Tronox Holdings plc Q2 FY2025 earnings call

• Second quarter impacted by weaker demand across most end markets, volumes 2% lower sequentially and 11% lower year-over-year. - Cost improvement program progressing ahead of plan, aiming for $125 million to $175 million sustainable run rate savings by end of 2026. - Idling of Botlek facility was necessary, costs improved as a result. - Selectively adjusting operating rates to reduce inventory and improve working capital and free cash flow. - Scaling back capital expenditures, reducing dividend by 60% for third quarter to align with macro environment. - Focused on maintaining market leadership, optimizing global footprint, improving costs, bolstering liquidity, and enhancing financial flexibility

TiO2 revenues decreased 10% vs year ago quarter, driven by 11% sales volume decrease, partially offset by 1% favorable exchange rate impact; Zircon revenues decreased 20% vs prior year, driven by 10% sales volume and price decrease; Revenue from other products decreased 7% vs prior year and 11% vs prior quarter, primarily due to lower pig iron sales volumes. Adjusted EBITDA was $93 million in Q2, 42% decline year-on-year, driven by higher production costs, unfavorable commercial impacts, and higher freight costs, partially offset by exchange rate tailwinds and SG&A savings

• 2025 revenue expected to be $3 billion to $3.1 billion, adjusted EBITDA $410 million to $460 million, assuming lower pigment and zircon volumes due to weaker global GDP and customer expectations of weaker second half. - Expect free cash flow to be a use of $100 million to $170 million for the year. - Cost profile expected to improve as cost improvement strategy is executed, with nearly double the cost savings than previously targeted to be exited the year with. - Mining projects commissioned to produce lower cost feedstock starting in late Q4, driving year-over-year cost benefits in 2026

• Weaker demand across most end markets impacting volumes and revenues. - Elevated interest rates and tariff-related uncertainties weighing on customer discretionary spending, affecting home sales and construction activity. - Delays in Brazil's antidumping investigation enabling Chinese producers to exploit gap between expiration of provisional duties and final duties. - Competitive dynamics in key end markets putting pressure on pricing and volumes

Q: David Begleiter from Deutsche Bank asked about drivers of EBITDA guide range.

A: John Romano said largely based on volume and price, with some targeted gains in India but some pricing erosion and production pullback.

Q: Peter Osterland from [Firm] asked about TiO2 volume decline and market share.

A: John Romano said North America had slight volume uptick but muted coating season, Europe had volume decline due to muted market and competitive activity, Asia Pacific had volume uptick in India, Latin America was flat.

Q: Fabian Jimenez from Mizuho asked about repositioning inventory and freight costs.

A: John D. Romano and John Srivisal said repositioning inventory related to Botlek closure and mining group actions, with a mix of container and bulk shipping.

Q: Josh Spector with UBS asked about free cash flow and working capital.

A: John D. Romano and John Srivisal said matching production to sales, cost improvement program ahead of targets, and looking at mining side too.

Q: Jeff Zekauskas at JPMorgan asked about EBITDA guide and seasonality.

A: John D. Romano said Q3 likely flat, Q4 impacted by other product sales and cost improvement.

Q: Hassan Ahmed from Alembic Global Advisers asked about dividend cut.

A: John D. Romano and John Srivisal said dividend cut aligned to macro environment to maintain financial flexibility.

Q: John McNulty from BMO Capital Markets asked about supply reduction and vertical integration.

A: John D. Romano said market will recover, and they'll continue to look at asset footprint for right balance.

Q: Roger Spitz on for Olivia Key at Bank of America Merrill Lynch asked about inventory financing and Chemours volumes.

A: John Srivisal said inventory financing is off balance sheet, and John D. Romano discussed market share and competitive activity differences.

Q: Edward Brucker at Barclays asked about supply-demand and secured debt.

A: John D. Romano said supply-demand will shift as market recovers, and they have sufficient secured debt capacity.

Q: Justin Pellegrino on for Vincent Andrews at Morgan Stanley asked about duty markets.

A: John D. Romano discussed differences in Europe, India, and Brazil regarding duties, competitive activity, and growth opportunities