaker Change: Yeah, So with regards to India I would say, it's probably the biggest opportunity for us because that is our second largest market that we're selling to and it's one that is.

Speaker Change: It's the largest market 450000 tons, a year largely with 300000 tons of Chinese material being supplied into that market.

John Romano: So that's a sizable portion of that opportunity. And then when Brazil, we have the only production facility in Brazil. Brazil's 180,000 ton per year market, approximately 100,000 tons annualized were being supplied by China. We've already seen some benefits of that. So if you remember, provisional duties had already gone into place, and we'd saw some lift. There was an end to the provisional duties on April 21st. And while the trade agency over there finalizes those numbers, there's about a 60 day window where duties are lifted. So the June timeframe, end of June, early July is when we'll start to see those duties go back into effect, and we'll start to see that lift.

Speaker Change: So that's a sizable portion of that opportunity and then Brazil.

Speaker Change: We have the only production facility in Brazil, Brazil is a 180000 ton per year market approximately 100000 tons annualized were being supplied by China. We've already seen some benefits of that so if youll remember a provisional duties had already gone into place.

Speaker Change: We saw some lift there was an end to the provisional duties on April 20, <unk> and.

Speaker Change: And while the.

Trade agency over their finalizes those number there is about a 60 day window where duties are lifted.

Speaker Change: So the June timeframe end of June early July is when we'll start to see those duties go back into effect and we will start to see that lift and we're making sure that we're positioning ourself to not only supply material from the.

John Romano: And we're making sure that we're positioning ourselves to not only supply material from the Hamilton we have, the facility we have in Brazil, but supplying the demand from our facilities in Yambu and North America as well. So those are the two areas where we see the additional lift as well as continuing to see progress in Europe. from the duties that are already in place.

Speaker Change: Hamilton we have.

Speaker Change: Facility, we have in Brazil, but supplying.

Speaker Change: The demand from our facilities in Yanbu in North America as well. So those are the two areas, where we see the additional lift as well as continuing to see progress in Europe.

Speaker Change: From the duties that are already in place.

Speaker Change: Great. That's Super helpful. And then just a question on the cash flow trying to bridge to the greater than $60 million.

Operator: Great, that's super helpful.

Operator: And then just a question on the cash flow trying to bridge to the greater than 50 million. Now, obviously, CapEx comes down 15. But then when I just think about the bottleneck net impact, I guess I'm getting at roughly 80-85 million of cash restructuring costs, or restructuring costs, which I guess gets to around 70-75 million of working capital benefit. Is that roughly in the right ballpark? Or I'm just trying to make sure I have the moving pieces there.

Now, obviously capex comes down 15.

Speaker Change: But then when I just think about the.

Speaker Change: Bartlett net impacts.

Speaker Change: I guess I'm getting at roughly 80 $85 million of cash restructuring costs.

Speaker Change: Restructuring costs, which I guess gets to around 70% $75 million of working capital benefit is that roughly in the right ballpark or I'm, just trying to make sure I have the moving pieces there I think.

John Srivastava: Yeah, I think taking a look at our guide of greater than 50 million of free cash flow, obviously, we've maintained our range on EBITDA 525 to 625. Cash interest was up a bit from last at 145 million as we've drawn a little bit more on our facilities. Cash tax is expected to be the same at less than 10 million. And we increased our guide on working capital from being negative 70 to flattish to being a source of use, source of cash in all scenarios. And as you mentioned, CapEx was lower to 365 million from the range of 375 to 395 million.

Speaker Change: Taking a look at our guide of greater than $50 million of free cash flow and honestly, we have maintained our range on EBITDA of $525 five by 'twenty, five to five or $6, 525% to 625%.

Speaker Change: Cash interest was up a bit from last at $145 million is withdrawing a little bit more on our facilities.

Speaker Change: Cash taxes as expected at the same at less than $10 million.

Speaker Change: We increased our guide on working capital from being negative 70 to flattish to being a source of use source of cash in all scenarios.

Speaker Change: As you mentioned Capex was lowered to $365 million from the range of $3 $75 million to $395 million, so with free cash flow being greater than $50 million of scenarios I think your math is correct Rob.

John Srivastava: So with free cash flow being greater than 50 million in all scenarios, I think your math is correct on, roughly correct on how bottleneck is impacting us right now.

Speaker Change: Roughly correct on how <unk> is impacting us.

Speaker Change: Alright, thank you.

Operator: Great, thank you.

Amit: Thank you. Our next question comes from Roger Spitz Bank of America Merrill Lynch Logjam. Please dial star. Thanks, Amit Your line and ask your question.

Roger Spitz: Our next question comes from Roger Spitz at Bank of America Merrill Lynch. Roger, please dial star six to unmute your line and ask your question. Thank you. Hopefully, you can hear me.

Speaker Change: Thank you hopefully you can hear me.

Speaker Change: My first question is is this bottleneck idling is that being kept warm or is that a cold shutdown and related.

John Romano: First question is, is botulic idling, is that being kept warm or is that a cold shutdown? And related, how hard is it to restart a chloride process? that has been in a cold shut for a year. Yeah, so at this particular stage, there's no plan to restart that asset. And I would say, you know, normally when chloride plants are closed down for long periods of time, they're not restarted. So it's not our plan to restart the asset. We're, again, working through that process at this particular stage. So it's but at this particular stage, there's no plan to restart the asset.

Speaker Change: Is it to restart our current posture to plan that has been in a cold shut for a year or more.

Speaker Change: Yes. So at this particular saves Theres no plan to restart that asset and.

Speaker Change: I would say.

Speaker Change: Normally when chloride plants are closed down for long periods of time, they're not restarted. So it is not our plan to restart the asset.

Speaker Change: Again working through that process at this particular stage. So it's but at this particular stage. There is no plan to restart the asset we're widening the asset down.

Operator: We're winding the asset down. Got it.

Speaker Change: Got it and then.

John Romano: And then, um, I don't know if this is something you might provide us, but I'm wondering, how much is your, you know, 2024 mining costs, as opposed to your pigment costs, or if you don't want to give that detail. Is it possible to break down your cogs between mineral sands mining and, and pigment operations? Yeah, I mean, it's really we look at it from an integrated basis, and we don't really split out those numbers at this point.

Speaker Change: Now if this is something you might provide us but I'm wondering how much is your 2020 for mining costs as opposed to year pigment.

Speaker Change: Or if you don't want to give that detail.

Speaker Change: Is it possible to break down your Cogs between.

Speaker Change: Hi.

Speaker Change: <unk> San is mining and pigment operations.

Speaker Change: Yeah.

Speaker Change: Yes.

Speaker Change: Really we look at it from an integrated basis, and we don't really split out those numbers at this point.

Speaker Change: Understood. Thank you very much.

Operator: All understood, thank you. Thank you so much.

Speaker Change: Thank you say much. Our next question comes from Hassan Ahmed of Alembic Global Advisors.

Hassan Ahmed: Our next question comes from Hassan Ahmed at Alembic Global Advisors. Hassan, please dial star six to unmute yourself and ask your question. Morning, John. Hopefully, you guys can hear me okay. I just wanted to revisit. Thanks so much.

Speaker Change: Simon Please dial star fix to meet yourself and ask your question.

Speaker Change: Yeah.

Speaker Change: Good morning, John Hopefully you guys can hear me okay.

Speaker Change: Just wanted to revisit.

Speaker Change: Thanks, so much so just wanted to revisit the.

John Romano: So just wanted to revisit the bunch of questions about the full year guidance. I mean, if I am understanding what you guys said correctly, you know, particularly as it pertains to the second half being stronger than the first half, you know, part of it is predicated on sort of lower cost on because of the shutdown of potluck. Part of it is, you know, the cost cutting program sort of getting into effect. But if I heard correctly, you guys also mentioned, you know, gaining pricing momentum. So I'm just trying to sort of reconcile that, that historically, obviously, as we move away from the seasonally strong time period, you know, which tends to be the, the call it spring, summer time period, it gets harder and harder for the industry to get that pricing.

Speaker Change: So a bunch of questions about the full year guidance.

Speaker Change: I mean, if I am understanding what you guys said correctly.

Speaker Change: Particularly as it pertains to the second half being stronger than the first half.

Speaker Change: Part of it is predicated on sort of lower cost on the cause of the shutdown of bottleneck.

Speaker Change: If it is you know the cost cutting program sort of getting into effect, but if I heard correctly you guys also mentioned.

Speaker Change: Gaining pricing momentum so im just trying to sort of reconcile that historically, obviously as we move away from the seasonally strong time period, which tends to be the the call. It spring summertime period, it gets harder and harder for the industry to get that pricing. So I'm just trying to assess.

John Romano: So I'm just trying to assess, you know, what gives you that comfort level that you will indeed get that pricing in the second half. Thanks, Hassan. It's a great question.

Speaker Change: What gives you that comfort level that you will indeed get that pricing in the second half.

Speaker Change: Thanks Hassan.

John Romano: And we didn't talk too much in prepared comments about what's going on in the second quarter because we provide guidance for the full year. But we are getting price in Europe. So when we think about our second quarter, historically, you go eight quarters with continual price erosion, 1% to 2% a quarter. It takes a little bit of time to get traction on a price increase. And we did announce a price increase in Europe in the second quarter, and we have successfully implemented a portion of that. So when we think about our second quarter price, there's still some competitive activity in other regions.

Speaker Change: Question, and we didn't talk too much in prepared comments about what's going on in the second quarter, because we provide guidance for the full year, but we are getting price in Europe. So when we think about our second quarter.

Speaker Change: Historically, you go eight quarters with continual price erosion, 1% to 2% a quarter. It takes a little bit of why a little bit of time to get traction on our price increase and we did announce a price increase in Europe in the second quarter and we have successfully implemented a portion of that so when we.

Speaker Change: Think about our second quarter price Theres still some competitive activity in other regions. So there's puts and takes on where we are on price, but I would say our price will be.

John Romano: So there's puts and takes on where we are on price. But I would say our price will be glad to slightly up this quarter, depending upon how we manage some of this competitive activity, but we are getting pricing in Europe, it has. And when we think about is that a demand profile increase? No, that's due to a shift in the supply base. So we're making progress. And as we start to look into the back half of the year, and some of these other areas where We've got opportunities for duties to go into place. You know, we're not talking about a significant amount of pricing, but we are talking about pricing opportunities.

Speaker Change: Flat to slightly up this quarter, depending upon how we manage some of this competitive activity, but we are getting pricing in Europe. It has and when we think about is that a demand profile increase no that's due to a shift.

Speaker Change: And the supply base, so we're making progress.

Speaker Change: As we start to look into the back half of the year and some of these other areas where.

Speaker Change: We've got opportunities for duties to go into place.

Speaker Change: We're not talking about a significant amount of pricing, but we are talking about pricing opportunities.

Speaker Change: Yeah.

Speaker Change: And then maybe if I can.

John Romano: I know you have your question on pricing, but the one thing I just wanted to make sure you had on your list on costs was the mining costs, the $50 to $60 million, as I mentioned in the Q&A earlier. The majority of that cost is hitting us in the first half of the year, so you'll see Q2 be a little bit more pressured than the second half of the year from that, as well as the mining, the production costs from Bollock. Obviously, they usually hit us a quarter later, so we'll see a hurt in Q2 from that announcement.

Speaker Change: I know you have for your question on pricing, but the one thing I just wanted to make sure you had on your list on costs was the mining cost the $50 million to $60 million as I mentioned in the.

Speaker Change: The Q&A earlier, the majority of that cost is hitting us in the first half of the year. So youll see Q2 be a little bit more pressure than the second half of the year from from that as well as the mining the production cost for Biolife and honestly, they usually hit US a quarter. Later, so we will see a hurt in Q2 from that announced.

Speaker Change: <unk>.

Speaker Change: Very helpful and as a follow up on.

Operator: Very helpful.

Hassan Ahmed: And as a follow up, on the anti dumping side of things, I just wanted to get a bit more granular about what's going on over there. I mean, look, first of all, maybe it's a two part thing. So first, you know, historically, you guys have talked about, you know, for lack of a better word, the opportunity being, you know, between, call it Saudi Arabia, the EU, Brazil and being somewhere north of around 600,000 tons. So the first part of the question is, is that still the case? Are you still sort of seeing it as being that sort of global opportunity?

Speaker Change: The anti dumping side of things I, just wanted to get a bit more granular about what's going on over there.

Speaker Change: I mean look.

First of all maybe it's a two part thing so first hit.

Speaker Change: Historically, you guys have talked about.

Speaker Change: For lack of a better word the opportunity being between call it Saudi Arabia, the EU, Brazil, and India being somewhere north of around 600000 tons. So the first part of the question is.

Speaker Change: Is that still the case or are you still sort of seeing it as being that sort of global opportunity and then the second part of that question is just on the ground. What are you guys seeing meaning.

John Romano: And then the second part of that question is just on the ground. What are you guys seeing? Meaning, are you sort of, you know, as you're talking to your customers, you know, particularly in countries where these anti dumping measures are going into effect? You know, other conversations you're having with them, sort of more along the lines of them actually wanting more material from you guys? Are you getting more inbound requests now from customers that were, you know, sort of taking their business elsewhere? I mean, are you actually seeing that market share gain or indications of that, you know, as these conversations continue?

Speaker Change: Are you sort of.

Speaker Change: As youre talking to your customers.

Speaker Change: Particularly in countries, where these anti dumping measures are going into effect.

Speaker Change: Other conversations you're having with them.

Speaker Change: More along the lines of them actually wanting more material from you guys are you getting more inbound requests now from customers.

Speaker Change: Yeah.

Speaker Change: Sort of taking their business elsewhere, I mean are you.

Speaker Change: Actually seeing that market share gain.

Speaker Change: Our indications of that as these conversations continue.

Speaker Change: Yes, so for sure in Europe, Thats happening, we are picking we're regaining share where we had lost it to the Chinese historically, because those duties are already in place and when you think about sizing the opportunity. So again, we're not assuming that China is going to completely.

John Romano: Yeah, so for sure in Europe, that's happening. We are picking, we're regaining share where we had lost it to the Chinese historically, because those duties are already in place. And when you think about sizing the opportunity, so again, we're not assuming that China is going to completely, you know, vacate Europe. They're still supplying there. They're about half where they were. And we would expect, you know, that to continue to trickle down. But our assumptions aren't that they're going to completely abandon that market, that we're going to get a fair share of what's the opportunity. So again, we saw a significant move in the first quarter that's migrating into the second quarter.

Speaker Change: Vacate Europe, they're still supplying their thereabout half where they were.

Speaker Change: And we would expect that.

Speaker Change: To continue to trickle down, but our assumptions arent that theyre going to completely abandon that market that we're going to get our fair share of whats the opportunity. So again, we saw significant move in the first quarter.

Speaker Change: That's migrating into the second quarter. So again, we're building on what's already happened in Europe and in India.

John Romano: So again, we're building on what's already happened in Europe and in India, specifically that those duties are not in place yet. So are we getting having the discussions with the customers on the assumptions that they are going to go in? And again, I mentioned that we should have definitive answer by the third week of May on those duties. And we're pretty confident that they're going to go in. So there's a lot of movement there. Now, obviously, China is positioning to get as much in as possible. So all that's factored in. But again, we're not assuming that China is going to stop selling in India either.

Speaker Change: Specifically that those duties are not in place yet so are we getting having the discussions with the customers on the assumptions that they are going to go in and again I mentioned that we should have definitive answer by the third week of May on those duties and we're pretty confident that they're going to go in so theres a lot of movement. There now obviously China is.

Speaker Change: Positioning to get as much as possible. So all of that's factored in but again, we're not assuming that China is going to stop selling in India either so.

John Romano: So even if they pull back half of that volume, again, when we think about our footprint there, the strategic advantage we have from shipping from Australia with a 10 percent duty advantage due to that free trade agreement, we feel we have a good opportunity to increase our volume there. And that's factored into the build in the second half. Brazil, we're the only producer in Brazil. Our plant in Brazil is meeting our customer demands as they are today. And as the duties go back into effect, we'll start to supplement demand into Brazil out of our facilities in Yambu and South and North America.

Speaker Change: Even if they pulled back half of that volume.

Speaker Change: Then when we think about our footprint there the strategic advantage, we have from shipping from Australia with a 10% duty advantage due to that free trade agreement, we feel we have a good opportunity to increase our volume there.

Speaker Change: And that's factored into the build in the second half Brazil.

Speaker Change: The only producer in Brazil, our plant in Brazil.

Speaker Change: Meeting our customer demands as they are today and as the duties go back into effect will start to supplement demand into Brazil out of our facilities in yanbu in South and North America, and I mentioned <unk> in North America, a lot of that has to do with just freight rates, sometimes it's depending upon which location it's easier.

John Romano: And I mentioned Yambu and North America. A lot of that has to do with just freight rates. Sometimes it's depending upon which location, it's easier and more cost effective for us to reposition volume into the Latin American market.

Speaker Change: A more cost effective for us to reposition volume into the Latin American market.

John Romano: Very helpful. John Thank you so much.

Operator: Very helpful, John.

Operator: Thank you so much.

Speaker Change: Thank you just as a reminder, participating in the Q&A and I have joined in the via Webinar. Please use device and icon, which can be found at the bottom of your webinar application screen.

Operator: Thank you.

Operator: Just as a reminder, if you're participating in the Q&A and have joined in via webinar, please use the raise hand icon which can be found at the bottom of your webinar application screen. As a reminder, if you're participating in Q&A and have joined in via phone, please press star 9 on your keypad to raise your hand. When you are called on, you will be prompted to unmute your line and ask your question. If you have joined via phone, please dial star 6 to unmute yourself.

Speaker Change: Reminder, participating in Q&A and have joined in by phone. Please press Star mine on your key pads to raise your hand.

Speaker Change: When you call Tom you will be prompted to Amit Your line and ask your question.

Speaker Change: You have joined by phone please dial six kilometer south.

Speaker Change: Our next question comes from Peter <unk> from <unk> Securities. Peter Please dial star fixed on mute yourself and ask your question.

Peter Osterland: Our next question comes from Peter Osterland from Truth Securities.

John Srivastava: Peter, please dial star six to unmute yourself and ask your question. Hey, thanks for taking the follow up. So I just wanted to ask a couple of questions on CapEx. First, just wanted to clarify the reduction to the CapEx guidance, was that related to Botlech or are the mining projects shaping up to be less capital intensive than you thought? What drove that reduction? About half of that reduction related to Botwick. And then, you know, the other half is just us managing projects that we need to look at the end of the day, we're trying to manage our cash flow and we have a target of 50 million positive free cash flow this year.

Peter: Hey, Thanks for taking the follow up sorry, just wanted to ask a couple questions on Capex.

Peter: First I just wanted to clarify the reduction of the Capex guidance.

Peter: Was that related to bottleneck or are the mining projects shaping up to be less capital intensive than you thought what drove that reduction.

Peter: And about half of that reduction related to Bartlett.

Peter: And then the other half is just us managing.

Peter: Projects that we need to look at the end of the day, we're trying to manage our cash flow and we have a target of 50 million.

Peter: Positive free cash flow. This year. So we're managing some of the projects that can better has I mean, the short answer is has nothing to do with South Africa, South Africa projects are largely migrating to the end.

John Srivastava: So we're managing some of the projects that can that are has I mean, the short answer is has nothing to do with South Africa. South Africa projects are largely migrating to the end. We're on budget on track. So these were some of the other opportunities on capital that we can move from one year to the next. But it's not like the capital is going to be eliminated. We'll continue to evaluate it. But we are shifting some of that into 2026. Got it.

Peter: We're on budget and on track. So these were some of the other opportunities on capital that we can move from one year to the next but it's not like the capital is going to be eliminated will continue to evaluate it but.

Peter: But we are shifting some of that into 2026.

Peter: Got it thanks, and then just.

Operator: Thanks.

John Srivastava: And then just as a follow up there, I guess after closing Botlik and finishing the mining projects and any other improvements you're making with optimizing your remaining asset footprint, what does a normalized annual CapEx number look like for Tronox? Yeah, I think as you look, if you look at a normalized level, we still are in the 250 to 300 long longer term once we're through the mining project. And remember, we think we've spoken a lot about South Africa, but we're still We still have a mining extension with Compaspe in Australia, so that's another piece that will continue into 2026.

Speaker Change: As a follow up there I guess after closing bottleneck and finishing the mining projects and any other improvements you are making with optimizing your remaining asset footprint, what does a normalized annual capex number looked like for Tronox.

Speaker Change: Yes, I think as you look if you look at a normalized level. We still are in the $2 50 to 300 long longer term once we're through the mining projects.

Speaker Change: And remember we expect we've spoken a lot about South Africa, but we're still.

Speaker Change:

Speaker Change: Adam we saw on the mining extension with capacity in Australia.

Speaker Change: So that's another piece that will continue into 2026 and after 2026, we'll be running at the lower rates that John just referenced.

John Srivastava: And after 2026, we'll be running at the lower rates that John just referenced. Great, thanks very much.

Speaker Change: Great. Thanks very much.

Speaker Change: Thank you. Our next question comes from Alex <unk> at Jpmorgan.

Aaron Rosenthal: Thank you. Our next question comes from Aaron Rosenthal at JP Morgan. Aaron, please unmute your line and ask your question. Hey, can y'all hear me alright? Yep, yep. Okay, great. I think earlier you had mentioned the uplift quarter over quarter in Europe was, you know, about 2x what you had seen historically from, you know, 4Q to 1Q. Is that comment based on a look back from maybe just the last couple of years? Or is that maybe a, you know, a 10 year average look back with respect to seasonality? And then, you know, as you think about 2Q, is the magnitude of that uplift into 2Q on par with that?

Speaker Change: Please I mean line and ask your question.

Speaker Change: And again, you'll hear me alright, yes.

Speaker Change: Yes.

Speaker Change: Okay, Great I think earlier, you had mentioned the uplift quarter over quarter in Europe, you know about that's what you've seen historically from four if you don't want to.

Speaker Change: Comment and based on and look back from maybe just the last couple of years or is that maybe a 10 year average look back with respect to seasonality and then you know as you're thinking about <unk> as the magnitude of that uplift and to take you on par with that or how should we think about the growth sequentially.

John Romano: Or actually think about the growth sequentially?

Speaker Change: So the growth from Q4 to Q1 it was abnormal.

John Romano: So, the growth from Q4 to Q1 was abnormal, so it's not even, you can't, there's been no quarter where we had Q4 to Q1 that was that large. So, it had everything, that was very much focused on us picking back up share as the duties went into place early in June, in July, I mean, January, sorry about that. And we're seeing more of a, I'd say, a bit more of a normal increase, but still heavier in the second quarter in Europe as well. So, again, it's not as if, I think we've started to see growth in the volume as we pick up some of that share, but we have, we still have room to go.

Speaker Change: It's not even you can't there's been no quarter, where we had Q4 to Q1 that was that large so it had everything that was very much focused on us picking backup share is the duties went into place early in June and July I mean January sorry about that.

Speaker Change: And we're seeing more of a I'd say a bit more of a normal increase.

Speaker Change: But it's still heavier in the second quarter in Europe as well so again, it's not as if.

Speaker Change: I think we've started to see growth in the volume as we pick up some of that share, but we have it.

Speaker Change: We still have room to go so the second quarter, although the growth is significant it's not as big of a leap as it was.

John Romano: So, the second quarter, although the growth is significant, it's not as big of a leap as it was. And from Q4 to Q1, but we're still seeing growth quarter over quarter, Q1 to Q2. Yeah, and we expect to be able to service, you know, the shutdown from Botlink immediately. I mean, we did, as we mentioned, build inventory and moved inventory towards the end of last year and in the first quarter of this year. So, we think we're well-positioned to service our customers. Going forward, as we mentioned, we can service some of those volumes, all those volumes from other facilities, which includes those in Europe, in Australia, and in Saudi primarily.

Speaker Change: From Q4 to Q1, but we're still seeing growth quarter over quarter.

Speaker Change: Q1 to Q2.

Speaker Change: Okay. That's fair and then I may have missed this but with you know with bottler winding down and it sounds like you're positioning some of the Australia assets for growth in India.

Speaker Change: And it sounds like you'll be meeting some of that volumetric need from inventory, but can we get a sense of how long that tail is on those volumes and then from that point on are you back filling volumes from the U K plan or <unk>.

Speaker Change: I guess, which plants in your network when those volumes eventually flow from.

Speaker Change: And we expect to to be able to service.

Speaker Change: Shutdown from Vale immediately I mean, we did as we mentioned build inventory and moved inventory towards the end of last year and in the first quarter of this year. So we think we're well positioned to service our customers going forward as we mentioned we can service those volume all those volumes from other other facilities.

Speaker Change: Which includes those in Europe and Australia.

Speaker Change: And Saudi Arabia, primarily and I think it's important to realize I mean, even with where we are today, we're not back to what we would call normalized.

John Romano: And I think it's important to realize, I mean, even with where we are today, we're not back to what we would call normalized, you know, growth as far as demand goes. We're not talking about targeting, you know, COVID levels, but there's still some opportunity for this market to recover. And, you know, we started to see that recovery in the first half of the year and it kind of trickled out in the second half of the year. We've seen some growth in the first half of the year. There's lots of puts and takes on it, but there's opportunity.

Speaker Change: Growth as far as demand goes we're not talking about targeting.

Speaker Change: Covid levels, but there is still some opportunity for this market to recover and we started to see that recovery in the first half of the year and that kind of trickled out in the second half of the year, we've seen some growth in the first half of the year, there's lots of puts and takes on it but there is opportunity and when that opportunity actually happens, we'll have the ability to run our assets at higher.

John Romano: And when that opportunity actually happens, we'll have the ability to run our assets at higher rates too. We're not running our other assets at 100% of capacity utilization. So, as the demand picks up, we'll be able to increase our capacity from the other assets. All the work that we're doing around technology and innovation to try to get more out of those assets will help us with fixed cost absorption and will be another lift as we start to think about our cost improvement plan. That being said, the $125 to $175 million of cost, that's not volume related.

Speaker Change: Rates too, we're not running our other assets at 100% of capacity utilization. So as the demand picks up we will be able to increase our capacity from the other assets all of the work that we're doing around technology and innovation to try to get more out of those assets will help us with fixed cost absorption and will be another lift as well.

Speaker Change: Start to think about our cost improvement plan.

Speaker Change: That being said the $125 million to $175 million of cost.

Speaker Change: That's not volume related those are things that we're doing to sustainably adjust our cost from an operational perspective and through every portion of the business.

Operator: Those are things that we're doing to sustainably adjust our cost from an operational perspective and through every portion of the business. All right. Thank you. Perfect, thank you so much.

Speaker Change: Yeah.

Speaker Change: Alright, thank you.

Speaker Change: Perfect. Thank you so much.

John Roberts: Our next question comes from John Roberts. John, please.

Speaker Change: Our next question comes from John Roberts.

Speaker Change: John Please.

John Roberts: Style star six and unmute your line. Can you hear me now? Yes, we can. Hello. Yeah, sorry.

Speaker Change: Thanks, Amit your line.

Speaker Change: Okay.

Speaker Change: And.

Speaker Change: Can you hear me now.

Speaker Change: Yes, we can.

Speaker Change: Hello, Yes.

John Romano: Rare earths are back in the news again. You once had a project to extract rare earths from your tailings. Does that come back into play? John, that project is still a work in progress for us. In Australia, we have been in the process of doing pre-feasibility studies on a facility there in Australia to extract more value out of that. So, as we mentioned in the prepared comments, Rare Earth is still a part of our strategy. It's part of the co-products that we get from our mining assets. We'll continue to get value out and clearly with the focus on Rare Earths coming from the government, there's a lot of renewed activity and I would say that we're right in the middle of it.

Speaker Change: Sorry rare Earths are back in the news again, you once had a project to extract rare Earths from your tailings does that come back into play.

Speaker Change: And John that projects still a work in progress for us.

Speaker Change: Australia, we are and have been in the process of doing pre feasibility studies.

Speaker Change: On a facility there in Australia to extract more value out of that so as we mentioned in the prepared comments rare Earth is still a part of our strategy. It's part of the co products. So we get from our mining assets and we'll continue to get value out of that and clearly with the focus on rare Earths coming from the government.

Speaker Change: <unk>.

Speaker Change: There's a lot of renewed activity and I would say that we're right in the middle of that.

John Romano: And have you seen any idling capacity in China yet? It's, I would say, yes, we've seen some plants pull back. And when John mentioned sulfur prices had gone up 40%, you know, that was largely focused on Europe, I mean, China. And we have an asset over there. So we have a very good window on what's happening in China, because we have an asset, it's not a large one. China is only 5% of our volume. Globally, in the majority of what we produce there, we sell in China. But I think that there has been some move, long term closing of sulfate plants, I wouldn't say there's been a lot yet.

Have you seen any idling capacity in China yet.

Speaker Change: It's I would say, yes, we've seen some plants pullback and John.

Speaker Change: John mentioned sulfur prices had gone up 40% that was largely focused on Europe and in China, and we have an asset over there so.

Speaker Change: So we have a very good window on what's happening in China, because we have an asset assess large one China is only 5% of our volume globally and the majority of what we produce there.

Speaker Change: We sell in China, but.

Speaker Change: I think that there has been some move long term closing of sulfate plants I wouldn't say, there's been a lot yet, but there's been other reductions in volume and I think it's important to kind of look at that normally when you go through a downturn you will get to the bottom of the downturn in the market recovers before you see a lot of assets close this mark.

John Romano: But there's been other reductions in volume. And I think it's important to kind of look at that.

John Romano: Normally, when you go through a downturn, you'll get to the bottom of the downturn and the market recovers before you see a lot of assets close. This market's been a lot different than that. The tail has been much longer. We continually say that although the tail's been long, definitively, we can say the market will recover. There's been no paradigm shift. But there's been a lot more assets that have closed. We closed a plant, most of our Western competitors have closed either one or multiple plants. There's two Japanese plants that have been outlined as closing to 80,000 tons sulfate facilities in late in 25 and early in 26.

Speaker Change: It's been a lot different than that the tail is thats been much longer we continually say that although the tail has been long definitively. We can say the market will recover there has been no paradigm shift.

Speaker Change: But theres been a lot more assets that are closed we closed a plant.

Speaker Change: Most of our western competitors have closed.

Speaker Change: Either one or multiple plants, there's two Japanese plants that have been outlined as closing 280000 tonne sulfate facilities late in 'twenty five and early in 'twenty six so as the market recovers its not only China's volume that could be impacted it's the overall volume that won't be available to supply the demand. So.

John Romano: So as the market recovers, it's not only China's volume that could be impacted, it's the overall volume that won't be available to supply the demand. So again, we're not looking for a demand to recover back to where we were in 2021.

Speaker Change: Again, we're not looking for a demand to recover back to where we were in 2021, but getting back to 2019 levels. We believe that's very doable and there'll be a smaller base to support it which would help with our margins.

John Romano: But getting back to 2019 levels, we believe is very doable and there'll be a smaller base to support it, which would help with our margins.

Speaker Change: Alright, thank you.

Operator: Thank you.

Speaker Change: Thank you very much. This concludes the Q&A portion of the webcast I will now turn the call back over to John Romano for closing remarks. Thank you. Thank.

Operator: Thank you so much.

Operator: This concludes the Q&A portion of the webcast.

John Romano: I will now turn the call back over to John Romano for closing remarks. Thank you. Thank you for that. But there's a lot of variables that we're working with at this particular stage, and the tariffs, as we mentioned earlier, have not had a significant impact on our business, but we're going to continue to evaluate that over time, and hopefully, you know, some of that will abate, and we'll see some upside from that. As we mentioned, it's only a $5 million tailwind from us at maximum, and that includes everything that we've seen at this particular stage.

Speaker Change: Thank you for that.

Speaker Change: But there's a lot of.

Variables that were working with at this particular stage and the tariffs as we mentioned earlier have not had a significant impact on our business, but we're going to continue to evaluate that over time and hopefully.

Speaker Change: Some of that will abate and we'll see some upside from that as we mentioned, it's only a $5 million.

Speaker Change: Tailwind from us at maximum and that includes everything that we've seen at this particular stage I think it's important for you to realize and remember that we are focused on the things that we can control. There's some things that are out of our control, but we can control our cost improving our production delivering on that cost improvement program and focusing on improving our.

John Romano: I think it's important for you to realize and remember that we are focused on the things that we can control. There's some things that are out of our control, but we can control our cost, improving our production, delivering on that cost improvement program, and focusing on improving our cash generation to ensure we hit that $50 million cash target for the year.

Speaker Change: Cash generation to ensure we hit that $50 million.

Speaker Change: Cash target for the year.

So thank you very much. Appreciate your time.

So thank you very much appreciate your time.

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: [music].

Speaker Change: Yeah.

Speaker Change: [music].