Q2 2025 Tronox Holdings PLC Earnings Call

Morning, and welcome to the Tronox Holdings Plc, Q2, 2025 earnings conference call.

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

He begins.

Following the presentation, we will conduct the claim.

Question and answer session.

This call is being recorded.

If you have any objections. Please disconnect at this.

Time.

I would now like to turn the call over to our house.

Jennifer Gunther Chief Sustainability officer head of Investor.

Restorations and external events. Please go ahead.

Okay.

Thank you and welcome to our second quarter 2025 conference calls.

Oh 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, we.

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

Moving to slide three a friendly reminder, that comments made on this call and the information provided in our presentation and on our website include certain statements that are forward looking and subject to various risks and uncertainties, including but not limited to the specific factors summarized in our SEC filings.

This information represents our best judgment based on what we know today. However, actual results may vary based on these risks and uncertainties. The company undertakes no obligation to update or revise any forward looking statements. During the conference call. We will refer to certain non U S. GAAP financial terms that we use in the management of our business and believe are useful to investors in evaluating the company's performance.

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 Thanks.

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

Our second quarter was impacted by weaker demand across most of our end markets and this resulted in softer than anticipated coating seasons and highlighted competitive heightened competitive dynamics across our key end markets.

Volumes in Q2 were 2% lower sequentially, and 11% lower year over year, reflecting weaker than usual seasonality.

For auto macro macroeconomic pressures included elevated interest rates and tariff related uncertainties.

Continued to weigh on customer discretionary spending while home sales and construction activity remained subdued.

Additionally, delays in Brazil's anti dumping investigation enabled Chinese producers to export the gap between the exploration of provisional duties in April and final duties, which were still.

Beginning of Q4.

We are encouraged by our early sales momentum in India, following the implementation of duties and they.

Our advantaged position in India through the Australia, India free free trade agreements, coupled with the duties against Chinese imports.

So a significant drop in.

February and growth in our fast growing economy, where per capita tier two consumption slow compared to other developing economies.

In response to the prolonged weakness in the market market, we are executing a disciplined strategy to manage the downturn and optimize earnings and cash.

Operationally our costs were in line with expectations.

The cost improvement program is progressing ahead of plan and is proving essential and mitigating both raw material and operational pressures.

We remain confident in our ability to deliver a $125 million to $175 million in sustainable run rate savings by the end of 2026.

Idling of our Butler facility was not a decision we took lightly but it was the right decision and our cost of improved as a result.

Beyond these measures we are continuing to evaluate all available levers to strengthen our operational foundation also liquidity and reinforce our role as a strategic global supplier to our customers.

This includes intensifying our focus on our commercial strategy further reducing capital expenditures and adjusting the dividend to ensure sustained financial strength and long term shareholder value.

Speak to these actions in more detail a little 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 $731 million, a decrease of 11% versus the prior year second quarter, driven by lower sales volumes and unfavorable zircon price.

<unk>.

Loss from operations was $35 million in the quarter, and we reported a net loss of $84 million, including $39 million of restructuring and other charges that were primarily related to the idling of bottleneck.

While our loss before tax was $81 million, our tax expense was $4 million in the quarter as we do not realize the tax benefits and jurisdictions, where we are incurring losses.

Adjusted diluted earnings per share was a loss of <unk> 28.

Adjusted EBITDA in the quarter was $93 million and our adjusted EBITDA margin was 12, 7%.

Free cash flow was a use of 55 million, including $83 million of capital expenditures.

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

As John covered earlier in the second quarter, we saw a challenged demand environment, including heightened competition, putting pressure on <unk> and zircon sales.

<unk> revenues decreased 10% versus the year ago quarter, driven by a 11% decrease in sales volume, partially offset by a 1% favorable exchange rate impact.

Price mix was flat in the quarter sequentially.

Sequentially <unk> revenues increased 1% driven by a 1% increase in average selling prices, including mix and a 2% favorable FX impact from the euro.

This was partially offset by volume declines of 2%.

Zircon revenues decreased 20% compared to the prior year driven by a 10% decrease in both sales volumes and price, including mix driven by continued weakness primarily in China.

Sequentially zircon revenues decreased 1% driven by a 2% decrease in price, including mix, partially offset by a 1% increase in volumes.

Revenue from other products decreased 7% as compared to the prior year and 11% versus the prior quarter, primarily due to lower sales volumes of pig iron.

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

Our adjusted EBITDA of $93 million represents a 42% decline year on year, driven by higher production costs unfavorable commercial impacts and higher freight costs. This was partially offset by exchange rate tailwind and SG&A savings.

Production costs were unfavorable by 28 million compared to the prior year. This was due to increased direct material costs higher mining costs and headwinds on pigment production costs, primarily driven by the high cost tons produced and bought like in the first quarter as we had expected.

Sequentially adjusted EBITDA declined 17% higher production costs, lower <unk> sales volumes and higher freight costs were partially offset by favorable average selling prices, including mix is favorable exchange rate movements and SG&A savings.

Compared to Q1 and production costs were $20 million headwind driven by higher cost tonnes produced in Q1 and sold in Q2 as expected and communicated on our last earnings call.

Additionally, we received non repeating insurance proceeds in Q1 related to the 2023 bought like supplier outage turning.

On the next slide.

We ended the quarter with total debt of $3 $1 billion net debt of $2 9 billion. Our net leverage ratio at the end of June was six one times on a trailing 12 month basis, our weighted average interest rate in Q2 was five 8% and we maintain interest rate swaps such that approximately 68% of our interest rates are fixed through 2028.

Importantly, our next significant debt maturity is not until 2029, we do not have any financial covenants on our term loans or bonds.

Liquidity as of June 30 was a strong $397 million, including $132 million in cash and cash equivalents that are well distributed across the globe.

We are proactively managing the balance sheet to bolster our liquidity position.

Towards that end. This month, we entered into an inventory financing program that provides us with an additional $50 million of liquidity.

I'm confident in our financial position and ability to weather an extended downturn.

Working capital was relatively flat for the quarter, excluding $25 million of restructuring payments related to the idling of our <unk> site.

The increase in inventories in the quarter was largely offset by a decrease in accounts receivable.

Our capital expenditures totaled 83 million in the quarter with approximately 56% allocated to maintenance and safety and 44% almost exclusively dedicated to the mining extensions in South Africa sustain our integrated cost advantage.

We returned $20 million to shareholders in the form of dividends in the second quarter.

With that I'll hand, it back to John.

Thanks, John.

Talk earlier about our strategic actions that are well underway.

The cost improvement program, the idling of our Butler facility and further capital expenditure reductions that will help strengthen our position in this challenging macroeconomic equal macro environment.

As this extended lower cycle demand and buyer environment continues we are meeting the challenge by pulling on all of the additional levers within our control.

We're selectively adjusting operating rates to reduce inventory and improve working capital and free cash flow.

This process is used utilizes our vertical integration to prioritize sites that offer greater flexibility to ramp up and down efficiently and optimizes, our ore blend to balance the tradeoff between cash flow and EBITDA.

On the commercial side, we're developing targeted initiatives and evaluating further strategic sales of the products.

As it relates to our capital allocation and cash position, we are scaling back further on capital expenditures, while preserving critical investments in our assets to ensure safe reliable operations and our board of directors declared a <unk> <unk> per share.

Dividend for the third quarter, a reduction of 60% to align with the current macro environment.

This lower cycle demand environment, we are focused on maintaining our market leadership, improving topline performance optimizing our global footprint improving costs bolstering, our liquidity and enhancing our financial flexibility we.

We are confident that this is the right strategy to weather the current macro environment and emerge as an even stronger competitors that will deliver sustained value for our shareholders.

Given the slowdown from both the macro and industry perspective, we have updated our 2025 financial outlook.

Our outlook is based on what we know today, taking into consideration a multiple of economic factors as well as data and conversations from and with our customers.

We now expect 2025 revenue to be $3 to $3 1 billion adjusted EBITDA is expected to be $410 million to $460 million.

These ranges assume lower pigment and zircon volumes than previously expected.

Given the revision downward in global GDP for the year and revised estimates from our customers of a weaker second half than previously anticipated. However, we are assuming pigment volumes improved slightly in the second half as we are focused on executing on our commercial strategy to maintain and grow market share in targeted regions as highlighted earlier.

We continue to see strong momentum in India aided by anti dumping duties in place in May.

We are developing additional opportunities for growth in our other products revenue stream in the second half of the year that we expect will provide incremental earnings similar to the sales with executed in previous years our.

Our guidance also assumes that our cost profile improves as we execute on our cost improvement strategy in the second half of the year with.

With the slowdown in demand, we will not work through the higher cost inventory as quickly as we previously anticipated, but we should see a step change in our costs in Q4 as a result of the good work our team is doing to take costs out of the business.

We are well ahead of our sustained our sustainable cost improvement program and we expect to exit the year with nearly double the cost savings than previously targeted.

Additionally, as our mining projects are commissioned they will begin to produce lower cost feedstock material that will flow through the business beginning in late Q4 and are expected to drive year over year cost benefits in 2026.

With regards to cash we expect the following for the year net cash interest of approximately $150 million net cash taxes of less than $10 million is the capital expenditures for projects in South Africa, our deductible working capital to be a use of $70 million to $90 million and.

And we further reduced capital expenditures to be less than $330 million or $65 million lower than our original guide.

We now expect free cash flow to be a use of $100 million to $170 million.

We are unwavering in our commitment to improving our cash position.

While the macro piece is out of our direct control, we will focus on controlling how we respond.

We will continue to take decisive action and have ample levers at our disposal to ensure sufficient liquidity under any conceivable scenario.

Turning to the next slide I'll review I will review, our adjusted our capital allocation strategy to align with the current environment.

As I mentioned earlier, we further reduced capital expenditures investing in our business remains critical to running safe reliable operations. So we are pausing or delaying investments, where it's economically feasible and safe to do so.

Additionally, we announced that we reduced our dividend for the third quarter by 60%. This adjustment will provide enhanced balance sheet flexibility.

We will revert reevaluate as the market recovers to ensure we continue to target a competitive dividend.

Debt Paydown remains a priority for <unk> in the medium and long term as we resumed positive free cash flow.

John Srivisal: Less than $330 million or $65 million lower than our original guide. We now expect free cash flow to be a use of $100 to $170 million. We are unwavering in our commitment to improving our cash position. While the macro piece is out of our direct control, we will focus on controlling how we respond. We will continue to take decisive action and have ample levers at our disposal to ensure sufficient liquidity under any conceivable scenario. Turning to the next slide, I will review how I adjusted our capital allocation strategy to align with the current environment. As I mentioned earlier, we further reduced capital expenditures. Investing in our business remains critical to running safe, reliable operations, though we are pausing or delaying investments where it's economically feasible and safe to do so. Additionally, we announced that we reduced our dividend for the third quarter by 60%.

<unk> is well positioned to navigate through this economic downturn.

We firmly believe that the actions, we're taking will further strengthen our business to ensure ample liquidity and solidify our position as the preferred strategic global supplier for our customers and I'm confident in <unk> future and remain committed to delivering value for shareholders that will conclude our prepared remarks, we'll now move into Q&A portion of the call. So I'll turn the.

Less than 330 million or 65 million lower than our original guide.

We now expect free cash, flow to be a use of 100 to 170 million.

We are unwavering in our commitment to improving our cash position.

While the macro piece is out of our Direct Control, we will focus on controlling how we respond.

Call back over to the operator to facilitate that operator.

We will continue to take decisive action and have ample levers at our disposal to ensure sufficient liquidity under any conceivable scenario.

Thank you we will now begin the question and answer session. If you are participating in the 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.

Turning the next slide, I will review. I will review how adjusted our Capital allocation strategy to align with the current environment.

Thank you all participating in the Q&A and have joined via phone line.

Please press star one nine on your keypad to raise your hand, when you all called upon you will be prompted a mute your line and ask your question. If you have joined by phone. Please dial star six can you on mute yourself.

As I mentioned earlier, we further reduce Capital expenditures investing in our business, remains critical to to running safer, reliable operations that we are pausing or delaying Investments where it's economically feasible and safe to do so.

John Srivisal: This adjustment will provide enhanced balance sheet flexibility. We will reevaluate as the market recovers to ensure we continue to target a competitive dividend yield. Debt paydown remains a priority for Tronox in the medium and long term as we resume positive free cash flow. Tronox is well-positioned to navigate through this economic downturn. We firmly believe that the actions we're taking will further strengthen our business to ensure ample liquidity and solidify our position as the preferred strategic global supplier for our customers. I'm confident in Tronox's future and remain committed to delivering value for shareholders. That will conclude our prepared remarks. We'll now move to the Q&A portion of the call, so I'll turn the call back over to the operator to facilitate that. Operator.

Additionally, we announced that we reduced our dividend for the third quarter by 60%, this adjustment will provide enhanced balance sheet, flexibility.

We will now take a minute to the Q2 Boston.

We will re-evaluate as the market recovers to ensure we continue to Target a competitive dividend yield.

Debt, Pay down remains a priority for tronox in the medium and long term as we resume positive free cash flow.

Our first question comes from David.

Turn off is well, positioned to navigate through this economic downturn.

Data from Deutsche Bank.

David you may.

Amit Your line and ask your question. Thank you.

Yeah.

We firmly believe that the actions we're taking will further strengthen our business to ensure ample liquidity and solidify our position as the preferred strategic Global supplier for our customers.

I'm confident in tronox is Future and remain committed to delivering value for shareholders.

Hi can you hear me.

Yeah, Thanks, David Lowe.

Good morning, John just looking at full year guidance.

That will conclude our prepared. Remarks will now move to the Q&A portion of the call. So I'll turn the call back over to the operator to facilitate that operator.

Operator: Thank you. We will now begin the question and answer session. If you are participating in the Q&A and have joined via webinar, please use the raised hand icon, which can be found at the bottom of your webinar application screen. If you are participating in the Q&A and have joined via phone line, please press star 9 on your keypad to raise your hand. When you are called upon, 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. We will now take a minute for the Q to roster. Our first question comes from David Belgrade from Deutsche Bank. David, you may unmute your line and ask your question. Thank you.

While the various drivers and variables that will determine whether you come in at the higher and lower end of the fourth 10th of $4 60 range.

Thanks for the question, David So largely is not dissimilar to what happened I guess in the second quarter a lot of it's going to be based on volume and price and when we think about the guide.

Hi, thank you. We will now begin the question and answer session. If you are participating in the Q&A and have joined via webinar, please use the raised hand icon which can be found at the bottom of your webinar application screen.

If you are participating in the Q&A and have joined via phone line,

We're not projecting to have any significant bump in volume there is a little bit of a move in the second half of the year and that's largely based on some targeted gains that we believe we're going to get in India. That's a market that we continue to see positive growth.

Please press *9 on your keypad to raise your hand when you are called upon. You will be prompted to unmute your line and ask your question. If you have joined via phone, please dial *6 to unmute yourself.

We will now take a minute for the queue to roster.

As I mentioned on the call. There is some competitive activity out there in Europe, we saw a.

Bit of a it wasn't as if we saw a significant drop but there was some competitive activity. There so where we had price increases in the second quarter some of Thats going to reverse so some of the pricing that we had forecasted in the second half of the year is not going to come in and we're actually seeing some erosion in price. So I would say largely when we think.

Our first question comes from David Bellator from Deutsche Bank, David, um, you may unmute unmute your line and ask your question. Thank you.

John Romano: Hi, can you hear me?

David Belgrade: Yes.

John Romano: Yes.

About the EBITDA guide.

Hi, can you hear me?

David Belgrade: Thanks, David. Hello.

It's the price and volume and there is some active piece of that that's attached to slowing our our production down as well as we mentioned.

John Romano: Morning.

Yes, yes, thanks. David. Hello.

David Belgrade: John, just looking for your guidance, why do there vary as providers and variables that will determine whether you come at the higher end or lower end of the $410 to $460 range?

We have pulled back some on production and we're doing that in a more in a thoughtful way to manage both cash and EBITDA, but we're balancing our sales profile to make sure. It's in line with production or vice versa balancing production to make sure. It's in line with sales.

John just looking for your guidance. Uh, whether various drivers of variables that will determine whether you come in at the higher end or lower end of the fourth 10 to 460 range.

John Romano: Thanks for the question, David. So largely, as you know, not dissimilar to what happened, I guess, in the second quarter, a lot of it's going to be based on volume and price. And when we think about the guide, we're not projecting to have any significant bump in volume. There's a little bit of a move in the second half of the year, and that's largely based on some targeted gains that we believe we're going to get in India. That's a market that we continue to see positive growth in. As I mentioned on the call, you know, there is some competitive activity out there in Europe. We saw a bit of a, it wasn't as if we saw a significant drop, but there was some competitive activity there. So where we had price increases in the second quarter, some of that's going to reverse.

Very good and quickly do you have an update on your rare Earths.

Um, thanks for the question, David. So largely as you know, not the similar to what happened. I guess in the second quarter, a lot of it's going to be based on volume and price. And when we think about that guy,

Activities.

Yes look so the rare Earth is something that we're continuing to work on I mean, that's there there'll be a capital piece of that that will come later and right now it's not part of our capital allocation strategy.

We are continuing to work on that I made reference to some sales of other products in.

In the back half of the year and part of that has to do with a rare earth opportunity that.

We have developed along with some other products. So it's still no.

John Romano: So some of the pricing that we had forecast in the second half of the year is not going to come in, and we're actually seeing some erosion in price. So I'd say largely, when we think about the EBITDA guide, it's price and volume, and there is some active piece of that that's attached to slowing our production down as well. As we mentioned, we have pulled back some on production, and we're doing that in a more thoughtful way to manage both cash and EBITDA. But we're balancing our sales profile to make sure it's in line with production, or, well, vice versa, balancing production to make sure it's in line with sales.

Big Buzzword right now and as we think about our capability to continue to feed the elements that go into that equation largely mono side then.

Mainland Praseodymium, that's something we're continuing to work on and there is an element of that in the fourth quarter.

Um, we're not projecting to have any significant bump in volume. There's a little bit of a move in the second half of the year, and that's largely based on some targeted gains that we believe we're going to get in India. That's a market that we continue to see positive growth in. Um, as I mentioned on the call, you know, there is some competitive activity out there in Europe. We saw a bit of a, it wasn't as if we saw a significant drop, but there was some competitive activity there. So where we had price increases in the second quarter, some of that's going to reverse. Some of the pricing that we had forecasted in the second half of the year is not going to come in, and we're actually seeing some erosion in price. So I'd say largely, um, when we think about the EBITDA guidance.

Thank you.

Okay.

Our next question comes from Peter off demand.

<unk>. Please press star fixed Amit your line and ask your question. Thank you.

The its price environment, there is some active piece of that that's attached to slowing. Our our production down, as well as we mentioned, um, we have pulled back some on production and we're doing that in a more in a thoughtful way to manage both cash and ibida, but we're balancing our sales profile to make sure it's in line with production or vice versa. Balancing production to make sure it's in line with sales.

David Belgrade: Very good. And quickly, do you have an update on your rare earths activities?

Yeah.

Very good and quickly. Do you have an update on your Rare Earth?

Peter you there if again Peter.

John Romano: Yeah, it looks like the rare earths is something that we're continuing to work on. I mean, that's a, there'll be a capital piece of that that will come later, and right now it's not part of our capital allocation strategy. But we are continuing to work on that. I made reference to some sales of other products in the back half of the year, and part of that has to do with a rare earth opportunity that we've developed along with some other products. So it's still, you know, it's a big buzzword right now. And as we think about our capability to continue to feed the elements that go into that equation, largely monazite and then neodymium and prasodium-mium, it's something we're continuing to work on, and there is an element of that in the fourth quarter.

Activities.

Thank you.

Hi can you hear me, yes, we can eat pizza.

Thank you.

Good morning, everyone.

Just wanted to start with the 2%.

Sequential decline for Tio to volumes that you saw in the quarter could you break out what you believe the growth rate was for underlying demand quarter over quarter and how much of a decline you realize was driven by our market share.

Yeah, So theyre north.

North America is normally where we have I would say it.

The northern Hemisphere is where the bigs coating season comes in and in North America, We did see some uptick in volume, but it was not in line with the normal coding season. So again I think a lot of that had to do with I don't believe we had market share loss in North America that was just largely driven by a muted coating season because.

Uh, in the back half of the year and part of that has to do with a rare earth opportunity that uh, that we've developed along with some other products. So it's still, you know, it's a, it's a big buzzword right now. And as we think about our capability to continue to feed, uh, the elements that go into that equation largely Mahanoy. And then

Neodymium and Podium. It's something we're continuing to work on, and there is an element of that in the fourth quarter.

David Belgrade: Thank you.

Thank you.

Operator: Our next question comes from Peter Osterland. Peter, please press star 6 to unmute your line and ask your question. Thank you.

We hope we were up slightly in North America, 2% to 3%.

In Europe, Middle East and Africa, there was some volume decline.

Part of that was the market actually wasn't as robust as it was in the first quarter. So it kind of slow down or I think there is some element element of.

Alan next question comes from Peter oeland. Uh, Peter, please press star 6 to unmute your line and ask your question. Thank you.

John Romano: Peter, are you there?

Operator: Again, Peter, that's star 6. Thank you.

The macroeconomics that macroeconomic environment, along with some of the tariff issues that probably weighed on some people's decision to pull down inventory.

Peter you there and once again Peter that R 6. Thank you.

Peter Osterland: Hi, can you hear me?

Operator: Yes, we can hear you. Thank you, Peter.

Peter Osterland: Oh, thank you. Good morning, everyone. Just wanted to start with the 2% sequential decline for TIO2 volume that you saw in the quarter. Could you break out what you believe the growth rate was for underlying demand quarter over quarter and how much of the decline you realized was driven by market share?

There was an element of competitive activity there as I mentioned, we raised prices in the second quarter.

And there were some competitors have pulled back for volume in that region. So Europe Middle East and Africa was down a bit Asia Pacific was actually up.

A pretty much in line with what we expected and that was largely driven in India. Because there were other areas, where we saw some volume decline, but India was a big push in Asia Pacific.

John Romano: Yeah, so North America is normally where we have a, I'd say, that's the northern hemisphere is where the big coating season comes in. And in North America, we did see some uptick in volume, but it was not in line with the normal coating season. So again, I think a lot of that had to do with, I don't believe we had market share loss in North America. That was just largely driven by a muted coating season because we were up slightly in North America, 2% to 3%. In Europe, Middle East, and Africa, there was some volume decline. Part of that was the market actually wasn't as robust as it was in the first quarter, so it kind of slowed down.

Hi, can you hear me? Yes, we can hear you. Thank you, Peter. Oh, thank you. Uh, good morning, everyone. Um, just wanted to start with the uh 2% sequential decline for tio2 volumes that you saw on the quarter. Um could you break out what you believe the growth rate was for underlying demand quarter over quarter and how much of the decline you realized was driven by market share.

yeah, so um, you know, North

Latin America was flat, but probably it was down a bit from what we expected and that had a lot to do with some of the delays in the final duties going into place, where we thought they were going to come in.

Earlier in the third quarter, it looks like they're going to come in towards the back into the third quarter now hopefully that Ed.

So the color you were looking for.

Yes very helpful. Thank you and then just as a follow up I wanted to get some color on the new reductions to your Capex forecast just given that some of the mining cost headwinds you've had this year were driven in part by delaying some capital investments in the past I guess could you just talk a little more about what you are cutting back on this year and maybe what you might be sacrificing in terms.

John Romano: And I think there is some element of the macroeconomic environment along with some of the tariff issues that probably weighed on some people's decision to pull down inventory. There was an element of competitive activity there. As I mentioned, we raised prices in the second quarter, and there were some competitors that pulled back for volume in that region. So Europe, Middle East, and Africa was down a bit. Asia Pacific was actually up, up pretty much in line with what we expected, and that was largely driven in India because there were other areas where we saw some volume decline. But India was a big push in Asia Pacific.

North America is normally where we have a I'd say Ah, that's in northern hemisphere is where the big coding season comes in. And in North America, we did see some uptick in volume, but it was not in line with the normal coding season. So, again, I think a lot of that had to do with. I don't believe we had market share loss in North America. That was just largely driven by a muted coding season, um, because we, we were up slightly in North America 2 to 3% um, in Europe, Middle East and Africa. There was some volume decline. Part of that was the market actually wasn't as robust as it was in the first quarter. So it kind of slowed down and I think there is some element element of

Future efficiencies as a result.

Yeah, maybe I'll start and then I'll, let John make a comment so to be the.

On the mining investments that we had in February and Easter effects are still on track Fair Breeze is now up and running so the money that we spent on Fairbury is that a fair basis. The new mine has been commissioned Easter what FES will come online in November and that's still on track. So the capital reductions that we were looking at were not directed to.

The macroeconomic environment that macroeconomic environment along with some of the Tariff issues that probably weighed on some people's decision to pull down inventory. Um, there was an element of competitive activity there. As I mentioned, we were raised the prices in the second quarter um and there were some competitors that pulled back for volume in that reason. So your Middle East and Africa was down a bit Asia Pacific was actually up

Those strategic investments as John mentioned, 44% of the capital in the quarter was actually strategic and almost all of that was exclusively in the mining John Yes.

John Romano: And Latin America was flat, but probably it was down a bit from what we expected, and that had a lot to do with some of the delays in the final duties going into place where we thought they were going to come in earlier in the third quarter. It looks like they're going to come in towards the back end of the third quarter now. Hopefully, that adds the color you were looking for.

We've been reducing obviously as we've gone across the year from a range of $3 75 to $3 95. When we first gave guide earlier. This year are down to $3 30, So a pretty significant reduction and it really has been in the discretionary areas. So while we believe are very high return capital projects and we put them on hold right now.

Um, I pretty much in line with what we expect and that was largely driven in India because there were other areas where we saw. You know, some volume declined. But India was a big push in Asia Pacific and Latin America was flat but probably, it was down a bit from what we expected. And that had a lot to do with some of the delays in the final duties going into place where we thought they were going to come in. Um, earlier in the third quarter, it looks like they're going to come in towards the back. End of the third quarter. Now

hopefully, that adds

the color you were looking for.

Peter Osterland: Yes, very helpful. Thank you. And then just as a follow-up, I wanted to get some color on the new reductions to your CapEx forecast. You know, just given that some of the mining cost headwinds you've had this year were driven in part by delaying some capital investments in the past, I guess, could you just talk a little more about what you're cutting back on this year and maybe what you might be sacrificing in terms of future efficiencies as a result?

To manage cash.

So of the $330 million that we have now 50 million relates to capitalized interest and as John mentioned, a $135 million relates to the two very strategic South Africa mining projects. So.

We do have about $180 million left there and as we've mentioned.

John Romano: And maybe I'll start, and then I'll let John make a comment. So the mining investments that we had in Fairbreeze and East OFS are still on track. Fairbreeze is now up and running. So the money that we spent on Fairbreeze, that Fairbreeze is the new mine's being commissioned. East OFS will come online in November, and that's still on track. So the capital reductions that we were looking at were not directed to those strategic investments. As John mentioned, 44% of the capital in the quarter was actually strategic, and almost all of that was exclusively in the mining. John?

Uh, yes, very helpful. Thank you. And then just, um, as a follow-up, I wanted to get some color on the, the new reductions to your capex forecast, you know, just give me that some of the Mining cost headwinds. You've had this year were driven in part by delaying some Capital investments in the past, I guess. Could you just talk a little more about what you're cutting back on this year? And, you know, maybe what you might be sacrificing in terms of future efficiencies as a result

150, 175 is is from a maintenance perspective.

And maybe I'll start and then I'll let John make a comment. So

Okay.

That's very helpful. Thank you.

Our next question comes from Fabian Jimenez at Mizuho Fabienne. Please press star six kilo mute your line. Thank you.

This is John Roberts.

Could you elaborate on the repositioning of inventory that increased your freight costs and why our bulk shipments higher costs for freight I would think that bulk is lower cost freight than non bulk.

Tim Carlson: Yeah, so we've been reducing, obviously, as we've gone across the year from a range of $375 to $395 when we first gave guide earlier this year, down to $330. So a pretty significant reduction, and it really has been in the discretionary areas. So while we believe our very high return capital projects, we put them on hold right now just to manage cash. So of the $330 million that we have now, $15 million relates to capitalized interest, and as John mentioned, $135 million relates to the two very strategic South African mining projects. So, you know, we do have about $180 million left there, and as we've mentioned, you know, about $150 to $175 is from a maintenance perspective.

to be the mining Investments that we had in Fair Breeze that needs to FS or still on track. Fair Breeze is now up and running. So the money that we spend on Fair Breeze, that fair Breeze is the new mind is being commissioned. East of FS will come online in November, and that's still on track. So the capital reductions that we were looking at were not directed to those strategic Investments. As John mentioned, 44% of the capital in the quarter was actually strategic and almost all of that was exclusively in the

Yeah. So thanks, John So some of that was repositioning inventory attached to the closure of bottleneck. So we repositioned inventory to make sure that we had volume available to offset as we drew down the embolic inventory. So that was a piece of it. There's also a piece around our mining group so.

As you know there's lots of discussion around tariffs.

And we repositioned a fair amount of our pig iron out of South Africa, and the U S.

Head of that so those were the two primary pieces that had to do with freight and Youre right bulk shipping shipping is cheaper but.

There was a mixture of container and we ship zircon by bulk I mean, I'm, sorry, we ship the pig iron bipolar.

Mining John. Yeah. So, um, we've been reducing obviously, as we've gone across the year from a range of 375 to 395. When, uh, we first gave guide earlier this year down to 330. So pretty significant reduction and it really has been in the discretionary areas. So, well, we believe our very high return capital projects and we put them on hold right now just to manage cash. Um, so we of the 330 million, uh, that we have now, you know, 15 million, it relates to capitalized interest. And as John mentioned, 135 million relates to the 2, uh, very strategic, South African, mining projects. So, you know, we do have about 180 million left there. And as we've mentioned, you know about 15175 is is from a maintenance perspective.

Peter Osterland: Very helpful. Thank you.

Very helpful. Thank you.

Operator: Our next question comes from Fabian Jimenez at Mizuho. Fabian, please press star 6 to unmute your line. Thank you.

And one other thing to a lesser extent was as John mentioned in his prepared comments just due to the our business planning process and taking advantage of a fertile Gulf vertical integration, we didnt move our feedstock around a bit to different plants. So that resulted in the slightly larger cost on freight, but obviously an overall benefit.

Our next question comes from Fabian Jimenez at mizuho, Fabian. Please press star 6 to unmute your line. Thank you.

Various Analysts: This is John Roberts. Could you elaborate on the repositioning of inventory that increased your freight costs and why are bulk shipments higher cost for freight? I would think that bulk is lower cost freight than non-bulk.

Uh, this is John Roberts. Um,

Yeah.

And then the higher second half other product sales you mentioned there might be some rare earth related products, there, but will the bulk of that would be or that you'll be selling in the second half.

John Romano: Yeah, so thanks, John. So some of that was repositioning inventory attached to the closure of bottling. So we repositioned inventory to make sure that we had volume available to offset as we drew down the bottling inventory. So that was a piece of it. There's also a piece around our mining group. So, as you know, there's lots of discussion around tariffs, and we repositioned a fair amount of our pig iron out of South Africa into the US ahead of that. So those were the two primary pieces that had to do with freight. And you're right, you know, bulk shipping is cheaper, but there was a mixture of container, and we ship zircon by bulk. I mean, I'm sorry, we ship the pig iron by bulk.

could you elaborate on the repositioning of inventory that increased your freight costs? And why are bulk shipments higher cost per Freight? I would think that bulk is lower cost Freight than non-bulk.

We're not going to go and what I can say is that this is not an <unk>.

Or in the form of slag or or anything like that these are.

Historically, we have had other product sales.

They've been more attached the tailings.

We're continuing to progress our strategy around rare earth. So theres, a rare earth element attached to that but this is not selling feedstock in the market.

Yeah, so thanks John. So some of that was repositioning inventory attached to the closure of b*******, so we repositioned inventory to make sure that we had volume available to offset as we close, we drew down the b****** inventory, so that was a piece of it. There's also a piece around our mining group. So, um, as you know, there's lots of discussion around tariffs.

Okay. Thank you.

Yeah.

Our next question comes from Josh Spector with UBS, Josh Cleveland in line and ask your question. Thank you.

Tim Carlson: And one other thing to a lesser extent was, as John mentioned in his prepared comments, just due to our business planning process and taking advantage of our vertical integration, we did move our feedstock around a bit to different plants. So that resulted in slightly larger costs on freight, but obviously an overall benefit.

Oh, Hey, good morning, I, just wanted to ask on free cash flow and specifically working capital I think John in your earlier comments, you said, you're matching production to demand I wasn't sure if that was the pigment or the mining side and just wondering kind of what flexibility you have there when you might take it take the initiative to.

Um and we repositioned a fair amount of our pig iron out of South Africa into the US um ahead of that. So those were the 2 primary pieces that had to do with Freight and you're right you know, bulk shipping shipping is cheaper but um there was a mixture of container and we ship Zircon, buy bulk. I mean, I'm sorry we we ship the pig iron by bulk.

And 1 other thing though, lesser extent was as John mentioned. It is prepared comments, just due to the our business planning process and taking advantage of a fertile, vertical integration. We did move our feed stock around a bit to different plants so that uh resulted in slightly larger uh costs on freight but obviously an overall benefit.

Various Analysts: And then the higher second half other product sales, you mentioned there might be some rare earth-related products there, but will the bulk of that be ore that you'll be selling in the second half?

Produce mining production to address working capital at the expense of EBITDA for how youre thinking about that trade off over the next six to nine months. Thanks.

Yes. Thanks for your question, Josh and so the short answer is we are looking at the mining side as well as a little bit more work that goes into making adjustments on that side of it but it's that's the mining it's the.

And then the higher second half other product sales. You mentioned, it might be some rare earth related products there, but will the bulk of that be or that you'll be selling in the second half.

John Romano: We're not going to go into what I can say is that this is not an ore in the form of slag or anything like that. These are historically, we've had other product sales. They've been more attached to tailings. You know, we're continuing to progress our strategy around rare earths, so there's a rare earth element attached to that. But this is not selling feedstock in the market.

Um, we're not going to go in. I can say is that the this is not an

The smelters that we upgraded the materials so largely the inventory reduction we're talking to right now when we made reference to adjusting production to sales is attached to the <unk> side of the business.

But as I mentioned in the prepared comments everything is on the table now we're looking at all of that we're trying to use our vertical integration to make sure we manage that.

an ore in the form of slagger or anything like that. These are, you know, historically we've had other products sales, um, they've been more attached to tailings. Um, you know, we're continuing to progress our strategy around Rare Earth. So there's a rare Earth element attached to that, but this is not selling feed stock in the market.

Various Analysts: Okay. Thank you.

Thank you.

Operator: Our next question comes from Josh Spector at UBS. Josh, please unmute your line and ask your question. Thank you.

Balance between cash and EBITDA.

Yes.

Take a look at our working capital our working capital and our free cash flow now, we do expect to generate cash from both in the second half of the year and primarily due a lot of the reasons that John had mentioned from bringing our production, which impacts more heavily in the second half as we did build inventory in the first half of the year, So seeing inventory come down. Additionally, the cost improvement program.

Our next question comes from Josh Spectre at UBS Josh. Please unmute your line and ask your question. Thank you.

Various Analysts: Well, hey, good morning. I just wanted to ask on free cash flow and specifically working capital. I think, John, in your earlier comments, you said you're matching production to demand. I wasn't sure if that was the pigment or the mining side. And just wondering kind of what flexibility you have there when you might take the initiative to reduce mining production to address working capital at the expense of EBITDA or how you're thinking about that trade-off over the next six to nine months. Thanks.

<unk> will help our inventory as well.

As it will be lower cost inventory that we're going to place on the balance sheet ultimately to be sold and then the other big drivers of working capital.

Relate just to active management.

John Romano: Yeah, thanks for your question, Josh. And so the short answer is we are looking at the mining side as well. There's a little bit more work that goes into making adjustments on that side of it, but it's the mining, it's the smelters that we upgrade the materials. So largely, the inventory reduction we're talking to right now when we made reference to adjusting production to sales is attached to the TIO2 side of the business. But as I mentioned in the prepared comments, everything is on the table now. We're looking at all of that. We're trying to use our vertical integration to make sure we manage that balance between cash and EBITDA.

Hi, good morning. Um, I just wanted to ask on free cash flow and specifically working capital I think John in your earlier comments, you said you're you're matching production demand. I wasn't sure if that was the pigment or the mining side and just wondering, kind of what flexibility you have there. When you might take the, take the initiative to produce mining production to address working capital at the expense of IBA, or how you're thinking about that trade-off over the next 6 to 9 months. Thanks?

The other working capital AR and AP.

It's worth maybe just a little bit more color on our cost improvement program, because when we announced that program. It was $125 million to $175 million run rate by the end of 2026, and we've got a target of $25 million to $35 million run rate by the end of 2025.

As I mentioned in the prepared comments, we are well above that.

Double more than double that at this stage and we're making great progress on that and a lot of that will as we get into it. There is some EBITDA impact in the fourth quarter, but most of that will be working its way into the production process and through the balance sheet as we get into 2026, but we have a high level of confidence.

Yeah thanks for your question Josh. And so the short answer is we are looking at the mining site as well just a little bit more work that goes into making adjustments on that side of it but it's you know it's the mining it's the uh the smelters that we upgrade the material so largely the inventory reduction, we're talking to right now when we made reference to adjusting production to sales is attached to the ti2 side of the business.

Tim Carlson: Yeah, and if you take a look at our working capital, both our working capital and our free cash flow, now we do expect to generate cash from both in the second half of the year. I primarily do the reasons that John had mentioned from bringing our production, which impacts more heavily in the second half as we did build inventory in the first half of the year. So seeing inventory come down. Additionally, the cost improvement program will help our inventory as well, as it will be lower cost inventory that we're going to place on the balance sheet and ultimately to be sold. And then the other big drivers of working capital relate just to active management of the other working capital, AR and AP.

But as I mentioned in the prepared comments, everything is on the table now, and we're looking at all of that. We're trying to use our vertical integration to make sure we manage that uh, balance between cash and Ava.

<unk>.

What our teams are doing at every one of our sites to look at creative ways to pull cost out and were well ahead of where we thought we would be and have high expectations that we'll exceed those targets.

Yeah and um if you take a look at our at our work in Cal both are working capital in our free cash flow. Now, we do expect to generate cash from both in the second half of the year and primarily do the reasons that John had mentioned from bringing our production, um, which impacts more heavily in the second half, as we did build inventory in the first half of the year. So seeing inventory come down Edition,

Okay. Appreciate all that and I guess, if I could just follow up quickly I mean, this might be too tough to answer, but if we go sideways from here.

Is it working capital tailwind next year or is it still a headwind based on how you are producing.

John Romano: I think it's worth maybe just a little bit more color on the cost improvement program because when we announced that program, it was $125 to $175 million run rate by the end of 2026, and we had a target of $25 to $35 million run rate by the end of 2025. And as I mentioned in the prepared comments, we are well above that, more than double that at this stage, and we're making great progress on that. And a lot of that will, you know, as we get into it, there is some EBITDA impact in the fourth quarter, but most of that will be working its way into the production process and through the balance sheet as we get into 2026.

Well, if we go sideways from here, we will continue to match production with sales. So the tier two would not be an increase and that becomes the question on the mining side of it how we manage that right. So that's the work we're still.

Managing through right now, but suffice it to say that we're looking at mining as well alright.

Ally, the Cost Improvement Program will help our inventory as well, as it will be lower-cost inventory that we're going to place on the balance sheet ultimately to be sold. And then the other big drivers of working capital relate just to active management of accounts receivable and accounts payable. I think it's worth maybe just a little bit more color on the Cost Improvement Program because when we announced that program, it was a $125 million to $175 million run rate by the end of 2026, and we had a target of $25 million to $35 million run rate by the end of 2025. As I mentioned in the prepared comments, we are well above that.

Great. Thank you we have additional levers that we can take right now based on what we see the market outlook and using the value of our vertical integration and we think it's appropriate at this point.

And the adjustments we made to production.

Are not the same order of magnitude EBITDA impact as they were in the past.

John Romano: But we have a high level of confidence in what our teams are doing at every one of our sites to look at creative ways to pull cost out, and we're well ahead of where we thought we would be and have high expectations that will exceed those targets.

Yes.

We're looking at sites that can be flexed more efficiently and to John's point, we repositioned some or to make sure that we had the right ore blends to optimize cash and EBITDA.

Every 1 of our sites to look at creative ways to pull cost out and we're well ahead of where we thought we would be and have high expectations that will exceed those targets.

Various Analysts: I appreciate all that. And I guess I could just follow up quickly. I mean, this might be too tough to answer, but if we go sideways from here, is working capital a tailwind next year, or is it still a headwind based on how you're producing?

Yeah.

Thank you.

Thanks, Josh.

Our next question comes from Jeff Zekauskas at Jpmorgan, Jeff. Please press <unk>, Amit Your line and ask your question. Thank you.

I appreciate all that. And I guess I could just follow up quickly. I mean this might be too tough to answer, but if we go sideways from here,

Is working capital A Tailwind next year or is it still a headwind based on how you're producing?

John Romano: Well, if we go sideways from here, we'll continue to match production with sales. So the TIO2 would not be an increase. And that becomes the question on the mining side of it, how we manage that, right? So that's the work we're still managing through right now. But suffice it to say that we're looking at mining as well.

Thanks very much.

I think your EBITDA guide is worth 10 464 this year.

And you did 12 five in the first half.

<unk> 93 in the second quarter.

Well, if we go sideways from here, we'll continue to match production with sales. So the tio2 would not be an increase and that becomes the question on the mining side of it. How we manage that, right? So that's the work. We're still.

So in order to reach the bottom of your guide you've got to do.

Tim Carlson: Right. We do have additional levers that we can take right now based on what we see the market outlook and using the value of our vertical integration, we think it's appropriate at this point.

One of two or 103 on average for the next two quarters.

Managing through right now but suffice it to say that we're looking at mining as well.

To reach the top of your guide you need to do $1 27, and a half.

John Romano: And, you know, the adjustments we made to production are not the same order of magnitude EBITDA impact as they were in this last downturn because we're looking at sites that can be flexed more efficiently. And to John's point, we repositioned some ore to make sure that we had the right ore blends to optimize cash and EBITDA.

We do have additional levers that we can take right now and based on what we see the Market Outlook and using the value of our vertical integration, we think it's appropriate at this point.

In general the fourth quarter is usually a seasonally light quarter.

What is it about the third and fourth quarter in EBITDA terms.

And you know, the adjustments we made to production are not the same order of magnitude in terms of impact as they were in this last downturn because.

Might lead you to earn more than you did.

Second and that if you earn at the second quarter right. Thank you guys.

Okay.

We're looking at sites that can be flexed more efficiently and to John's point, we reposition some ore to make sure that we had the right or blends to optimize cash and Ava.

Thanks, Jeff So when we think about Q2 to Q3, you should think flat up or down a little bit it's not going to be a huge lift in the big four in the fourth quarter impact and we mentioned this.

Various Analysts: Thank you.

John Romano: Thanks, Josh.

Thank you.

Thanks Joe.

Operator: Our next question comes from Jeff Vespascuis at JP Morgan. Jeff, please press star 6 to unmute your line and ask your question. Thank you.

Other opportunity that we're working on.

Historically, we have.

Our next question comes from Jessica couscous at JP Morgan. Jeff please. Press star 6 to unmute your line and ask your question. Thank you.

Various Analysts: Thanks very much. I think your EBITDA guide is $410 to $460 for this year, and you did $205 in the first half and $93 in the second quarter. So in order to reach the bottom of your guide, you've got to do $102 or $103 on average for the next two quarters. To reach the top of your guide, you need to do $127 and a half. You know, in general, the fourth quarter is usually a seasonally light quarter. You know, what is it about the third and fourth quarter in EBITDA terms that might lead you to earn more than you did at the second? And that if you earn at the second quarter rate, I think you get to something like $391.

In the past we've had these other product sales and that is likely to come in the fourth quarter and that is.

Uh, thanks very much. Um,

I think you're at the a guide is

The piece that will have a swing in that number in the fourth quarter John keep in mind those are very profitable sales for us. So if you look at the magnitude of what we've done in the past it would approximate.

410 to 460 for this year.

And you did 205 in the first half and 93 in the second quarter.

So, in order to reach the bottom of your guide, you've got to do.

Now that you laid out one other thing as well as the cost improvement program that we've taken are taken over and then underway and as John mentioned and we expect more than double this year.

1 of 102 or 103 on average for the next 2, quarters to reach the top of your guide. You need to do 127 and a half.

Lot of that goes to the balance sheet, we do see real savings this year.

Um,

And as you go across the quarters it does increase.

You know, in general the fourth quarter is usually a seasonally light quarter.

Just due to the timing of execution and getting full run rate of those savings, but we're anticipating maybe as much as $10 million of cost improvement that will fall into the fall into the bottom line.

Um, you know, what is it about? The third and fourth quarter and keep it de terms that might lead you to earn more than you did in.

Second.

Largely in late Q3 and Q4.

And that if you weren't at the second quarter, right? I think you get to something like 391,

John Romano: Thanks, Jeff. So when we think about Q2 to Q3, you know, you should think flat, up or down a little bit. It's not going to be a huge lift. And the big fourth quarter impact, and we mentioned this other opportunity that we're working on. You know, historically, we have, you know, in the past, we've had these other product sales, and that is likely to come in the fourth quarter. And that is the piece that will have a swing in that number in the fourth quarter. John?

And then can you talk about.

Thanks, Jeff. So when we think about Q2 to Q3

Whats happening in India.

What kind of volume you may be picking up.

You talk about Brazil.

What kind of volume you may be losing.

And can.

Can you give us a sense of.

The geographic pricing.

Where competitive conditions greater worthy.

Tim Carlson: Yeah, keep in mind those are very profitable sales for us. So, and if you look at the magnitude of what we've done in the past, it would approximate, you know, the math that you laid out. One other thing as well is the cost improvement program that we've taken over and been underway. And as John mentioned, we expect more than double this year. A lot of that goes to the balance sheet. We do see real savings this year. And as you know, you go across the quarters, it does increase just due to the timing of execution and getting full run rate of those savings.

I'll start with the last question first so the competitive environment right now I would say as far as pricing goes.

Our.

Areas like Europe, Middle East and Africa, I mentioned that there was a volume decline in that region, where we had price increases in the second quarter.

And we had some competitive activity, where some competitors actually reduced price to move volumes. So you've got Europe middle East and Africa.

John Romano: But we're anticipating maybe as much as $10 million of cost improvement that will fall into the bottom line, and largely in latent Q3 and Q4.

Middle East is a competitive environment right now that's not a duty affected area and so there's obviously some competitive activity as China continues to reposition to try to.

You know, you should think flat up or down a little bit. It's not going to be a huge lift and the big for the fourth quarter impact, and we mentioned this, uh, other opportunity that we're working on, um, you know, historically, we have in the past, we've had these other products sales and that is likely to come in the fourth quarter and that is the piece that we'll have a swing in that number in the fourth quarter, John. Yeah, keep in mind, those are very profitable sales for us. So, um, and if you look at the magnitude of what we've done in the past, it would approximate, you know, the amount that you laid out 1 other thing, as well as the cost Improvement program that we've taken the taken over and then underway. And as John mentioned, we expect more than double this year. A lot of that goes to the balance sheet. We do see real savings this year. Um, and as, uh, you know, you go across the quarters, it does increase. Um, just due to the time you've execution and and getting full run rate of those savings but we're anticipating maybe as much as 10 million

of cost Improvement that will fall into the balance fall into the bottom line and largely in latent, Q3 and Q4

Managed some of their sales, although they are India has been a big impact for them Latin America.

Various Analysts: And then can you talk about what's happening in India and what kind of volume you may be picking up? And you talk about Brazil and what kind of volume you may be losing. And can you give us a sense of the geographic pricing dynamic? That is, you know, where are competitive conditions greater? Where are they small?

and then C. Can you talk about, um,

There's been some competitive activity was even some western suppliers moving volume there now that being said our volume wasn't down.

what what's happening in India and

What kind of volume you may be picking up?

Cute.

One to Q2 on in Latin America, but we were expecting a little bit of a lift there.

And you talk about Brazil and what, what kind of volume you may be losing.

North America has been as I mentioned, our volumes are up slightly there.

and can you give us a sense of

um,

Ben it's been stable on price in Asia Pacific.

Again due to some of the shifting around of volume.

John Romano: Yeah, I'll start with the last question first. So the competitive environment right now, I would say, as far as pricing goes, are in areas like Europe, Middle East, and Africa. I mentioned that there was a volume decline in that region where we had price increases in the second quarter. And we had some competitive activity where some competitors actually reduced price to move volume. So you've got Europe, Middle East, and Africa. Middle East is a competitive environment right now. It's not a duty-affected area. And so there's obviously some competitive activity as China continues to reposition to try to, you know, manage some of their sales, although they are, you know, India has been a big impact for them. Latin America, there's been some competitive activity with even some Western suppliers moving volume there.

the geographic pricing dynamics, that is, you know, we're competitive conditions, greater, where are they?

Largely duty impacted areas, we see the volume upside in India, and there is competitive activity and a lot of the other areas in Asia Pacific, where China is continuing to try to reposition.

From some of the share that they're losing in those duty affected areas.

Now start with the last question first. So the competitive environment right now? I would say, as far as pricing goes, we're in areas like the Middle East and Africa. I mentioned that there was a volume decline in that region where we had.

Yeah.

Thanks.

Thank you. Our next question comes from Hassan.

And then make a global advisors Hudson. Please dial six Q Amit your line in your <unk>.

Thank you.

Good morning, John.

Least is a competitive environment right now. It's not a duty affected area and so there's obviously some competitive activity as China continues to, you know, reposition to try to

Okay.

Just wanted to sort of understand a little more about.

How you guys thought about the dividend cut.

Look I mean at the end of the day I understand this downturn has been far more drawn out than prior downturn.

John Romano: Now that being said, our volume wasn't down Q1 to Q2 in Latin America, but we were expecting a little bit of a lift there. You know, North America has been, as I mentioned, our volumes are up slightly there. It's been stable on price. And in Asia Pacific, again, due to some of the shifting around the volume, largely duty-impacted areas, we see volume upside in India. And there's competitive activity in a lot of the other areas in Asia Pacific where China is continuing to try to reposition from some of the share that they're losing in those duty-affected areas.

You know, manage some of their sales. Although they are, you know, India has had a big impact on them. Latin America, um, there's been some competitive activity with even some Western suppliers moving volume there. Now, that being said, our volume wasn't down.

I mean, the industry is cyclical and will continue to remain cyclical. So I'm just trying to understand the logic you know in.

In a cyclical industry or having a fixed dividend I mean.

Did you guys think about maybe incorporating some variability into that dividend may be having.

Possibly a fixed payout ratio I mean, just the thought process around the magnitude of the cost as well as the logic behind having a fixed dividend.

Thanks Hassan So obviously, we did spend a lot of time thinking about debt reduction in the dividend.

Q 1 to Q2 on in Latin America but we were expecting a little bit of a lift there. Um you know, North America's been, as I mentioned, our volumes are up slightly there. Um it's been real, it's been stable on price and in a specific uh again due to some of the shifting around the volume, um largely duty of impacted areas. We see volume upside in India and there's competitive activity in a lot of the other areas in Asia Pacific where China is continuing to try to reposition um from some of the share that they're losing in those Duty affected areas.

And it was aligned to the current macro environment and.

Various Analysts: Thanks.

Thanks.

John Romano: Thank you.

As I said in prepared comments as the macro changes will continue to evaluate that to make sure. It's a competitive dividend we still feel that the dividend is important and that's part of our capital allocation strategy, but in this environment. We felt it was right sized.

Operator: Our next question comes from Hassan Ahmed at Olympic Global Advisors. Hassan, please dial star 6 to unmute your line and ask your question. Thank you.

Various Analysts: Morning, John.

Thank you. All the next question comes from, Hassan Ahmed at Olympic Global advisors. Hassan, please dial Star 6 to unmute your line and ask your question. Thank you.

John Romano: Morning.

Various Analysts: You know, first of all, I just wanted to sort of understand a little more about how you guys thought about the dividend cut. Look, I mean, at the end of the day, I understand this downturn has been far more sort of drawn out than prior downturns. But I mean, you know, the industry is cyclical and will continue to remain cyclical. So I'm just trying to understand the logic, you know, in a cyclical industry of having a fixed dividend. I mean, you know, did you guys think about maybe, you know, incorporating some variability into that dividend, you know, maybe having, you know, possibly a fixed payout ratio? I mean, just the thought process around the magnitude of the cut as well as the logic behind having a fixed dividend.

um, morning John

So that we can manage our liquidity through this.

Longer downturn than we inspected expected John Yeah, obviously, we looked at a lot of different analyses had a lot of different discussions around it and.

Did cut in several other areas. So all of that went into our calculus of.

Cutting the dividend by 60% and we really wanted to just maintain our financial flexibility in this market and as we mentioned earlier, we will re look at the dividend at the appropriate time period.

Understood understood and as a follow up.

You know I know the whole railroad to element side, it's quite topical right now.

I mean, you guys have a huge huge exposure to heavy minerals mining.

I mean, if I have my numbers correct. I mean, you guys are producing as much as $3 7 million.

John Romano: Thanks, Hassan. So obviously, we did spend a lot of time thinking about that reduction in the dividend. And it was aligned to the current macro environment. And as I said in prepared comments, as the macro changes, we'll continue to evaluate that to make sure it's a competitive dividend. We still feel that the dividend is important. It's part of our capital allocation strategy. But in this environment, we felt it was right-sized so that we can manage our liquidity through this, you know, longer downturn than we expected. John?

Um, morning. You know, uh, first of all, I just wanted to um, sort of understand a little more about um, how you guys thought about the dividend cut? Um, look, I mean, at the end of the day, I understand this downturn has been far more sort of drawn out than prior downturns. But I mean, you know, the industry is cyclical and will continue to remain cyclical. So I'm just trying to understand the logic, you know, in a cyclical industry of having a fixed dividend. I mean, you know, did you guys think about maybe, you know, incorporating some variability into that dividend? You know, maybe having, you know, possibly a fixed payout ratio? I mean, just a thought process around the magnitude of the cut, as well as the logic behind having a fixed dividend.

Tons of heavy minerals.

In light of what we just saw from MP materials, the department of defense coming in.

In Australia, and I understand your exposures in South Africa, as well as Australia, but even in Australia. The government sort of collaborating with Luca I mean are you having discussions with local government and then maybe other sort of metals and mining company processes and the like do you know.

Thanks Assan. So obviously we did spend a lot of time thinking about that reduction in the dividend and it was a line that the current macro environment and as I said in prepared comments as the macro changes we'll continue to evaluate that to make sure it's a competitive dividend. We still feel that the dividend is important. It's part of our Capital allocation strategy.

But in this environment, we felt it was right sized.

So that we can manage our liquidity through this.

Tim Carlson: Yeah, obviously, we looked at a lot of different analyses, had a lot of different discussions around it, and, you know, obviously, did cut in several other areas. So all that went into our calculus of, you know, cutting the dividend by 60%. And we really want to just maintain our financial flexibility in this market. And as we mentioned earlier, we will relook at the dividend at the appropriate time period.

Maybe sort of accelerate the.

The growth of that.

Sort of.

Product area.

Yeah, Thanks Hassan and the answer is yes on all of those so.

We've spent a lot of time.

In multiple jurisdictions around looking and trying to come up with opportunities, where we could get funding.

You know, longer downturn than we inspect it expected John. Yeah. Obviously we looked at a lot of different analyses had a lot of different discussions around it and uh you know, obviously did cut in several other areas. So all that went into our calculus of um you know, cutting the dividend by by 60% and we really want to just maintain our financial flexibility in this market. And then, as we mentioned earlier, we will re look at the dividend at the appropriate time period.

Various Analysts: Understood. Understood. And as a follow-up, you know, I know the whole rare earth element side is quite topical right now. I mean, you know, you guys have a huge, huge exposure to heavy minerals mining. You know, I mean, if I have my numbers correct, I mean, you guys are producing as much as 3.7 million tons of heavy minerals. You know, in light of what we just saw from NP Materials, you know, the Department of Defense coming in, you know, in Australia, and I understand, you know, your exposures in South Africa as well as Australia. But even in Australia, you know, I mean, the government's sort of collaborating with ILUCA. I mean, are you having discussions with local governments, maybe other sort of metals and mining companies, offices, and the like to, you know, maybe sort of accelerate the growth of that sort of product area?

No.

Saudi Arabia, Brazil, Australia those are all works in progress.

And we continue to collaborate with others that are in that space one of the advantages we have.

Our rare Earths.

Base is that we also have heavier and heavier or some of the shortfall in some of these other opportunities that are out there.

There was a lot you can read a lot into A&P, but you know.

That was a great opportunity for them and what I can tell you is that we're working with lots of different governments and companies to try to figure out how we optimize and accelerate.

We might benefit from that and as I mentioned, there is an element of that work.

That has to do with some of the sales that are happening in the fourth quarter.

Understood understood and as a follow-up, um, you know, I know the whole ra element side, this white topical, uh, right now. Um, I mean, you know, you guys have a huge, huge exposure to heavy minerals mining. Um, you know, I mean, if I have my numbers, correct. I mean, you guys are producing as much as 3.7 million, uh, tons of heavy minerals. Um, you know, in light of what we just saw from MP materials, you know, the Department of Defense coming in, um, you know, in Australia and I understand, you know, your exposures in South Africa, as well as Australia, but even in Australia, you know, I mean the government sort of collaborating with iluka. I mean, are you having discussions with local governments, maybe other sort of metals and mining companies processes and the like to, you know, maybe sort of accelerate the the the the the growth of

Very helpful. John Thank you so much.

John Romano: Yeah, thanks, Hassan. And the answer is yes on all of those. So we spent a lot of time in multiple jurisdictions around looking and trying to come up with opportunities where we could get funding. So US, Saudi Arabia, Brazil, Australia, those are all works in progress. And we continue to collaborate with others that are in that space. And one of the advantages we have in our rare earth base is that we also have heavies. And heavies are some of the shortfall in some of these other opportunities that are out there. You know, there was a lot, you could read a lot into NP, but you know, that was a great opportunity for them.

Of that, uh, of that sort of uh, product area.

Thank you.

Our next question comes from John Mcnulty from BMO capital markets. John Please dial star fix can Amit your line and ask your question. Thank you.

Yes. Good morning can you hear me.

Yes, hi.

Hi, John.

Perfectly perfect.

Perfect.

Just wanted to dig in so I guess, we've seen a bunch of capacity closures this year, including your own bottleneck. We saw some last year, we saw China. It looks like a dial back a decent amount of production and by our count it's around 6% of nameplate capacity and yet if anything it seems like the.

<unk> has gotten worse.

Are we getting closer to that tipping point, where the supply has been dialed back enough where the supply demand can start to tighten at this point are there other factors that we should be considering and I understand the demand environments not robust by any means but it doesn't seem like it's contracted by as much as maybe supply hub.

Yeah. Thanks Assan. And the answer is yes, on all of those. So um, we spent a lot of time um in multiple jurisdictions around looking and trying to come up with opportunities where we could get funding. So us Saudi Arabia, Brazil Australia. Those are all works in progress, and we continue to collaborate with others that are in that space. You know, 1 of the advantages, we have uh, in our Rare Earth base is that we also have Heavies and Heavies are some of the shortfall in some of these other opportunities that are out there. Um, you know, there was a lot, you can read a lot into MP. Um, but you know,

John Romano: And what I can tell you is that we're working with lots of different governments and companies to try to figure out how we optimize and accelerate how we might benefit from that. And as I mentioned, there's an element of that work that has to do with some of the sales that are happening in the fourth quarter.

For them. And what I can tell you is that we're working with lots of different governments and companies to try to figure out how we optimize and accelerate

I guess can you help us just to think about the cycle and where we are and maybe some of the puts and takes around that.

How we might benefit from that, and as I mentioned, there's an element of that work um that has to do with some of the sales that are happening in the fourth quarter.

Various Analysts: Very helpful, John. Thank you so much.

Yes, Thanks, John Great question, and look I mean at the end of the day. This cycle has been longer than any other one that I have experienced and I do believe that we're hedging towards the cycle going the other direction to your point on production since 2023.

John Romano: Thank you.

Very helpful, John. Thank you so much.

Operator: Our next question comes from John McNulty from BMO Capital Markets. John, please dial star 6 to unmute your line and ask your question. Thank you.

Thank you.

Various Analysts: Yeah, good morning. Can you hear me?

Our next question comes from John mcy from BMO Capital markets, John, please, dial Star 6 to unmute your line and ask your question. Thank you.

Operator: Yes, we can hear you. Thank you.

Yeah, good morning. Can you hear me?

Various Analysts: Okay. Hi, John. Perfect. Perfect. I just wanted to dig in. So I guess we've seen a bunch of capacity closures this year, including your own bottling. We saw some last year. We saw China. It looks like it's dialed back a decent amount of production. And by our count, it's around 6% of nameplate capacity. And yet, if anything, it seems like the environment has gotten worse. So are we getting closer to that tipping point where the supply has been dialed back enough where the supply-demand can start to tighten at this point? Are there other factors that we should be considering? I understand the demand environment's not robust by any means, but it doesn't seem like it's contracted by as much as maybe supply has.

Yeah, we can hear you. Thank you. Yeah. Hi John.

750000 tons of capacity taken out that's a share of some of that's in Japan. Some of it was in Taiwan. Some of it was in Europe. Some of it was in China as recently as the last two weeks.

Ben to Chinese companies that have announced 280000 ton lines that are coming down. So when you think about recovery.

Clearly when the recovery may not look like the last recovery, but there is less capacity there and I would say that there are probably other capacity announcements that are still hanging out there that haven't happened yet.

And I, probably don't need to go into a lot of detail you can imagine where that might be with some companies that have been trying to restructure for a while so.

Various Analysts: So I guess, can you help us just to think about the cycle and where we are and maybe some of the puts and takes around that?

Perfectly perfect. Um, I just wanted to dig in. So I guess we've seen a bunch of capacity closures this year, including your own bot luck. Um, we saw some last year. We saw China, it looks like it's dialed back, a decent amount of production and and by our count it's it's around 6% of name plate capacity and yet if anything it seems like the environment has gotten worse. Um so are we getting closer to that Tipping Point where the supply has been dialed back enough? Where the supply demand can start to tighten at this point? Are there other factors that we should be? Considering I understand the the demand environments not robust by any means. But it it doesn't seem like it's contracted by as much as maybe supplying.

I do believe that the market is going to recover its a matter of when not if and we are putting our business in a place where we feel we'll be able to weather that period of time, whether it's three months or another eight months. So that we can come out of the other side a stronger competitor.

John Romano: Yeah, thanks, John. It's a great question. And look, I mean, at the end of the day, the cycle has been longer than any other one that I've experienced. And I do believe that we're hedging towards the cycle going the other direction. To your point on production, since 2023, there's been 750,000 tons of capacity taken out. That's a share of some of that's in Japan. Some of it was in Taiwan. Some of it was in Europe. Some of it was in China. As recently as the last two weeks, there's been two Chinese companies that have announced 280,000-ton lines that are coming down. So when you think about recovery, clearly, the recovery may not look like the last recovery, but there is less capacity there. And I would say that there are probably other capacity announcements that are still hanging out there that haven't happened yet.

So I guess, can you help us just to think about the cycle and where we are and maybe some of the puts and takes around that?

Yeah, thanks, John. It's a great question. And look, I mean, at the end of the day, the cycle has been longer than any other one that I've experienced, and I do believe that we're hedging towards.

Okay.

Got it okay no thats helpful.

And then I guess with.

The dialing back or the closure of bottleneck.

I guess you guys had been about when fully running had been about 85% vertically integrated I assume this pushes you.

Closer to fully integrated is that where you want to be or would you consider possibly cleaving off a piece of the mining business, that's something that would be even remotely palatable to you to kind of maybe change that that internal balance I guess, how should we be thinking about that longer term.

The cycle going the other direction to your point on production. Since 2023, there's been 750,000 tons of capacity taken out, that's a share of some of that's in Japan. Some of it was in Taiwan some of it was in Europe, some of it was in China as recently as you know, in the last 2 weeks, there's been 2. Chinese companies that have announced at 280,000 tan lines that are coming down. So when you think about recovery,

So that's a great question as well and we're not 100% vertically integrated there is still a need for some feedstock and this particular states where paring back on that because we pulled back production, but in the long term. We will continue to look at what that right balances and we don't want to be long on feedstock for sure.

John Romano: And I probably don't need to go into a lot of detail. You can imagine where that might be with some companies that have been trying to restructure for a while. So I do believe that the market is going to recover. It's a matter of when, not if. And we are putting our business in a place where we feel we'll be able to weather that period of time, whether it's three months or another eight months, so that we can come out of the other side a stronger competitor.

Clearly when the the recovery may not look like the last recovery, but there is less capacity there. And I would say that there are probably other capacity announcements that are still hanging out there that haven't happened yet. Um, you know, and I don't know, probably don't need to go into a lot of detail. You can imagine where that might be with some companies that have been trying to restructure for a while. So,

Sure and Theres, a right balance to strike there and as we said on the last call. We're going to continue to look at our asset footprint and try to make sure that we're right sized so that that balance can continue to give us that advantage that we've referenced before.

I do believe that the market is going to recover. It's a matter of when not if and we are putting our business in a place where we feel, we'll be able to weather that period of time whether it's 3 months or another 8 months.

So that we can come out of the other side, a stronger competitor.

Various Analysts: Got it. Okay. No, that's helpful. And then I guess with the dialing back or the closure of bottling, I guess you guys had been about when fully running had been about 85% vertically integrated. I assume this pushes you, you know, closer to fully integrated. Is that where you want to be, or would you consider possibly cleaving off a piece of the mining business? Is that something that would be even remotely palatable to you to kind of maybe change that internal balance? I guess, how should we be thinking about that longer term?

Three to $400 a ton from buying stock on the open market.

Yeah.

Got it thanks very much for the color.

Thank you.

Our next question comes from Olivier <unk> of Bank of America Merrill Lynch Olivia. Please Presto Oc your line and ask your question. Thank you.

Alright, thank you.

Roger on for Olivia.

I had two questions.

Guarding the $50 million inventory financing facilities and I suspect, we'll see more in the Q, but can you give us a heads up on on what the rate and maturity of that facility is and will that facility be on or off balance sheet, meaning youre going to find balance sheet. The inventory stays on our balance sheet and we will see in the debt.

John Romano: Yeah, so that's a great question as well. And we're not 100% vertically integrated. There is still a need for some feedstock. In this particular stage, we're paring back on that because we pulled back production. But in the long term, we'll continue to look at what that right balance is. And you know, we don't want to be long on feedstock for sure. And there's a right balance to strike there. And as we said on the last call, we're going to continue to look at our asset footprint and try to make sure that we're right-sized so that that balance can continue to give us that advantage that we referenced before, you know, $300 to $400 a ton from buying feedstock on the open market.

Got it. Okay. No that's helpful. Um and then I guess with with the dialing back or or the closure of botle um I guess you guys had been about when fully running had been about 85% vertically integrated, I assume this pushes you, you know, closer to fully integrated. Is that where you want to be or would you consider possibly cleaving off a piece of the mining business? Is that something that would be even remotely palatable to you, um, to kind of maybe change that that internal balance. I guess, how should we be thinking about that longer term?

<unk>.

Any drawings amount under that facility.

Yeah. Thanks, Roger for the question, obviously <unk> added a significant amount of liquidity in this month for us at $50 million.

It is not recorded as debt on our balance sheet, but we will be recording it in the other liabilities section of it.

Yeah, so that's a great question as well and we're not a 100% vertically integrated. There is still a need for some feed stock in this particular stage where pairing back on that because we pulled back production. But in the long term we'll continue to look at what that right balance is and you know, we don't want to be long on feed stock for sure and there's a right balance to strike there. And as we said on the last call, we're going to continue to look at our asset for footprint and try to make sure.

And we do have a very competitive rate just given the the level of inventory.

<unk> that they have backing it.

That were right sized. So that if that balance can continue to give us that advantage that we've referenced before, you know, 3 to 4 hundred dollars a ton from buying food stock on the open market.

It is a short term facility that's renewable.

Various Analysts: Got it. Thanks very much for the caller.

Ever.

Several months.

John Romano: Thank you.

Got it. Thanks very much for the caller.

Thank you.

Several months okay.

Operator: Our next question comes from Olivia Key at Bank of America, Merrill Lynch. Olivia, please press star 6 to unmute your line and ask your question. Thank you.

Okay.

Second question is.

So how would you compare your volumes down 11% year over year and flat pricing.

Roger Spitz: Hi, thank you. This is Roger on for Olivia. I had two questions regarding the $50 million inventory financing facilities, and I suspect we'll see more in the queue. But can you give us a heads up on what the rate and maturity of that facility is? And will that facility be on or off balance sheet, meaning you're going to, if on balance sheet, the inventory stays on balance sheet, and we'll see in the debt stack, you know, any drawings amount under that facility?

Our next question comes from Olivia key at Bank of America Merrill, Lynch. Olivia, please press star 6 to unmute your line and ask your question. Thank you.

And <unk> on their pre release said that their sales were up.

Uh, thank you. Uh, this is Roger on for Olivia. Um,

High single digits.

I suspect you've thought about that I wonder if you might share any thoughts you had.

Yes. So look if you look over time, there is a lot of fluctuations in market share and I would just say that.

And I suspect we'll see more in the queue. But can you give us a heads up on on what the rate and maturity of that facility is? And will that facility be

<unk> that we had for the second quarter initially was to be up.

On or off, balance sheet, meaning you're going to, if, if I'm balance sheet the, the inventory stays on balance sheet and we'll see in the debt stack.

Mid to high single digits, and we were down.

Tim Carlson: Yeah, thanks, Roger, for the question. Obviously, it added a significant amount of liquidity in this month for us at $50 million. It is not recorded as debt on our balance sheet, but we will be recording it in the other liability section of it. And we do have a very competitive rate, just given the level of inventory, the security that they have backing it. And it is a short-term facility that's renewable, you know, every several months.

You know, any drawings amount under that facility.

And I'll go back to comments that I made the point in North America that was largely driven by muted code coding season.

Our volumes were up but they werent up as what normally what they would've been in Europe, our volumes, what Europe Middle East and Africa. They were down in part of that had to do with the market actually just not being as robust as we thought it was we weren't planning for it to be stronger, but it was actually weaker than we expected it to be and there was competitive activity over there.

Yeah, thanks, Roger for the question. Obviously, it added a significant amount of liquidity in this month for us at 50 million. Uh, it is not recorded as debt on our balance sheet, but we will be recording it in the other liabilities section of it. Um, and we do have a very competitive rate, just given the the level of inventory, um, the security that they have backing it, um, and it is a short-term facility that's renewable. Um, you know, every uh, uh, several months.

Various Analysts: You're several months facility. Okay, but renewable. Second question is, so how would you compare your volumes down 11% year over year and flat pricing? And Comores, on their pre-release, said that their TIO2 sales were up in high single digits. I suspect you've thought about that. I wonder if you might share any thoughts you had.

As I mentioned, we were raising prices and we had some competitors that were losing prices and we pick that we lost a little volume there Asia Pacific our volumes were up largely tied to what we were going to see in.

There's several months specifically, okay. But um renewable uh second question is um

India as I mentioned before with some growth in that area in Latin America, Although flat, we were projecting that to be up and there was some market share shift in that area as well. So when I mentioned our strategy from a commercial perspective moving into the balance of the year, it's to maintain <unk> grow share targeted regions and.

So how would you compare your volumes down 11% year-over-year in flat pricing uh and kamor on their pre-release said that their K2 sales were up.

You know, High single digits. Um,

I suspect you thought about that. I wonder if you might share any thoughts you had.

John Romano: Yeah, so look, if you look over time, there's a lot of fluctuations in market share. And I would just say that the guide that we had for the second quarter initially was to be up in mid to high single digits, and we were down. And I'll go back to the comments that I made before in North America that was largely driven by a muted coding season. Our volumes were up, but they weren't up as what normally what they would have been. In Europe, our volumes were, Europe, Middle East, and Africa, they were down. And part of that had to do with the market actually just not being as robust as we thought it was. We weren't planning for it to be stronger, but it was actually weaker than we expected it to be.

Targeted regions for growth are largely in India.

Our objective is to maintain our share.

Normalized rates throughout the year, so I can't speak too much to <unk> on what they announced back in June.

Uh, yeah. So look, if you look over time, there's a lot of fluctuations in market share. And I would just say that a guide that we had for the second quarter. Initially was to be up.

In a mid mid to high single digits and we were down.

But generically I know, what's happening in the market with competition and the reasons that I mentioned theirs.

And I'll go back to the comments that I made before North America, which was largely driven by a muted coding season.

The competition is.

Elevated.

Thank you very much.

Yeah.

John Romano: And there was competitive activity over there where, as I mentioned, we were raising prices, and we had some competitors that were losing prices, and we picked, we lost a little volume there. Asia Pacific, our volumes were up, largely tied to what we were going to see in India, as I mentioned before, with some growth in that area. And Latin America, although flat, we were projecting that to be up. And there was some market share shift in that area as well. So when I mentioned our strategy from a commercial perspective, moving into the balance of the year, it's to maintain and/or grow share targeted regions. And the targeted regions for growth are largely in India. And our objective is to maintain our share at normalized rates throughout the year. So I can't speak too much to Comores on what they announced back in June.

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Um, our volumes were up, but they weren't up as what normally what they would have been in Europe our volumes, where Europe, Middle East and Africa, they were down and part of that had to do with the market, actually, just not being as robust, as we thought it was, we weren't planning it for it to be stronger, but it was actually weaker than we expected it to be. And there was competitive activity over there. Um, where as I mentioned, we were raising prices and we had some competitors that were losing prices and we picked, we lost a little volume there. Asia Pacific, our volumes were up. Largely tied to what we were going to see in. Uh India as I mentioned before, with some growth in that area in Latin America. Although flat, we were projecting that to be up.

Yeah.

Our next question.

Edwin Brooklyn at Barclays. Please mute your line and ask your question. Thank you.

Hey, Thanks for taking the question. This morning first one back.

On supply or some of the supply questions with all the capacity reductions that we've seen in the that you've mentioned would you say broadly speaking from a <unk> perspective that supply overall supply is closer to underlying demand right now.

John Romano: But generically, I know what's happening in the market with competition. And you know, in the regions that I mentioned, the competition is, oh, it's elevated.

And there was some market share shift in that area as well. So when I mentioned our strategy from a commercial perspective, moving into the balance of the year, it's to maintain and or grow, share, targeted regions and the targeted regions for growth are largely in India. And our objective is to maintain our share at normalized rates throughout the year. So I can't speak too much to Kors on what they announced back in June. Um,

Or is it something that we still need demand to improve in order to.

and, um, but generically, I know what's happening in the market with competition and, you know, and the reasons that I mentioned, there's

To kind of fill that supply gap.

Yes, so the biggest.

The competition is a, it's elevated.

Various Analysts: Thank you very much.

I would say variable in answering that question is China.

Thank you very much.

Operator: As a reminder, if you are participating in the Q&A today and have joined via webinar, please use the raised hand icon, which can be found at the bottom of your webinar application screen. And as a reminder, if you are participating and have joined via phone, please press star 9 on your keypad to raise your hand. And when you are called upon, 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. Our next question comes from Edward Brooker at Barclays. Please unmute your line and ask your question. Thank you.

So China continues to be weak and our sales into China are not significant we have a plant over there. So we have good visibility into that but yeah. So I'd say if you. If you think about the answer to that question globally, I think you're right China has a big impact on that on that so.

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China.

Has some headwinds.

<unk> with duty affected areas we.

Believe based on information that I provided those two plants that have been announced that they are idling two or closing theres other assets I think production that's being adjusted accordingly.

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Edward Brooker: Hey, thanks for taking the question this morning. First one, back on supply or some of the supply questions. You know, with all the capacity reductions that we've seen and that you've mentioned, would you say, broadly speaking, from a TIO perspective, that supply, overall supply, is closer to underlying demand right now? Or is it something that we still need demand to improve in order to kind of fill that supply gap?

Our next question comes from Edward Brooker at Barclays. Please unmute your line and ask your question. Thank you.

So.

I think the better answer is as that Chinese market recovers and I can't tell you when that's going to happen a lot of that volume is going to get sucked up.

But again, there hasn't been a tremendous amount of capacity added as <unk>.

Since 2003, there has been about 740000 tons, that's come out of the market. So I do think as the market recovers, even if it's not as robust of a recovery as it was historically.

Hey, thanks for taking the question this morning. Uh first, 1 back on uh Supply or some of the supply uh questions. You know, with all the capacity, reductions that we've seen and that, that you've mentioned. Would you say, broadly speaking from a Tio perspective, that Supply overall Supply is closer to underlying Demand right now?

or is it something that we still need to demand to improve in order to, uh,

Youre going to see a shift in.

John Romano: Yeah, so the biggest, I'd say, variable in answering that question is China. So China continues to be weak. And our sales into China are not significant. We have a plant over there, so we have good visibility into that. But you know, so I'd say if you think about the answer to that question globally, I think you're right. China has a big impact on that. So China has some headwinds with duty-affected areas. We believe, based on information that I provided, there's two plants that have been announced that they're idling. Two are closing. There's other assets, I think, production that's being adjusted accordingly. So I think the better answer is as that Chinese market recovers, and I can't tell you when that's going to happen, a lot of that volume is going to get sucked up. But again, there hasn't been a tremendous amount of capacity added.

To kind of fill that spy app.

Supply demand and price accordingly.

Yeah. So the biggest

Because where we are in price right now is not a sustainable place.

Got it.

That's helpful. My second one could you if you have it on hand, just give us your secured bond.

Buying capacity or secured debt capacity and then is there any thought you using.

<unk>, our secured debt to boost liquidity.

I I'd say variable in answering that question is China. So, China continues to be weak and our sales into China are not significant. We have a plant over there. Um, so we have good visibility into that. But, you know, so I'd say if you, if you think about the answer to that question globally, I think you're right. China has a big impact on it on that. So,

China has some headwinds with Duty affected areas.

So I wasn't following your first question.

Obviously, we can go out and raise debt the debt capital markets, we continue to monitor them.

In this environment to maintain financial flexibility so we do.

2 plants that have been announced that they're idling 2 or closing. There's other assets, I think production that's being adjusted accordingly. Um, so

Look at the market.

And evaluate whether or not we do want to raise any additional debt in the markets, but at this point, we as I mentioned, we do have sufficient liquidity particular with the actions that we took for this inventory raised but we will monitor market.

John Romano: Since '23, there's been about 740,000 tons that's come out of the market. And so I do think as the market recovers, even if it's not as robust of a recovery as it was historically, you're going to see a shift in supply, demand, and price accordingly. Because where we are in price right now is not a sustainable place.

What was your first question again.

First question is just on how much secured debt capacity adds.

I I think the better answer is, as that Chinese market recovers and I can't tell you when that's going to happen. A lot of that volume is going to get sucked up. But again, there hasn't been a tremendous amount of capacity at it is, um, since 23, there's been about 740,000, tons that's come out of the market. And so, I do think as the market recovers, even if it's not as robust of a recovery, as it was historically.

Okay, I think maybe we'll follow up with you. After this call if that's okay.

You're going to see a shift in.

Supply, demand and price according

Yep, absolutely have more than enough.

Because where we are in price right now is not a sustainable place.

Edward Brooker: Got it. That's helpful. My second one, could you, if you have it on hand, just give us your secured bond capacity or secured debt capacity? And then is there any thought to using a secured bond or secured debt to boost liquidity?

Our final question today comes from Vincent Andrews Morgan Stanley.

<unk> your line and ask your question. Thank you.

Good morning. This is Joseph Pellegrino on for Vincent just curious if you could discuss the differences in markets that have announced duties specifically between Europe and India.

Got it. That's uh, that's helpful my second 1, could you, uh, if you have it on hand, just give us, uh, your secured, uh, Bond capacity, our secured debt capacity. And then, is there any thought to using, uh, you know, a secure Bond or, or secured, uh, debt to boost liquidity?

Tim Carlson: So I wasn't following your first question. You know, obviously, we can go out and raise debt. The debt capital markets, we continue to monitor them, you know, in this environment to maintain financial flexibility. So we do, you know, look at the market and evaluate whether or not, you know, we do want to raise any additional debt in the markets. But at this point, we, as I mentioned, we do have sufficient liquidity, particularly with the action that we took for this inventory raise. But we will monitor the market.

Are you seeing the competitive pressure in Europe, but youre seeing strength in India.

There was product placed in Europe, but maybe not so much in India are there differences in demand and we're just hoping you could kind of discuss the differences that you're seeing in those duty markets. Thank you.

Thanks, Justin So in Europe in Europe, we saw big.

So I wasn't following your first question. Uh, you know, obviously, we can go out and raise debt, the debt Capital markets, we continue to monitor them, um, you know, in this in this environment, uh, to maintain Financial flexibility. So we do, um, you know, look at the market, um, and evaluate whether or not, you know, we do want to raise

Bump up in our sales profile as a result of the duties and we're still saying that but there has been an increased level of competitive activity. As there are more suppliers that are feeding into that market. So we did see a decline in the second quarter, but we still there still are advantages attached.

John Romano: What was your first question again?

Any additional debt in the markets, but, uh, at this point, we, as I mentioned, we do have sufficient liquidity, particularly with the action that we took for this inventory raise. But, um, we will monitor the market.

Edward Brooker: First question just on how much secured debt capacity you have.

What was your first question again?

Tim Carlson: Okay. I think maybe we'll follow up with you after this call, if that's okay.

First question, just on, uh, how much secured debt capacity you have.

The duties that are in place in Europe, and we will continue to benefit from that in India, specifically one of the advantages that we have.

Edward Brooker: Yep, absolutely. Thank you.

Okay, I I think maybe we'll follow up with you, uh, after this call. If that's okay.

John Romano: More than enough.

Yep. Absolutely, yeah. More than enough.

Cause that we ship into India from Australia, Australia has a free trade agreement.

Operator: Our final question today comes from Vincent Andrews at Morgan Stanley. Vincent, please unmute your line and ask your question. Thank you.

Everybody else that shifts into India, now, including China, where the much higher duty theres already a 10% duty. So we were positioned well in India to begin with we have that's one that's the second largest market that we were selling into prior to the duties go into doing into effect.

Tim Carlson: Good morning. This is Justin Pellegrino on for Vincent. Just curious if you could discuss the differences in markets that have announced duties, specifically between Europe and India. You're seeing the competitive pressure in Europe, but you're seeing strength in India. Is that, you know, there was product placed in Europe, but maybe not so much in India, or are there differences in demand? And we're just hoping you could kind of discuss the differences that you're seeing in those duty markets. Thank you.

Oh, a final question. Today comes from Vincent Andrews at Morgan Stanley. Vincent please unmute your line and ask your question. Thank you.

Been a strategic market for us for years.

It's got a high growth rate low catheter.

<unk>.

Kurt low per capita T O to consumption, so there's lots of growth opportunity there.

Good morning. This is Justin Pellegrino on, for Vincent. Just curious, if you could discuss the differences in markets that have announced, uh, duties, specifically, between Europe and India. Uh, you're seeing the competitive pressure in Europe, uh, but you're seeing strength in India, is that, uh, you know, there was product placed in in Europe, but maybe not so much in India, or are there differences in demand and we're just hoping you can kind of discuss the differences that you're seeing in those uh Duty markets. Thank you.

John Romano: Thanks, Justin. So in Europe, we saw a big bump up in our sales profile as a result of the duties. And we're still seeing that, but there has been an increased level of competitive activity as there are more suppliers that are feeding into that market. So, you know, we did see a decline in the second quarter, but we still, there still are advantages attached to the duties that are in place in Europe and will continue to, you know, benefit from that. In India specifically, one of the advantages that we have is that we ship into India from Australia. Australia has a free trade agreement. Everybody else that ships into India, now including China, with a much higher duty, there's already a 10% duty. So we were positioned well in India to begin with.

So.

And in Brazil.

That's an opportunity that's a 180000 ton a year market you had 100000 tons of Chinese material going in there the duties were in place until April 21.

Those provisional duties lapsed based on.

And we knew they were going to labs, because the investigation was going to last longer than six months and provisional duties can only be in place for six months. So we were arguably I mentioned our sales in Latin America were flat Q1 to Q2, we would have expected those provisional duties to become permanent a little bit sooner than where they are it looks like it's going to be more towards the end of the <unk>.

Thanks Justin. So, in Europe in Europe, we saw a big bump up in our sales profile as a result of the duties, and we're still seeing that. But there has been a, an increase level of competitive activity, as there are more suppliers that are feeding into that market. So, you know, we did see a decline in the second

Order but we still there still are advantages attached to the duties that are in place in Europe and will continue to you know benefit from that in India specifically 1 of the advantages that we have.

<unk> period, which has a deadline at the end of the quarter ended the third quarter. So that's the other area, where we still have opportunity.

The Chinese have exploited that by continuing to ship and there will be there's this gap between provisionals and final duties being implicated in those are the three areas.

John Romano: We have, it's the second largest market that we were selling into prior to the duties going into effect. It's been a strategic market for us for years. It's got a high growth rate, low per capita TIO2 consumption, so there's lots of growth opportunity there. So that kind of, and in Brazil, that's an opportunity. That's a 180,000-ton a year market. You had 100,000 tons of Chinese material going in there. The duties were in place until April 21st. Those provisional duties lapsed based on, and we knew they were going to lapse because the investigation was going to last longer than six months, and provisional duties can only be in place for six months. So we were, I mentioned our sales in Latin America were flat Q1 to Q2. We would have expected those provisional duties to become permanent a little bit sooner than where they are.

We're duties are in place and.

Before they were in place.

China was exporting about 300000 tons into India, So about 258000 tons into the European market and 100000 tons into Brazil. So that's the 600000 tons that has become in play not just for us but for.

Is that we ship into India from Australia. Australia has a Free Trade Agreement. Um, everybody else that ships into India now, including China with a much higher Duty. There's already a 10% Duty so we were positioned well, in India to begin with. We have, it's 1, it's the second largest market that we were selling into prior to the duties going into going into effect. It's been a strategic market for us for years. Um, it's got a high growth rate low Capital per to 2% low per capita to consumption. So there's lots of growth opportunity there. Um, so

That kind of, and in Brazil,

Other competitors that are non Chinese.

Okay that makes sense and then just one follow up.

You saw the sort of increased pressure in Europe, and <unk> can you just give us an idea of what youre thinking about sequentially for Europe as it relates to.

Demand for our products as well as price just as those duties are are still in play.

That's an opportunity. That's 180,000 ton of your Market. You had a 100 thousand tons of Chinese material going in there. The duties were in place until April 21st, those provisional duties elapsed based on the. And we knew they were going to elapse because the investigation was going to last longer than 6 months, and provisional to these can only be in place for 6 months.

Given the increase we saw in Q1, and then kind of followed by the decrease in Q2, what are you thinking of sequentially for Q3. Thank you.

John Romano: It looks like it's going to be more towards the end of the investigation period, which has a deadline at the end of the quarter, end of the third quarter. So that's the other area where we still have opportunity, but the Chinese have exploited that by continuing to ship in there while there's this gap between provisionals and final duties being implicated. And those are the three areas where duties are in place. And, you know, before they were in place, China was exporting about 300,000 tons into India, about 258,000 tons into the European market, and 100,000 tons into Brazil. So that's the 600,000 tons that has become in play, not just for us, but for other competitors that are non-Chinese.

Yes, so we don't I'm not going to provide a guide on pricing by region, but I will say that factored into the guide for Q3, There's you know 2% to 3% move on price.

So we were, I mentioned our sales in Latin America were flat, Q1 to Q2. We would have expected those provisional duties to become permanent a little bit sooner than where they are. It looks like it's going to be more towards the end of the investigation period, which has a deadline at the end of the quarter, end of Q3. So that's the other area where we still have opportunity. But

On the downside that's in the guide.

When we start thinking about Europe in general.

Not seeing a tremendous amount of downward movement, it's more in line.

It's a holiday season right now so August is typically a low month, but we already know what happened in July and.

September is forecasted to move in the right zone, So we're not expecting.

The significant reduction I did mention that we are going to focus on maintaining our market share.

China was exporting about 300,000 tons into India about 258,000, tons into the European market and 100,000 tons into Brazil. So that's the 600,000 tons that has become in play, not just for us but for

And.

Other competitors that are non-chinese.

Tim Carlson: Okay, that makes sense. And then just want to follow up. You noted that you saw the bit of increased pressure in Europe in Q2. Can you just give us an idea of what you're thinking about sequentially for Europe as it relates to demand for products as well as price, just as those duties are still in play, given the increase we saw in Q1, then kind of followed by the decrease in Q2? What are you thinking of sequentially for Q3? Thank you.

Also look at targeted areas for growth and the growth is probably more aligned to India and maintaining share would be everywhere else.

Fantastic. Thank you.

Okay, that makes sense. And then just want to follow up, um you know that you saw the bit of uh increased pressure in Europe and and 2 Q. Can you just give us an idea of what you're thinking about sequentially for your as it relates to um,

Thank you.

This concludes the Q&A and today's call. Thank you for joining and have a great day.

John Romano: Yeah, so we don't, I'm not going to provide a guide on pricing by region, but I will say that factored into the guide for Q3, there's, you know, 2% to 3% move on price. On the downside, that's in the guide. When we start thinking about Europe in general, we're not seeing a tremendous amount of downward movement. It's more in line, you know, it's a holiday season right now. So August is typically a low month, but we already know what happened in July, and September is forecasted to move in the right zone. So we're not expecting a significant reduction. I did mention that we are going to focus on maintaining our market share and also look at targeted areas for growth. And the growth is probably more aligned to India, and maintaining share would be everywhere else.

Uh, demand for uh, product as well as price. Just as those Duties are, are still in play. Um, given the the increase, we saw in q1, then kind of followed by the the decrease in Q2. What are you thinking of uh sick my for Q3. Thank you.

Yeah, so we're not going to provide a guide on pricing by region, but I will say that factored into the guide for Q3, there's a 2% to 3% move on price. Um, on the downside, that's in the guide.

When we start thinking about Europe in general, we're not seeing a tremendous amount of downward movement. It's more in line, you know, it's a holiday season right now. So August is typically a low month, but we already know what happened in July and, um, September is forecasted to move in the right zone, so I we're not expecting, um, a significant reduction. I did mention that we are going to focus on maintaining our Market.

share, and

Also, look at targeted areas for growth and the growth is probably more aligned to India and maintaining share would be everywhere else.

Tim Carlson: Fantastic. Thank you.

John Romano: Thank you.

Fantastic, thank you.

Thank you.

Operator: This concludes the Q&A and today's call. Thank you for joining and have a great day.

This concludes the Q&A and today's call. Thank you for joining, and have a great day.