Good day, and welcome to the Tronox Holdings Q3 2020 Earnings Call. All participants will be in listen-only mode. After today’s presentation, there will be an opportunity to ask questions. I would now like to turn the conference over to Jennifer Guenther, Vice President of Investor Relations. Please go ahead.

Thank you, and welcome to our third quarter 2020 conference call and webcast. On our call today are Jeff Quinn, Chairman and Chief Executive Officer; Jean-François Turgeon, Chief Operating Officer; John Romano, Chief Commercial and Strategy Officer; Tim Carlson, Chief Financial Officer; and John Srivisal, Senior Vice President, Business Development and Finance. We will be using slides as we move through today's call. For those listening by telephone, if you haven't already done so, you can access them on our website at investor.tronox.com. Moving to Slide 2, I remind you that comments made on this call include certain forward-looking statements that are subject to various risks and uncertainties, including those summarized in our SEC filings. This information represents our best judgment based on today's information. However, actual results may vary, and the Company undertakes no obligation to update or revise any forward-looking statements. During this call, we will refer to certain non-U.S. GAAP financial terms useful for evaluating the Company's performance. Reconciliations to the nearest U.S. GAAP terms are provided in our earnings release and in the appendix of the accompanying presentation. Moving to Slide 3, it's now my pleasure to turn the call over to Jeff Quinn. Jeff?

Thanks, Jennifer. Good morning, everyone, and thank you for joining us today. I will first review the highlights of the quarter before turning it over to other members of my team for a deeper dive into the results. I will then share an update on our ongoing strategic projects and outlook for the full-year. We were very pleased with our third quarter results, which continued to reflect the strength of our vertically integrated business. Revenue in the third quarter increased 17% sequentially, primarily driven by improved TiO2 sales volumes and recovery in feedstock and other revenues. The improved TiO2 market demand that we began to see in July continued through the remainder of the quarter, resulting in a sequential volume growth in all geographic regions. As we discussed, that trend also gave us some momentum as we entered the fourth quarter, evidenced in our October order book. TiO2 sales volumes recovered strongly this quarter, increasing 16% sequentially. Adjusted EBITDA for the quarter was $148 million with an adjusted EBITDA margin of 22%. Utilizing our proprietary enterprise optimization model, we adjusted operations in the quarter to accommodate the pandemic's effect, resulting in higher production costs and a slight negative impact on margins as we anticipated on our second quarter earnings call. These impacts were minimized through continued cost reductions and increased acquisition synergies. Year-to-date, synergy captured now totals $183 million, with $134 million reflected in EBITDA. Today, I invited John Srivisal, our Senior Vice President, Business Development and Finance, to discuss our continued outstanding achievement in synergies in more detail. The robustness of our tracking mechanism is one of the reasons we have been successful in delivering on the promise of the Cristal acquisition. Given our success and expectations for more synergies, we are raising our full-year 2020 synergy target to $235 million, with $185 million expected to be reflected in EBITDA. Our net income for the quarter was $902 million, including a non-cash deferred tax benefit of $895 million due to the reversal of a portion of our U.S. valuation allowance related to net operating loss carryforwards. This reversal is based on an analysis of our improved profitability and expectations for continued profitability in the U.S. Today, we are pleased with how well our business is positioned despite the pandemic. We have $1.1 billion in cash and available liquidity, more than sufficient to sustain our business. I will now turn the call over to John Romano, our Chief Commercial and Strategy Officer, who will comment on our commercial performance and trends in the global marketplace. John?

Thanks, Jeff. Now to slide 4. First, I'll take you through the year-on-year comparison. Revenue of $675 million was 12% lower than the $768 million for the year-ago quarter, primarily due to impacts from the COVID-19 pandemic. TiO2 pigment sales of $543 million were 10% lower, driven primarily by a sales volume decline of 9%, reflecting weaker demand in Asia Pacific, led by India due to the pandemic. There was a slight lag in Europe, while volumes in Latin America exceeded, and North America remained level with Q3 2019 volumes. The year-over-year volume decline of 9% for Q3 is an improvement from the previous quarter's 27% decline. We expect this year-over-year negative variance to be eliminated in the fourth quarter. TiO2 selling prices were 3% lower year-over-year on a local currency basis or 1% lower when adjusted for currency. Moving to zircon, sales of $56 million were 18% lower than a year ago. With zircon sales volumes down 7% compared to Q3 of 2019 driven by softer market conditions and shipment timing. Selling prices were 11% lower than a year-ago quarter. Now moving to the sequential comparison versus the second quarter of 2020, revenue of $675 million increased 17% from the prior quarter on improved TiO2 and feedstock sales due to increased market demand. TiO2 pigment sales were 17% higher compared to $466 million. Sales volumes increased by 16%, led by strong volumes in North America and significant recovery in Latin America. TiO2 pricing remained stable. Looking back over the quarter, September was our strongest TiO2 volume month. The trajectory moving out of the third quarter is encouraging as we expect this strength to continue into October. I will now turn the call over to JF for a review of our operating performance and profitability in the quarter. JF?

Thank you, John. Moving to Slide 5, let me first review the year-over-year comparison. Adjusted EBITDA of $148 million was 20% lower than the year-ago quarter. We benefited from $34 million in synergy and favorable foreign exchange rates, primarily the South African rand, euro, and Brazilian real. This was offset by lower sales volume and pricing mix, increased production costs driven by adjustments made to accommodate the pandemic, idle facility and lower-cost maintenance charges. Sequentially, adjusted EBITDA of $148 million increased 4% from $142 million, driven primarily by improved volume. Using our operational excellence program, we have reduced anticipated back half fixed costs by approximately $50 million to offset the impacts of COVID-19. Combined with the strength of our synergy captures, we have minimized the impact on our margin profile. I would now like to turn the call over to John Srivisal to discuss synergies in further detail. John?

Thank you, JF. Turning to Slide 6. In Q3, we achieved $34 million of incremental synergies year-over-year reflected in EBITDA. Year-to-date synergies of $134 million reflected in EBITDA from $183 million achieved in total synergies. As Jeff mentioned, we raised our full-year 2020 synergy targets to $235 million from $190 million earlier this year, with $185 million expected to be reflected in EBITDA. The majority of the targeted synergies are coming from true cost savings, not tied to volumes. We continue to realize more synergies faster, despite the macro backdrop, with a slight shift in allocation across the anticipated synergy buckets. 36% of the EBITDA synergies realized year-to-date comes from SG&A. We expect to achieve incremental SG&A synergies through 2022. This year, we committed to achieving $120 million of total synergies in 2020 and $220 million by the end of the program in 2022. We expect to achieve nearly double the 2020 target and delivering our 2022 target over two years earlier than expected. I'll now turn the call over to Tim Carlson for a review of our financial position. Tim?

Thanks, John. On Slide 7, we've outlined our liquidity and capital resources at the end of the quarter. We have $1.1 billion in total available liquidity, including $722 million of cash and cash equivalents, appropriate distribution amongst our global operations, and no trapped cash. Our current liquidity is sufficient to fund the TTI acquisition, pay down debt, and preserve optionality for our business. Our current total debt is $3.5 billion, and our net debt is $2.8 billion. We've included a chart to visually outline our debt maturity schedule, showing no maturities on our term loans or bonds until 2024. Our capital allocation policy remains unchanged, prioritizing disciplined capital spending on high return projects and deleveraging with a targeted net leverage of 2x to 3x in a gross debt level of $2.5 billion. Capital expenditures in the third quarter were $47 million, and our depreciation, depletion, and amortization expense was $76 million. Our free cash flow for the quarter was $37 million. Overall, our total receivable balance remains at 95% current, and we have no accounts receivable aging concerns. I'll now turn the call back to Jeff to provide an update on some key strategic developments and our outlook. Jeff?

Thanks, Tim. As I have emphasized many times, our management team is focused on navigating our company through the pandemic and planning for the future. In May, we announced the signing of a definitive agreement to acquire the TiZir TTI business for $300 million, representing a synergy-adjusted multiple of approximately 5.2 2019 adjusted EBITDA. This acquisition will further our vertical integration strategy by increasing our titanium feedstock production capacity and reducing reliance on third-party suppliers, lowering costs to better serve our pigment customers. We continue to work through the customary closing process with regulatory authorities and are making progress towards closing as anticipated. We remain cautiously optimistic that the ongoing design modifications will result in a successful startup and anticipate achieving sustainable operations. Moving to the next project, we introduced project newTRON at our Investor Day last year. This global multi-year digital transformation strategy aims to reduce operating costs and enable Tronox to maximize the benefits of vertical integration. The Atlas Campaspe project is the next mine development in our pipeline that will replace supply from our existing Snapper/Gingko mines. The project ensures that we maintain current levels of vertical integration in zircon supply. These projects represent key investments in the future competitiveness of Tronox. Now, turning to Slide 9, I'd like to share our outlook for the remainder of the year. The momentum we have moving out of the third quarter is indicative of the improved market conditions we expect through the end of the year. We anticipate strong fourth-quarter TiO2 sales volumes at or above the third quarter of 2020 and the fourth quarter of 2019. Our expectation of incremental synergy achievement combined with strong commercial outlook should result in adjusted EBITDA in the fourth quarter, in the range of $155 million to $170 million.

We will now begin the question-and-answer session. The first question is from Frank Mitsch with Fermium Research. Please go ahead.

Hey. Good morning, everybody. I'm trying to get at what might be normalized when I look at your third quarter given the negative impact from the pandemic. I mean, your volumes in TiO2 moved up 16%, but they were down 9% year-over-year. Is there any way to quantify when you reigned – as you reigned in production with the fixed cost absorption might've been in terms of a negative impact in the quarter?

Hey, Frank. It's Tim. Just to let you know from a cost absorption standpoint, we reduced our production to match the economics of the pandemic. In doing so, we took about $14 million of idle facility charges in the quarter. So that was about two margin points. Those idle facility charges will decline quite a bit in Q4 as we start to ramp up production at a couple of our sites. But we will still see some unfavorable fixed overhead absorption in Q4. So probably a similar margin profile from Q3 in terms of flipping from idle facility cost to overhead absorption. So we'll see that continue to improve given the Zircon that we see flowing through in Q4.

Got you. Thank you. And if I think about the very positive progress that you've made on synergies, one of them was tied to operating the Yanbu facility at higher rates. Now I do understand that we are in the midst of a pandemic, so that is having an impact on production. But can you talk about how you are progressing in terms of ramping Yanbu up to where your Hamilton rates are, and where you stand in that whole process?

So Frank, it's JF. Look, we have a team focused on quality and costs instead of focusing on volume. We have overachieved on other buckets of synergy, and we're confident that we will continue to overachieve even if none of those synergies are linked to volume addition.

Frank, this is Jeff. We have increasing confidence in our ability to ramp up the volumes when market demand calls for it. While we've not yet stepped up to those Hamilton lock rates, we certainly have improved our visibility to be able to get there.

Good morning, Jeff.

Hi, Hassan.

Hey. How are you? In the comments that you made, you touched on the Chinese market and you talked about how pricing had improved in China TiO2-wise, and you also touched on how ilmenite prices were going up through the course of the quarter. So two-part question; one is, was there a bit of de-stocking in China earlier, so is that de-stocking behind us? And then in terms of ore pricing, could you just tell us where you see supply demand right now?

On the de-stocking in China, I would agree with you. We have seen inventories come down, which is one of the reasons we are starting to see not only an uptick in demand but price improvements as well. There has been a range of 25% to 30% increase in ilmenite pricing and that is reflected in Chinese TiO2 pricing, which will ultimately have an impact on pricing in general. As far as high-grade feedstock is concerned, we haven't seen a significant move there. The pandemic has impacted production, but there is a likelihood that pricing may start to move up as we get into early 2021.

Understood. Thank you. As a follow-up, Q4 Zircon volumes are expected to be quite strong, and the guidance overall for the company is quite strong as well. Can you give me a sense of that 25% sequential Zircon volume increment, what it would translate to in terms of incremental EBITDA contribution for Q4?

I'll provide some insight on volume. However, we don't comment specifically on margin structures of our products. Given the co-product nature of Zircon, it does provide good margins for us.

Yes. Thanks for taking my question. Just around the incremental synergies, could you give us some color if these are just accelerated synergies that were already planned, or if they're new opportunities? Also, why wouldn't the 4Q run rate for synergies be higher than 3Q?

Hi, John. As Jeff mentioned, we do expect synergies to continue to outperform throughout the year, which is why we raised our guidance. In Q3, there were some one-time synergy benefits but in Q4, we expect to report at or above the full-year number.

Overall, the increased synergy amount is both in quantity and pacing. There are new things we've been able to realize synergies from and also delivering some things that we anticipated quicker. There's been some things we haven't fully captured due to the pandemic. But overall, it's more sooner and faster.

Just adding that while we're expecting strong recovery on the volume front in Q4, we're still managing operations to align with the demand we've seen this year. Hence, you might see synergies level off in Q4.

Just a quick question on the Saudi smelter. When does it begin ramping? When will we know if the fixes worked? Has the cost of the delay increased?

There's about a one to two-month delay due to COVID-19. We now expect to start in mid-next year. When we ramp up, we should get a good read on whether the design modifications have worked.

The costs will not increase with any delay as we are capped at $125 million. We've made the necessary contributions already.

This year, net exports out of China have gone up significantly. Could you share where you see that ending up and if that's a new structural level of exports?

While there has been a de-stocking in China that raised exports, the demand has also suppressed a bit, affecting pricing and availability in the market.

Given that we have big moves in de-stocking and costs facing price pressure through the pandemic, how should we think about EBITDA margins moving forward?

EBITDA margins in Q4 should recover to the mid-20 range, and we believe we can sustain margins in that range long-term, potentially increasing as volume recovers.

Could you share any upside scenarios for Q4 volumes given October strength?

While we won't give a specific number, we expect Q4 volumes to be at or above Q3 levels and back to pre-pandemic volumes.

The order book is different from historical patterns, with buying trends shifting due to the pandemic, leading to late orders.

What is your normalized liquidity target and how much excess liquidity do you have at September recognizing the synergy plans?

Targeted liquidity is about $300 million to $400 million of cash and availability of term loans. Currently, we have over $800 million of liquidity.

For capital expenditures, we are in the low 300 range currently. But we'll disclose forecasts at our Q4 results. Projects include Atlas Campaspe for mining development.

This concludes our question-and-answer session. I would like to turn the conference back over to Jeffry Quinn for any closing remarks.

Thank you, operator. Thanks for your time today and your questions. Despite uncertainty, the year has played out as anticipated with a strong first quarter, a tough second quarter, and recovery in the third quarter. We're cautiously optimistic as we finish the year. We will provide updates on projects and long-term synergies during our year-end call. Thank you, everyone. Have a great day.