Tronox Holdings plc Q3 FY2022 Earnings Call

Hello and welcome to the Tronox Holdings Q3 2022 Earnings Call. My name is Harry and I will be your coordinator today. I would now like to hand you over to Jennifer Guenther, Vice President of Investor Relations, to begin. Jennifer, please go ahead.

Thank you and welcome to our third quarter 2022 conference call and webcast. Turning to slide two, on our call today are John Romano and Jean-Francois Turgeon, Co-Chief Executive Officers; and Tim Carlson, Chief Financial Officer. We will be using slides as we move through today's call. You can access the presentation on our website at investor.tronox.com. 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-US GAAP financial terms that we use in the management of our business and believe are useful to investors in evaluating the company's performance. Reconciliations to their nearest US GAAP terms are provided in our earnings release and in the appendix of this accompanying presentation. Additionally, please note that all financial comparisons made during the call are on a year-over-year basis unless otherwise noted. Moving to slide four, it is now my pleasure to turn the call over to John Romano. John?

Thanks, Jennifer, and good morning everyone and thank you for joining us today. For those of you who have joined who may be a little less familiar with the Tronox story, we're the world's largest vertically integrated TiO2 producer with nine pigment plants, six mines, and five upgrading facilities across six continents. 2021 revenue totaled $3.6 billion which was fairly evenly distributed across the Americas, Europe, Middle East, Africa, and Asia-Pacific. Our 1.1 million tons of pigment capacity supports our well-balanced base of approximately 1,200 customers globally. Our vertically integrated business model supplies approximately 85% of our internal feedstock needs and this ensures consistent and secure supply for our customers. In addition to TiO2, we also generate significant value as the world's second largest producer of zircon with approximately 300,000 tons of capacity. I invite you to listen to a replay of our Investor Day webcast from June if you haven't already done so to learn more about our strategy, key initiatives, and mid and long-term financial targets. Now, turning to slide five. Tronox's strong margin performance continued in the third quarter enabled by our vertically integrated portfolio, despite difficult market conditions. We achieved adjusted EBITDA of $247 million within our updated guidance range and an adjusted EBITDA margin of 27.6%. This is now the 22nd quarter in a row that we've achieved adjusted EBITDA margins greater than 20% and the eighth consecutive quarter where margins were above 25%, evidence of the strength and resilience of our business through a variety of economic scenarios. We invested $314 million in ongoing key capital projects that reinforce Tronox's commitment to strengthening our business model. We returned $110 million to shareholders year-to-date including share repurchases and dividend payments. Finally, we're now realizing increasing value from Tronox's higher-value co-product streams which include monazite, consisting of high-value rare-earth elements. The monazite has a higher margin because it carries very little cost as historically those co-product streams were stockpiled as waste. This demand for light rare earth elements found in monazite is increasing dramatically given their use in many facets of the emerging and green economy, including permanent magnets for electric vehicle motors and wind turbines. While revenue for these co-product streams is less than $30 million year-to-date, the rising interest has driven a 74% increase in high-value co-product revenues year-over-year, enabling Tronox to realize greater value from what it was previously viewed as waste. This provides an interesting growth opportunity for Tronox to not only generate incremental earnings but also support growth in the renewable energy space. Turning to slide six, our third quarter revenue of $895 million represented a 3% increase, driven by higher TiO2, zircon, and pig iron prices and higher pig iron volumes. Income from operations was $163 million and net income attributable to Tronox was $121 million. Our GAAP diluted earnings per share was $0.77 and our adjusted diluted earnings per share was $0.69 with the primary difference being due to a 10% share benefit we recorded in the quarter for an adjustment to a valuation allowance of an Australian deferred tax asset. Adjusted EBITDA of $247 million represented a 2% decrease largely due to softer market conditions. Our margin decreased 140 basis points to 27.6% driven by higher costs and unfavorable product mix from higher pig iron volumes that rolled from Q2 to Q3. Finally, we generated $25 million in free cash flow, which was impacted by the inventory build in the quarter from both Jazan feedstock purchases and the replenishment of safety stock as a result of softer demand. We're taking action to address this in the fourth quarter as JF will review with you in a few minutes. Moving to Slide 7. As we communicated in our release last month, TiO2 volumes were softer in the quarter due to a significant reduction in demand in Europe, the Middle East, Africa, and Asia Pacific. Pricing across both TiO2 and zircon was in line with our expectation, driven by our continued execution on our commercial pricing strategy. TiO2 volumes declined 13% sequentially, while average selling prices increased 3% on a local currency basis or 1% on a US dollar basis. Zircon volumes improved 8% compared to the quarter, owing to the orders that rolled from the second quarter into the third quarter, and positive pricing momentum continued in zircon resulting in a 7% price increase versus the prior quarter. Revenue from other products was $94 million, an increase of 31% driven by higher pig iron and rare-earth revenues. The strengthening US dollar in the quarter was a headwind for revenue due to unfavorable translation impacts, primarily from the weakening of the euro. Looking to the remainder of the year, we expect fourth quarter pigment demand to decline 25% to 30% sequentially driven by customer destocking, continued weakness in Europe, the Middle East, Africa, Asia Pacific, and seasonal weakness in the Americas. Customer inventory levels remain low relative to previous periods of economic weakness, so we do not believe we will see similar levels of destocking as we move into 2023. Based on this and direct customer feedback we've received, we are confident Q4 will be the trough for TiO2 volumes. We continue to see the benefits of our vertical integration and margin stability initiatives in our financial results. As we've communicated previously, we do not expect pricing to move as it has in previous economic transitions due to the differentiated landscape and the commercial approach that we've implemented over the last several years. I'll now turn the call over to JF for a review of our operational performance. JF?

Thank you, John, and good morning. Turning to Slide 8. Our adjusted EBITDA sequential decline was driven by higher costs to serve our customers, including increased commodity costs in addition to lower volume, partially offset by higher pricing across all products and favorable exchange rate on our operations. We saw a headwind to margin from product mix as higher sales of pig iron in the third quarter had an unfavorable impact on margin. Freight rates remained level from the prior quarter and abated. Costs have been a significant headwind in the year, no different than other players in our space. Our major material increased 12% sequentially, or 58% year-over-year on a constant currency and volume basis, primarily driven by coke, chlorine, sulfur, sulfuric acid, and energy costs. The 58% increase on our major material equates to a $95 million headwind versus the prior year. In total, $29 million of the $50 million sequential headwind to EBITDA from production costs was driven by higher cost tons sold in the quarter and lower fixed cost absorption. We also incurred a $17 million lower cost or market charge due to lower pig iron pricing. The weakening Australian dollar and South African rand had a favorable impact on production costs and more than offset unfavorable FX translation impact to revenue. This results in a net positive $14 million FX impact on EBITDA compared to the prior year. Turning to slide 9. As a result of the macroeconomic backdrop, we are taking action to navigate the current landscape and position Tronox for success. We employ a robust process as part of our forecasting review that enables us to plan for a variety of economic scenarios. Combined with our enterprise optimization model, we are able to react swiftly and optimize our portfolio. We continue to be laser-focused on cost reduction and have a number of levers to optimize performance across various scenarios that we are executing on. We have already begun executing our cost reduction playbook. We have implemented a hiring freeze. We are reducing professional fees, travel, and other discretionary costs. We are also optimizing our fixed costs and driving additional supply chain initiatives. Softening demand drove increased TiO2 inventory levels in the third quarter and allowed us to replenish our safety stock, which has been below seasonal norm levels for the last several quarters. Additionally, the contracted purchase of Jazan slag drove increased feedstock levels. As a result, we have taken action to reduce production levels due to lower customer demand. As we have highlighted previously, the vertical integration investment and newTRON are key projects to support our medium and long-term profitable growth initiatives. However, we have implemented plans to significantly reduce our annual capital spend to below $275 million in 2023 to adapt to the macroeconomic environment as it unfolds. While this will delay our ability to realize benefits from these projects, we do believe this is the appropriate decision for the business at this time and it is consistent with our ability to flex our capital spend. We anticipate this action will enable Tronox to generate positive free cash flow across a variety of scenarios including our recession case. We will continue to balance cash generation while ensuring we have the product necessary to meet our customer needs and are effectively positioning Tronox for future success. I would now like to turn the call over to Tim for a review of our outlook. Tim?

Thank you, JF. Turning to slide 10. We continue to monitor developments through a monthly bottoms-up view of market trends. Our process involves a robust discussion to thoroughly evaluate identifiable risks and opportunities to our forecast. Based upon our current review, we expect adjusted EBITDA in the range of $140 million to $170 million for Q4. This assumes TiO2 volumes declined 25% to 30% sequentially. The range also includes approximately $10 million in total one-time charges from lower production levels. As a result, our expectation for our full year 2022 adjusted EBITDA is to be in the range of $902 million to $932 million. Our updated cash use assumptions are as follows: we expect working capital to be a use of $200 million to $230 million due to increased inventories across feedstock and TiO2, which we are proactively managing in Q4. Net cash interest expense of approximately $115 million, cash taxes of approximately $60 million, capital expenditures of approximately $425 million. We also anticipate completing a securitization facility and a portion of our accounts receivable that has been in process since Q2, which will generate a one-time benefit of approximately $125 million in free cash in Q4. Based on these assumptions, we expect our free cash flow for the year to be greater than $150 million. These continue to represent our best estimates based on our current market outlook. We have ample levers to ensure sufficient liquidity, under any conceivable scenario. JF reviewed the actions we're currently taking. We remain focused on executing the strategy we detailed at Investor Day and delivering on our commitments. Given what we know today, we remain confident in achieving our recession case in 2023. That concludes our prepared remarks. With that, I'd like to turn the call over for questions. Harry?

And our first question for today comes from Duffy Fischer from Goldman Sachs. Duffy, your line is now open if you would like to proceed with your question.

Good morning, guys. First question, we've had a number of the coatings guys go, which is kind of three-fourths of your volume. Their volumes don't appear to be anywhere near as bad as down 25% to 30%. So can you talk about where you're seeing that destocking is at, is it at the trader level? Is that at large customer? Is that your inventory that needs to be destocked? Kind of walk through how big of a chunk that 2025 is destocking, versus what you think real demand or consumption is in the fourth quarter, please?

Thanks, Duffy. This is John. It's really a mix of various factors. We mentioned that we were building up some inventory and we recovered some of our safety stock in the third quarter. Consequently, part of the destocking will involve us slowing down further due to demand. Specifically, based on our observations and feedback from our customers, along with some reports we've received, we anticipate that the destocking process will essentially conclude by the end of the quarter. The mentioned 25% to 30% figure is informed by the order patterns we are noticing. Many of our customers are taking the opportunity to negotiate for better prices, which is typical during the onset of a downturn. We believe those numbers are significantly lower and that you shouldn't simply multiply that figure by four to predict what will occur in the coming year, 2023. In short, we anticipate that the destocking will be finished by the end of the quarter. That's why we're confident in stating that we believe the fourth quarter will be the low point for TiO2 volumes.

Fair enough. Thank you. And then obviously, you're integrated so ore costs don't matter as much for you directly, but your competitors buy market-based or what do you see in the ore market going into next year? Will they get cost relief on that side meaningfully, and therefore, maybe allow them to bring down pigment prices and compete with you more on the pigment side, or do you think that will hang in there and is tighter structurally than pigment itself?

Duffy, thank you for this question. Look, we continue to believe in the strength of our vertical integration. At the beginning of the year, we were talking about a shortage of raw material to feed the pigment demand. It's clear that with a 25% and 30% drop in one quarter that changed the dynamic, but one quarter cannot make an adjustment for price on projects that take five to 10 years to realize. The reality is the world GDP and we always said TiO2 is in line with world GDP, is not dropping by 25% to 30%. So I think the point you made we agree with your comment it's not sustaining what is happening in Q4 in TiO2 and it's obviously not going to be sustaining for the feedstock part of the business either. We've seen in China that the ilmenite price that is imported continued to grow and the price of that ilmenite continues to increase. There was absolutely no price going down for imported ilmenite to China, even with weak demand and weak production of pigment in China. Even the local ilmenite in China has been very stable and they have stopped and slowed their production instead of lowering prices. So we feel very confident with our vertical position, related to that situation.

Great, very helpful. Thank you, guys.

Thank you. And our next question for today is from the line of Josh Spector of UBS. Josh, your line is now open.

Yeah. Hey, guys. Thanks for taking my question. Just wanted to ask on the fourth quarter guide. You talked about the one-time cost impact due to reduced production. I guess, can you separate what that cost impact would be from, I guess, a reduced or an absorption there versus the fundamentals of volumes? And kind of related to that for Tronox, there tends to be a kind of a lagged impact for a number of quarters, when you reduce rates of higher cost inventory flowing through. You call this one time. Is this time different or should we expect to see that into early next year as well?

Hey, Josh, it's Tim. Great question. There are really two components that we think about. One is the increase in production costs as a result of unfavorable fixed cost absorption, which does end up in inventory. That said it does roll into the following quarter. However, there are certain lines that we'll be taking down for a little bit longer period of time. And when that happens, we actually take the charge in the quarter rather than putting it into inventory. So there's about $10 million of incremental costs in Q4 associated with costs that we flow through immediately and do not allocate to inventory. There’s probably another $15 million to $20 million of cost resulting from the lower production that will flow into the inventory costs that will affect Q1.

And Josh, just maybe one more comment on that. We have nine TiO2 plants on six continents of different levels of inventory. So that flow-through that we talk about moving into the second – into the first quarter of next year, some of that’s going to hit us this year, because we don't have the amount of inventory that we had historically. So that is going to actually impact us a little bit in the fourth quarter.

Thanks. That's helpful. And just on the mining side of it, maybe related to the prior question to an extent. I mean, I know, Tim you're kind of loath to reduce operating rates there where you don't have to. That's been part of the benefit of the back integration. Would you consider – are you going to build inventory there or would you consider selling any of that into the market to keep your inventories more lean and take advantage of some still semi-tight market conditions on the ore side?

Another great question, Josh. We look at all opportunities as it relates to our mining operations in terms of managing costs and optimizing profit. We look at maintenance schedules in terms of how we can do maintenance schedules cheaper without overtime with outside services. We look at opportunities to sell excess feedstock. The one item that is hurting us a bit in Q3 and Q4 that we had talked about is, we are building a bit of some CP slag as a result of the production coming out of Jazan.

Maybe, Josh, I could add that we have some time in our minds what we call satellite deposits that in times of high demand, I mean, you incur more costs to get more product out of those remote areas. Obviously, in times where you see a drop of 25% to 30%, I mean, we stopped those side operations and save costs by doing that. So we're actually doing this.

Some of the projects that we would do historically with contract workers we're doing those with our own workers to reduce costs as well.

Okay. Thank you.

Thank you. And our next question is from the line of David Begleiter of Deutsche Bank. David, your line is now open.

Thank you. Good morning. In respect to your European footprint, are you considering making any permanent changes given the higher energy environment you're looking at moving forward?

No. This is John Romano. Sorry, David. We are not looking at making any permanent changes to our footprint in Europe. Quite frankly, we think about our biggest impact on energy actually was in the UK. We have gotten some relief. We had some more risk in our fourth quarter numbers prior to the UK coming in with a cap on what natural gas prices are going to be. So what was a significant headwind moving into the fourth quarter some of that's been abated based on what you could call a hedge, which was put in place by the UK government putting a cap on energy.

And David, we have a strategy to reduce our dependence on natural gas in our facility. That's part of our five-year plan to continuously improve our cost position. That's why we feel confident with our footprint there.

Understood. And just on project newTRON, you mentioned that there were some delays in realizing the savings, given the reduced CapEx. Can you quantify those delays and time the future benefits going forward? Thank you.

Yes, David. It's JF. Look, we always mentioned that newTRON was a project that gave us flexibility to adjust to the market conditions. Obviously, we want to reduce our capital expenditure in 2023. We don't need the additional volume that newTRON was about to give us. We want the benefits of the cost reduction of newTRON and we continue to work on newTRON. We don't stop it. We just slow it down. The impact of that decision will mean that the benefit will probably come more in 2024. Well, the remaining benefit, because the benefit that we've already achieved with it, which is around $75 million for this year. We will still have those benefits in 2023 and we will continue to get some but at a slower pace. Still, we're very confident in the $150 to $200 per ton, but it's going to be probably mid-2024 and 2024 instead of what we had originally anticipated.

Thank you very much.

Thank you. And our next question is from the line of Hassan Ahmed of Alembic Global. Hassan, over to you.

Good morning, John and JF. Question on volumes. While I'm, obviously, cognizant that you can talk about competitors. But as I take a look at Q3 TiO2 volumes, Chemours sequentially down 8%, you guys sequentially down 13%, Zendor guiding to declines of 25%. I mean just any color around these, sort of, fairly large variances across the TiO2 majors in terms of sequential volumes?

Thanks, Hassan. This is John. So, look, you're right. We can't speak specifically to competitors, but we'll talk generally. For us, Tronox, one of the first areas that we obviously saw the slowdown in was China. We have an operation over there. It's not a huge one but that was one of the first plants that we actually slowed down. I believe we have a little bit more exposure in the APAC market. So when we think about those three competitors quarter-over-quarter is one thing. I think you should also look at it a bit further than just one quarter. Everybody has a different customer profile. Some customers are different than others. Some are driving working capital adjustments. So, I'm not reading into that variance to be too significant between at least two of those people that you referenced. But we're focused on what we can control and influence. Regarding what we're seeing moving forward, even what we're hearing from our customers, a lot of what's happening is clearly demand driven but there's a big portion of this that is destocking. We've referenced and the landscape is different. The landscape is different because we still do not believe there is anywhere near the amount of inventory in the system that there was during the last downturn. We've already got customers that were pulling back that we're getting random last-minute orders on. All the signs are out there, which would indicate and support the comment we made in the prepared comments that we believe the fourth quarter is in fact going to be the trough. As we move into 2023, our number, our volumes are going to pick back up.

Fair enough. And as a follow-up just on the Q4 guide of $140 million to $170 million. Obviously, I understand the fact that Q4 seasonally is a weak quarter. But on an annualized basis, that's $560 million to $680 million in EBITDA, which obviously is below the trough guide of $800 million to $1 billion that you guys have given. So my question really is, with the market sort of shaping out to be the way it is, and you guys reiterating that sort of trough guidance number. What gives you comfort around that?

Tim, do you want to start?

Yes. So from my perspective, Hassan, the cost-saving activities that JF talked about are in process now. We haven't yet realized the true benefits and the full benefits of those cost-saving activities. I talked about some unfavorable absorption rolling into next year. The cost-saving activities that we have in place more than offset that unfavorable absorption and also will further support and increase our EBITDA. And on top of that the recession case that we outlined was for a 10% volume decline, we don't expect 25% to 30% volume declines going forward because of the destocking that's happened. As a result, with that incremental volume coming back much lower than 2019 levels, that volume alone will also support our recession case.

Just to go back to the point you made the reference between the range on EBITDA, a lot of that will be dependent upon volume. What we're seeing in the month of October was a significant reduction and we even have expectations that within that range, we might see higher numbers on volume pickup as I mentioned, where customers are starting to place orders a little bit at the last minute. So there is a volume element of that that's factored into that range for the fourth quarter.

Very helpful. Thank you.

And our next question is from the line of Frank Mitsch of Fermium Research. Frank, your line is now open.

Thank you and good morning. Yes, typically I think a fourth quarter as a time to build inventories. You're obviously, it appears comfortable that you've rebuilt your safety stock and you're lowering production and obviously others in the industry are lowering production. I'm curious as to what your target inventory level is at year-end? Is it where you ended the third quarter, is it lower, is it higher and how do you think about inventory levels for the TiO2 producers given that others in the industry have announced production cuts?

So Frank, it's JF. Look, we are taking action to reduce production in Q4. But as you can imagine, a drop in sales of 25% to 30% is more than what we had anticipated and we're not going to reduce capacity as fast as sales have turned down. So, we will continue to build inventory in Q4 and look, we'll probably build a little bit above what we consider normal and that's why some of our free cash flow is ending up in working capital. But we are working hard on '23 to adjust that and go back to our normal inventory level. We'll be very well positioned if something happened and the demand is more than what we expect and see at the moment.

Understood. And you were able to realize a modest increase in price sequentially. I'm curious as to what your pricing outlook is for the fourth quarter and if you could offer any comments with respect to '23?

Yes, Frank, this is John Romano. So we don't provide specifics on price forecasts moving forward. But generically we did recognize price improvement in the third quarter and it's very well-known there was some movement in the Chinese pricing during the third quarter which had an impact on our pricing even in the third quarter in some regions. Moving into the fourth quarter, as I mentioned earlier, our pricing at this downturn which we're in right now will not be reflective of what we've seen historically. When we think about our numbers moving into the fourth quarter, our pricing in the fourth quarter is not going to be significantly different than what we had in the third quarter. Obviously, the negotiations are a little bit different, but we still have the ability to negotiate. We still have our margin stability agreements and a variety of other agreements that we have in place that are helping us manage our margin throughout economic transitions. You've also got the other impacts when we say the landscape's changed. Ilmenite prices haven't moved down, sulfur prices are starting to move back up. So there's a lot of things along with all the other costs in the system which are going to make it very difficult for pricing to move down significantly and that's why when we think about that recession case that we referred to during Investor Day, those elements of that to get to that recession number are still in place and we're still confident in that.

That's very helpful. You referenced the Asian price and there was a thought that Chinese pricing which had declined precipitously was at or near a bottom. I'm wondering if you had any comments with respect to that being the case or not?

Yes, that's a great question. When you think about the export, did you have another question to follow up on it?

No, it was just because some producers were operating at or below their variable cost of production. So I was just curious as to what your comment was there?

Yeah. No. I mean when you think about the exports out of China in the last three to four months, those have actually gone down, while pricing was moving down significantly, which would, I think, give some visibility that pricing not dissimilar to what we saw in the second quarter of 2020 when COVID hit. We saw this massive drop in our TiO2 consumption. Our inventories went up. We slowed down production but pricing remained flat. What we've seen as recently as in the last 48 hours is confirmation from eight to 10 small to medium-sized Chinese TiO2 producers that have actually announced price increases. We do believe that where we are now there is a significant gap, but costs aren't going to allow that to continue. We've already seen them start to move in the other direction.

Thank you so much.

Our next question of the day comes from Matthew DeYoe of Bank of America. Matthew, your line is now open.

Good morning, everyone. How sustainable are the earnings from the monazite you'll be selling from stockpiled waste? Can this continue for a while? Since it's coming from waste, should we view these revenues as nearly pure margin?

That's a great question. Selling these materials is not new to us. We've been selling monazite for several years. However, we've noticed that the margins from those sales have significantly increased over the last 12 months. We're using the additional revenue to reinvest in development opportunities related to rare earth materials. The speed at which we sell it varies. We produce out of Australia and South Africa. If we maintain sales over a 10-year period, that would be around 6,000 to 7,000 tons a year. This doesn't account for what we continue to extract from our tailings. We believe this is one area we will continue to focus on, and we are also considering downstream options in the future. As we work on a long-term strategy, we will be looking for more downstream opportunities.

Okay. And I guess on the inventory, right. We're talking about this replenish and you're going to build more days of sales inventory are like 150 now. I mean, I know there's inflation feeding through that, but theoretically that should be feeding through the sales number as well. So why did days sales inventories have to be as high?

Well, that's a great point. I'm not sure when you get the 150 days.

Until, our feedstock.

So are you talking about total inventory? Okay. So go ahead, Tim.

No. So that day sales inventory as you mentioned includes all of our feedstock throughout our vertical integration channel. As you look at our different components which we manage as part of our global enterprise optimization, we're a bit high on feedstocks right now as I mentioned earlier. When it comes to days sales on finished goods we're pretty much where we'd like to be from a seasonal norm standpoint. By the end of the year, as JF mentioned, we're going to build a little bit of inventory. We'll continue to manage that with our production in Q1 and Q2 to make sure that our production is consistent with demand. While it's been a burden, we do not anticipate inventory to be a burn next year.

I guess then if I can slide in then to, what do we think for working capital unlock next year? I guess, that you can comment on that?

Yes. We'll be providing specific guidance and thoughts on 2023 as part of our call in February. At this point in time, we're not going to be providing any specifics on 2023.

Understood.

And we have no further questions registered today. So it would be my pleasure to hand back to Mr. Turgeon for any closing remarks.

Thank you, Harry, and thank you for joining the call today. In summary, we remain focused on the lever within our control, prudently managing cash, executing against our strategy, driving operational excellence and delivering on our key capital projects to enhance our vertical integrated portfolio. Tronox remains well positioned to continue delivering on our commitment. That concludes the call. Have a great day. Thank you.

Thank you for joining everyone. This concludes the Tronox Holdings Q3 2022 earnings call and you may now disconnect your lines.