Welcome to the Tronox Holding Q4 2022 earnings call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. If you would like to ask a question, please press star 1 on your telephone keypad. If you change your mind at any time, please press star 2. For operator assistance at any point, it is star 0. Thank you. Let me turn the call over to your host, Jennifer Guenther, Vice President, Investor Relations. Jennifer, you may begin your conference. Welcome to our fourth quarter and full year 2022 conference call and webcast. Turning to slide two. On our call today are John Romano and Jean-François Turgeon, Co-Chief Executive Officers, Tim Carlson, Chief Financial Officer, and John Srivisal, Senior Vice President, Business Development & Finance. 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. 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. 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 and may be a bit new to the Tronox story, we're the world's largest vertically integrated TiO2 producer with 9 pigment plants, 6 mines, and 5 upgrading facilities across 6 continents. Our 2022 revenue totaled $3.5 billion and was fairly evenly distributed across the Americas, Europe, Middle East, and Africa, and Asia Pacific. Our 1.1 million tons of pigment capacity supports our well-balanced base of approximately 1,200 customers globally. Vertically integrated business model supplies approximately 85% of our internal feedstock needs at full effective capacity. This ensures consistent and secure supply for our customers. In addition to TiO2, we have also generated significant value as the world's second-largest producer of zircon with approximately 300,000 tons of capacity. Our strategy is focused on positioning Tronox as the advantage global TiO2 leader through the production of safe, quality, low-cost, sustainable tons. Let's turn to slide five, where I want to take a moment to cover the significant strides we made in 2022 in our sustainability performance. In our sustainability report released in June, we accelerated the carbon reduction targets we had published previously, increasing our 2025 goal to 35% from 15% emission reductions, and we increased the 2030 goal to 50% from 35% emission reductions relative to our 2019 baseline. We remain committed to our net zero goal by 2050, as well as other sustainability related commitments, including zero waste to externally dedicated landfills by 2050 and targeting zero workforce injuries. The revision to the targets was made possible largely due to the significant renewable energy project we announced in 2022 in South Africa. This 200 megawatt solar project with SOLA Group is expected to provide 40% of Tronox's South African electricity needs and reduce our exposure to electricity cost increases in the region. It's also expected to lower our global Scope 1 and 2 emissions by 13%. We're very excited about the positive impact this project will have on our organization, both locally and globally, as it is expected to be completed by the first quarter of 2024. We also added additional disclosure on climate related risks in accordance with TCFD and aligned our reporting to SASB standards. We are continuously working to understand the standards and expectations of our stakeholders and align our internal priorities accordingly. As we highlighted last quarter, we are continuously realizing increasing value from higher value co-product streams, including rare earth minerals. We continue to see demand for the types of rare earth elements found in our monazite reserves increasing given their use in the green economy. We are exploring opportunities to upgrade the rare earth content of what we sell to extract more value from our mineral resources. Let's turn to slide 6 to review the key messages for 2022. 2022 was definitely a tale of two halves. We're proud of the perseverance of our organization throughout 2022 as we ended the year very different from what it began. The first half of 2022 began with considerable momentum, while the second half was characterized by a significant market pullback starting in China, followed by the rest of Asia Pacific, EMEA, and the Americas. Despite a 34% TiO2 volume decline and a 44% zircon volume decline in the fourth quarter of 2022 compared to the prior year, we were able to achieve full year 2022 adjusted EBITDA of $875 million and adjusted EBITDA margin in the mid-twenties, while generating full free year cash flow of $170 million after investing $428 million in capital expenditures. These results were driven by prudent management of production and our cost structures to align with the current market environment while remaining focused on our commercial pricing strategy. Our capital investment of $428 million in ongoing key capital projects included Project newTRON and our mining expansion projects that reinforce Tronox's commitment to strengthening our business model. The $170 million of free cash flow generated in the year came in well above our expectations. Despite the increase in cost pressures in the fourth quarter and the AR securitization initiative coming in lower than anticipated due to lower receivables, we successfully managed our cash position to more than offset these headwinds. In the year, we returned approximately $137 million to shareholders, including share repurchases and dividends. As we highlighted in the fourth quarter, the unanticipated events, namely the fire at our KZN site in South Africa and the historic flooding in Australia, unfavorably impacted costs by $30 million in the fourth quarter. We were also negatively impacted on the cost side by lower absorption as we adjusted our production to be more closely aligned with the lower market demand. In total, we incurred over $60 million in costs from fourth quarter events and unfavorable absorption charges. We expect to see continued impacts of these events in the first quarter, namely on zircon tons available for sale and the cost of ore from the new mine. However, these impacts are expected to begin to improve within the first quarter, and therefore, we anticipate greater recoveries to EBITDA as we move into the second and third quarters. Slide 7 provides a bit more detail on the full year performance for your reference. Let's turn to slide 8, and we'll review the fourth quarter in more detail. Revenue of $649 million was impacted by a swift market contraction across all regions. Improvements in pricing were more than offset by operational cost increases and lower sales volumes. As I previously outlined, the fourth quarter includes approximately $60 million of idle facility and lower cost or market charges, along with higher costs from Q4 events and lower fixed cost overhead absorption. Our effective tax rate for the quarter was 26%, while our normalized rate was 24%. Our GAAP diluted loss per share was $0.09, and our adjusted diluted loss per share was $0.17. Adjusted EBITDA in the quarter was $113 million, our adjusted EBITDA margin was 17.4%, impacted by higher event-driven operational costs in the quarter. Our free cash flow in the quarter was $126 million. Now let's move to slide 9 for a review of our commercial performance. While we did see a significant reduction in demand across all regions, our TiO2 volumes came in within our previously guided range for the quarter. Pricing across both TiO2 and zircon was in line with our expectation, driven by continued ex-execution of our commercial pricing strategy. TiO2 volumes declined 28% sequentially, while average selling prices declined slightly by 1%, while FX impacts were less than 0.5% favorable. Zircon volumes declined 30% compared to the prior quarter, owing to lower production from the fourth quarter. Our zircon pricing remained relatively flat to the prior quarter. Revenue from other products was $80 million, a decrease of 12% to the prior year, largely driven by lower pig iron sales. The strengthening of the US dollar in the quarter was a headwind to revenue compared to the prior year due to unfavorable translation impacts, primarily from the weakening of the euro. We firmly believe we saw the trough in our TiO2 volumes in the fourth quarter, as we stated previously. We're already beginning to see a rebound. We expect the first quarter pigment demand to increase from the fourth quarter, driven by a larger rebound in Europe than in other regions. We anticipate North America and Asia to recover a bit slower as demand continues to remain low, although still up from the fourth quarter lows. We expect the recovery and demand to continue as we enter into the coating season and anticipate seeing progressively improving sales volumes in all regions as we move throughout the second and third quarters. We also continue to see the benefits of our margin stability initiatives in our financial results. Even with the recent significant volume reductions, we anticipate our overall TiO2 pricing in the first quarter to remain relatively flat to the fourth quarter level. This is driven by the variety of contract arrangements we have in the market with our customers that support our margin stability initiatives. As we've communicated previously and demonstrated in Q4, we do not expect pricing to move as it has in previous economic transitions, owing in large part to the commercial approach we've successfully 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. Good morning. Turning to slide 10, our adjusted EBITDA sequential decline was driven by lower sale volume, higher costs, including freight, and unfavorable pricing impact. FX rate were a favorable offset. As John outlined, the quarter was significantly impacted by a fire at our KZN facility in South Africa and an historic flooding in Australia, which delayed the commissioning of the Atlas-Campaspe mine. In South Africa, we are replacing the final spiral this month that suffered damage from the fire. We will be back to 100% production level at the site by the end of this month. As a result, our first quarter will also be impacted by the lower zircon available for sales and the lower fixed cost absorption. In Australia, while the heavy rain abate late last year, the area where the mine is located is in a basin, where the water continued to collect and result in never-before-seen flooding level in this millennium. We were able to reach an important milestone this month at Atlas-Campaspe. Due to significant effort and negotiation by our team, the heavy mineral concentrate being produced is now successfully being trucked off the site using an alternate ore road, albeit at a higher cost. A good accomplishment given the significant impact of the flood on our inability to use the original roadway. We are enthusiastic about the value this mine will bring to our operation and the improvement to our bottom line we will see from utilizing the speed stock. We will begin to see this in our second quarter result in the form of incremental zircon sale, all through the cost benefit for the ore will be further delayed as it will take time for the ore to flow through our pigment plant. We expect to see a more significant benefit as we move into the second half of the year. In total, these events impact our result by $30 million. As we previously communicate, we also slowed our production to align more closely with the lower market demand in the fourth quarter, resulting in lower fixed cost absorption and idle facility and LCN charge. This impacted result by an additional $30 million resulting in a total of approximately $60 million of impact to the fourth quarter EBITDA. We expect to see continued impact from these events in the first quarter, namely on zircon tonne available for sale and on the cost of ore from the new mine. As a result of the commercial dynamic John previously outlined and the hangover effect from the fourth quarter event, we expect the first quarter 2023 adjusted EBITDA to be in the range of $120 million-$130 million and adjusted EBITDA margin to remain in the high teens. We therefore anticipate a greater recovery to EBITDA as we move into the second and third quarter. Turning to slide 11. 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 a part of our forecasting review that enable us to plan for a variety of economic scenario. 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 a variety of scenario that we are executing on. We have already begun executing on our cost reduction playbook. We have implemented a hiring freeze. We are reducing professional fee, travel, and other discretionary costs. We are also optimizing our fixed costs and driving additional supply chain initiatives. We are prudently managing working capital. Declining demand drove increased TiO2 inventory level in the third and fourth quarter. One benefit of this was enabling the replenishment of our safety stock, which has been below seasonal norm level in the first half of 2022. Our target to be an 85% vertically integrated TiO2 producer is part of our long-term strategy. This lets us absorb market fluctuation while optimizing our feedstock asset, which have higher fixed costs relative to our TiO2 asset. As a result of current lower TiO2 production level driven by customer demand, which is down in the 30% range year-on-year, we are taking action to reduce our feedstock production level. This will result in slightly higher mining and beneficiation costs in the first and second quarter of the year. On capital expenditure, as we have highlighted previously, vertical integration investment and newTRON are key projects to support our medium and long-term profitable growth initiatives. We have implemented plan to significantly reduce our annual capital spend to be below $275 million in 2023 to adapt to the macroeconomic environment as it unfolds. While this will delay our ability to realize benefit from these projects, we do believe this is the appropriate decision for the business at this time and is consistent with our ability to flex our capital spend. We anticipate these actions will enable Tronox to generate positive free cash flow across a variety of scenario, 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 Timothy Carlson for a review of our financial position. Tim. Thank you, JF. Turning to slide 12. We ended the year with total debt of $2.5 billion. Our net leverage at the end of the year was 2.8 times. Our balance sheet remains strong with no near-term significant maturities until 2028 and no financial covenants on our term loans or bonds. Total available liquidity as of December 31st was $608 million, including $164 million in cash and cash equivalents, which is well distributed across our global operations. Capital expenditures totaled $428 million in 2022. Approximately $125 million was for maintenance and safety capital. $75 million was for Project newTRON, and $200 million was for operational vertical integration projects, including Atlas-Campaspe. Depreciation, depletion, and amortization expense was $269 million for the year. Our free cash flow totaled $170 million due to our strong cash earnings. We returned $137 million to shareowners in 2022 in the form of dividends and share repurchases. As this is my last earnings call before my retirement from Tronox on April 1st, I would just like to say thank you for your support over the last six years. I'm extremely proud to have played a role in Tronox's transformation to where it is today, well-positioned to navigate the current environment and deliver meaningful value in the future. I look forward to remaining a shareholder for many more years. I will now turn the call over to John Srivisal, who will discuss the first quarter outlook. I have worked very closely with John over the past several years as a business partner on the executive team, and am confident that the leadership, financial skills and strategic vision he brings to the role will continue to position Tronox for success. John. Thank you, Tim, for those kind words. Hello, everyone. I'm excited to be here this morning and been looking forward to meeting many of you over the coming months. Turning to slide 13. At Tronox, we employ a robust bottoms-up analysis of our markets, operations, and the risks and opportunities in developing our forecast. While the pace and timing of the recovery remains to be seen, we are confident that we have seen the trough on TiO2 volumes. However, as John and JF outlined, we expect to continue to see the impact of zircon volumes and operating costs in the first quarter from fourth quarter events. Based on this and our current bottoms-up analysis, we expect adjusted EBITDA to be in the range of $120 million-$130 million for the first quarter. This assumes that TiO2 volumes will increase sequentially in the low to mid-teens range. As John indicated, this also assumes relatively flat TiO2 pricing given the reset in some of our margin stability contracts. With respect to zircon, we do expect volumes to decline sequentially by about 5,000 tons owing to lower production at KZN in Australia for the reasons discussed earlier. Due to these two events, we have incorporated into our first quarter range approximately $25 million in higher production costs. The range also assumes a headwind from FX, primarily driven by the Australian dollar and South African rand. Stepping back from the quarter, as you would recall, we introduced a recession case at our Investor Day in June 2022. We stand firm behind the analysis supporting that range, there are 3 important factors to consider in the time since then. First, we modeled the market correction starting 12 to 18 months from our Investor Day. Instead, we saw the start of a downturn within 60 days of Investor Day. We therefore hadn't fully realized the newTRON benefits we had originally assumed we achieved by the end of 2023. Instead, we have now delayed aspects of the project to reduce capital, which also delays the realization of savings previously anticipated. Second, the historical flooding in Australia has significantly delayed the benefits from the Atlas-Campaspe mining project. Third, TiO2 volumes declined 15% year-over-year in 2022, while the recession case assumed a 10% decline. While we anticipate TiO2 volumes to sequentially increase from the Q4 trough, we expect 2023 full year volumes to be flat to slightly up from 2022. Importantly, however, pricing dynamics have played out exactly as we anticipated. As we have emphasized over the last several years, the stability programs our commercial team has put in place have successfully reduced the volatility in the market. Moving to our expectations for 2023 cash uses, we expect working capital to be approximately a $150 million use, which is higher than where we'd like it to be. We are working to reduce these expected outflows through further optimization efforts. We expect net cash interest expense to be approximately $130 million, cash taxes of approximately $35 million, and capital expenditures of less than $275 million. JF shared earlier the actions we are currently taking as a business. We will continue to assess and execute against the levers we can pull, depending on the economic scenarios, to ensure sufficient liquidity and continued alignment of our production and cost to the economic backdrop. We remain focused on delivering on our commitments. That concludes our prepared remarks. With that, I'd like to turn the call over for questions. Rika? Thank you. As a reminder, if you would like to ask a question today, please press star, then 1 on your telephone keypad. If you change your mind, please press star 2. The first question we have from the phone lines comes from Duffy Fischer of Goldman Sachs. Your line is now open, Duffy. Please go ahead. Yes, good morning. First question, just on the last comments about the differential from your trough case. Can you quantify roughly what those three buckets would do to your trough case? Sure, Duffy. Good to talk to you again. If you take those three buckets separately, we first focus on newTRON savings. As we presented in Investor Day, we expected about $150-$200 per ton of savings. As we shared as well, you know, about a third of that related to volumes. Given this market environment, we don't expect to see those savings come through until the market picks up, later in, 2024. Additionally, a portion of that related to, cost savings, which, required, you know, full integration of our ERP across the globe. A portion of that, amount related to, those that we won't see for a while. Turning to the Atlas, as we mentioned before, we expect about... We had initially assumed and relayed to you that about $50 million of benefit we'd see from the Atlas. However, as you can expect, just given the downturn in the market. Sorry, given the delay in the mine opening up, we do see some additional costs coming through. You know, with that and the activities that we're doing to try to bring that ore to accommodate for the floods, we'll see additional costs hitting. That's roughly about $25 million. Finally, you know, as I mentioned, you know, this recession case assumed 10% volume declines, and we're seeing more than that. Okay. There is an element of, you know, it's cost, and it's the volume on that zircon that we're not getting, early in the year as well. Okay. Just kind of a balance sheet question. Volumes were down big last year, but yet your inventory was up over $200 million, and now you're guiding to working capital being up another $150 million this coming year, as you're calling volumes kind of flattish. What is that? Why do we need so much more working capital than we did a year ago? Yeah. Duffy, we're still building inventory. We have brought down production at our sites, but not as much as the volume on TiO2 have come down. Additionally, we are building feedstock, so that's a big portion of the build in the inventory level. Duffy, you would realize that, I mean, we're 85% vertically integrated. In Q4, we saw a drop in TiO2 demand of, in the order of 30%. We're expecting the same drop in Q1 versus a year ago quarter. We have to slow down our mine and smelter. Those are high fixed operations. We don't want to slow them down too much. That's why we're still building inventory at the moment. Look, obviously, that would position us very well for the second half if we see the market picking up. Hey, hey, Duffy. It's Tim. The other component of working capital, probably the more significant component is receivables. Q4 of 2022, obviously was a trough for the levels we've never seen before. We see the uptick in Q1. We see the uptick continuing through Q4. The just inventory levels in Q4 year-on-year at slightly improved DSOs will cause an increase as well. Great. Thank you, guys. Thank you. Our next question comes from the line of Josh Spector of UBS. Please go ahead when you're ready, Josh. Hey, guys. This is James Cannon on for Josh. I was just gonna ask about your 1Q outlook. It seems a little bit more optimistic at low-to-mid teens versus a competitor that was a little less optimistic. I was wondering if you could just comment on what gives you confidence in that recovery and whether you've seen that pick up so far in the quarter or you're expecting further improvement to come. Yeah, James. Look, I mean, we can tell you what we're seeing in the market. What we're seeing in the market, as we mentioned, in the prior quarter, we thought the fourth quarter was gonna be a trough, and in fact, it was. Our volumes are picking up in all regions. We made reference on the call that Europe is picking up a little bit, actually quicker than the rest of the world, but we're seeing an increase in North America. We're seeing an increase in Asia. There's a lot of optimism going around in India right now. India is a big portion. I think a lot of our investors think China is a big part of our business. India is a bigger part of our business than China is at this particular stage, and there's significant growth going on there. When we think about where we are today, compared to where we were in the fourth quarter, pigment volumes are picking up. That's why we're confident that those margins that we referenced are gonna continue. We also referenced, where we were on the pricing. you know, we referenced that pricing was gonna be relatively flat. We have a lot of agreements that have adjusted, on the margin stability side that have allowed us to offset and actually probably overcome some of the decreases. Net-net, when we think of relatively flat That could be flat to slightly up depending on what happens. We're confident in what we're seeing in the first quarter, and that first quarter build is gonna build into the second quarter because we expect to see volumes to continue to increase. James, I would add to that obviously in Q4 with the drop of 30% of volume and with what we expect for Q1, as John said, is an improvement, but still far from what was our normal volume. This drop is way more than what our customer are experiencing. It was not sustaining, you know, to see the type of drop that we have in Q4. Got it. Thanks, guys. Thank you. We now have David Begleiter of Deutsche Bank. Please go ahead when you're ready. Thank you. Good morning. Just on zircon, how is the market reacting to the loss of your volumes? What does that mean for pricing, do you think, for the full year? Well, as we talked, you know, we referenced in the call, our pricing for the Fourth Quarter from Fourth Quarter was flat. We anticipate to see, I'd say, stable pricing moving into the First Quarter. With China being down, I would say that there was a bit of a decrease in demand. It didn't impact us because, as you know, we were short on inventory to begin with, and the Atlas capacity delay continued to pull back on our inventory. We're still confident that as we move into the First Quarter and into the Second Quarter, that we're gonna see pricing that remains relatively flat to where we are today. When we start thinking about the impact of what's happening in Atlas, if we would have had that production, we would've had about 5,000-10,000 more tons in the first quarter, and we believe we could have placed those at the same price. Very good. Just on newTRON, what were the actual savings in 2022? What do you think they'll be in 2023 and even 2024 now? On newTRON, David, remember we talked about an improvement of about $50 million for 2022. We will maintain that obviously in 2023. We're probably gonna slightly increase it by, I'd say, another $20 million through automation of some of our plant and continuous development of our advanced process control and our maintenance practice. All of those elements, you know, the investments were done in 22, and the benefit will start to show in 23. As John mentioned, we have paused the ERP deployment worldwide, so that will slow down a bit the benefits related to that part of the project. Obviously all the additional ton that newTRON was giving us, it will be available when the market picks up, you know. That's in a nutshell where we are. Very good. Thank you. Thank you, David. We now have Frank Mitsch of Fermium Research. Your line is now open. Thank you, and best wishes on your retirement, Tim. It was a pleasure working with you for sure. John, in response to one of the questions that was asked earlier, you talked about, you know, lost revenues and profits from zircon. You know, it kind of begs the question, you had a $60 million negative impact from the flood and the fire in 4Q. On your slide, you mentioned a $25 million impact in 1Q, but it sounds like the impact might be higher than that. Can you kind of step us through as to, you know, what the impacts might be here in 1Q and what lingers into 2Q? Yeah, Frank. Again, when we think about... Let's start with what's happening in Atlas right now. Atlas is actually up and running. When we pull the heavy mineral concentrate out of Atlas, it has to go to Broken Hill, and that's the issue. The road to Broken Hill is still flooded. We have come up, as JF mentioned in his comments, we're now shipping HMC from Atlas to Broken Hill via an alternate route. The primary road hasn't been repaired yet, so we are getting material there. As we get into the second quarter, we'll start to see more benefit from what's coming out of that asset. The big impact in the first quarter and in the fourth quarter was that Broken Hill wasn't really running. You had fixed costs there. We also had our mine in Ginkgo that was supposed to come down, which we continued to run so that we could continue to run ilmenite through Broken Hill, so that we could have ilmenite to produce pigment. There are a variety of compounding effects that have happened from that flood that are continuing to roll into Q1. When we think about where we are now and our expectations, as we said, is we would expect to see the fourth quarter cost, or actually our cost to improve as we move into the latter half of the year as we start to get the roads back and full production through the additional capacity we'll be able to ship on that primary road again. Yeah. and Frank, we will obviously close the mine, that is the high-cost mine, as soon as we could reach full production from that road. That's the big unknown for us this year because we don't know when that road will open. You know, it's, we're obviously working with the county and with the local authority to try to even help them, reopen that road and do what's necessary. That's why it was hard for us to predict what would happen for the whole year. Understood. The way that we think about it is not just the $25 million in the production costs, but the lost zircon tons, and, you know, so you're probably talking another, you know, material loss of profitability in 1Q. Is that not how we should think about that? Then some of that spills into 2Q as well. It's about $15 million on zircon, $10 million on Atlas and $15 million on South Africa, which is not gonna repeat because as JF mentioned, South Africa is coming back online at the end of this month, and that's from the fire. Gotcha. All right, great. Then, you know, and just a question regarding inventory levels downstream. You know, with 22 being below the recession case, in terms of TiO2 volumes, is your expectation that the downstream volumes are probably below average, or would you say that your customer, inventory levels are probably in line? So I'm just trying to judge, is there a potential in 23 or perhaps 24 that we see a restocking benefit downstream? Yeah, it's a great question. You know, the reality is when we talked in the fourth quarter, that was a lot of the destocking going on. Clearly, there's been a drag on effect from demand. I think you're exactly right. We believe the majority of the destocking has stopped, because we're starting to see our customers order a bit quicker than they had before. I mean, China's a great example. In the month of January, From January to February, we've seen a significant move in volume requests from customers as China starts to pick up. You'll start to see what was being exported out of China, absorbing some of that additional growth. I do believe there is an opportunity as we get into the back half of the year for a restocking event. It won't be as significant as it was maybe 2 years ago in order to get back up to where we were, in the year where we had all the COVID benefit from the additional, you know, money that was coming into the system, in the form of subsidies. We do believe that there's an upside, and it could happen before the end of the year. Thanks so much. Thank you. We now have John McNulty of BMO Capital Markets. Please go ahead when you're ready. Yeah, thanks for taking my question. I guess can you speak to energy costs? You know, 2022, obviously, Europe had a huge spike. Rest of the world was kind of mixed. You guys were somewhat immune to that because the hedges. Now energy's plunged back down. I guess, can you kind of help us to think about how energy will impact you in 2023 versus 2022 overall? How should we be thinking about that? Hey, John, it's Tim. From an overall energy standpoint, it'll be somewhat neutral for us, 2023 versus 2022. A little bit of incremental cost that we've built into our plan as a result of some concerns that we have in Europe, but nowhere near the level of increases that we saw in 2021 or in 2022. Sub $10 million. Got it. Got it. Okay. Maybe just to clarify, 'cause admittedly I'm a little bit confused by some of the earlier questions. When with regard to the mine issues that you guys faced in the fourth quarter, it sounds like from a cost perspective, in the fourth quarter, you had about a $60 million hit. In the first quarter, you're gonna have more like a $25 million hit. On top of that, there's gonna be some kind of issue around zircon and your ability to move zircon. I guess, can you speak to, relative to the fourth quarter, will your zircon sales and volumes, I guess, be up or down or flat? John, to take the different pieces of that, as it relates to, you know, a Q1 run rate, you know, there's about $10 million of incremental Atlas costs that we normally would not have had. There's about 15,000 tons of zircon sales in the quarter that we would have had if in fact Atlas had been online and if in fact we did not have the Kazideng fire. In addition to that, as JF mentioned as part of his prepared remarks, you know, volumes are down 30% year-on-year in the fourth quarter. We see that again in Q1, you know, just given the guide that we gave you on volumes. When you're down 30%, you know, our benefits of vertical integration, you know, we struggle a bit 'cause we target 85%. When you're down 30%, we've got to slow our mines down, a little bit, which we are doing as part of Q1. That's an additional $15 million of unfavorable over absorption. It's really those three pieces in Q1 that are impacting our Q1 guide. I mean, just from the zircon question though, I mean, so the first quarter of 2023 is gonna be about 5-ish down from where we were in the fourth quarter, and then it starts to move up. When we talk about the road, this alternate road from Atlas to Broken Hill, it's not the road that had the capability to take the volume that we would have been using on that primary road. We've got approval to use that road, on a smaller volume of material going from Atlas to Broken Hill to, you know, to convert that into mags and non-mags. Ultimately, we won't have full capacity until we get probably more in the mid-year when that new where that primary road is back up and running. That's the limiting effect, and then when you get into the third quarter, you start to see zircon numbers move back up to what those normal levels would be. John, if you. Got it. Okay, no, that. talking about Q4 to Q1 specifically, as I mentioned, earlier on the call, we're gonna be down about 5,000 tons quarter-over-quarter on zircon. Got it. Okay. No, thanks very much. That definitely helps to clear it up. Thank you. We now have Jeff Zekauskas of JPMorgan. Please go ahead when you're ready, Jeff. Thanks very much. Your titanium dioxide volumes were down 34%. Can you talk about the regional differences? You know, if you group it into Europe, America and Asia, you know, what were the relative changes? Then if you can overlay demand from coatings and paper and plastic additives, you know, how did those demand changes work? Yeah. In the fourth quarter, Europe was down more significantly than Asia Pacific. Asia Pacific was down, I guess I'd say second to the Europe, Middle East and Africa market. North America had not moved down as much, but it was still down. When we think about how that breaks down into the segments, I wouldn't say there was a significant push in either direction. Maybe there was a bit more of a pullback on the paper laminate side in Europe than there was on the coating side. You know, we saw a destocking effect going on in the fourth quarter that was pretty consistent around all market segments. It wasn't heavily weighted in the coatings. Obviously, as we look into Q1, I mentioned that Q1 is stronger than Q4 in North America, although it's growing at a I mean, it's picking up slower. You know, that is heavily weighted on coatings. As we get into coating season, we're anticipating that we're gonna start to see those volumes pick back up. That's why we referenced in the second quarter, we'll see volumes picking up significantly in every region. Can you just frame a little bit of the degree of volume contraction in North America? Like order of magnitude. Was it 10 or 20 or 25 or 5? Are you picking up market share in Europe, in the current quarter? Yeah. In Europe, we're seeing a significant increase in volume from the fourth quarter. To, you know, the point that Jeff made previously. Yes. Okay. ... we're not where we were previously, but we are seeing a significant increase. Market share gains, you know, it's hard to say. I mean, clearly there's still some production offline. There's some, you know, there are other competitors out there that are having more difficulty than we are. There could be some market share gain, but it's not being driven by price. It's maybe driven by some of the customer agreements that we have that are more long term. I'd say, Jeff, that, our sustainable approach, being vertically integrated and the way we operate our mine pigment plant and our positive impact on the environment and our reputation with our customer is certainly helping us, maintaining and I'd say, gaining share, you know. That's obviously a story that we use to our advantage, specifically, against Chinese competition. In the fourth quarter, what were North American volumes like in TiO2? North American volumes, I'd say were down probably about 5%-10% more than what we would normally see in a fourth quarter downturn. As we move into the first quarter, they're moving up, but probably not as much as we would have seen previously. That's again, North America was kind of the last one to slow down, and we saw Europe and Asia picking up a bit more. As we look into the forecast, because we're halfway through the quarter, we're already getting an indication from customers, the second quarter is looking to improve in all regions. Okay, great. Thank you so much. Thank you, Jeff. We now have Hassan Ahmed from Alembic Global Advisors. Please go ahead when you're ready. Morning, John and Jeff. You know, I'm still a little confused about the trough earnings power of the company. I mean, you know, from your sort of commentary, it seems you're sort of backing away from the $800 million-$1 billion sort of guidance you had given earlier. My confusion kind of stems from if I take a look at, let's say, the Q1 guidance of $120 million-$130 million in EBITDA you guys have given, on an annualized basis, you know, that's $480 million-$520 million, right? If I take a look at your Q4 number, $113 million, and factor in the $60 million of one-offs and annualize that's $700 million. You know, obviously the $800 million to $1 billion that you guys had talked about. Where are we now, in terms of that sort of cross-earnings potential? Thanks for the question. When you think about where we are on our guidance, $120-$130, pick the middle, $125. Consensus is out there at, like, $152. The $25 million that we had to bridge, we'd say about $20 million of that is attached to Australia, and $5 million of that's attached to South Africa. Of that $20 million, $10 million of that is probably EBITDA that would've been attached to zircon sales, and the other $10 million is attached to additional cost from the mine. That would get you to where we would be, at least that bridges to consensus. When you start thinking about moving into the second and the third quarter, again, you can't, as we've always said, you know, we don't want you to take the guidance that we provided and multiply it by four, because that is well below. I think John made some reference into how you could bridge to where we would be. You think about what John said on Atlas by itself. We said $50 million, there's some additional costs, so $75 million just coming from Atlas for the year because we're not getting that value that we would have historically, where we talked about it being a $50 million positive. You know, as we get into the second half of the year, our margins are going to be, if you... I'll just say that if you took the numbers that we're anticipating in the 3rd quarter and multiplied them by 4, you'd be looking at numbers that are within our recession case. I don't know if that. JF, you wanna make a comment? That provides hopefully a little bit more color. No, I think that was the right way. I hope, Ahsan, you understand that Atlas was obviously, when we did our recession case at Investor Day, we assumed that Atlas capacity will be in full operation and it's not. At the moment, there's absolutely no value from Atlas in Q1. In fact, there is costs associated with Atlas at the moment because we continue to run a mine that we should have shut down. We have more costs and less value. That's explain why Q4 and Q1 are below our normal recession run. We hope that, look, as the year progress, we can go even above that. We don't know what would the market do, but we'll be in a very good position to react to the market. We'll have the feedstock and the pigment to meet our customer demand. Maybe just one more to follow on. Again, it's a repeat of what John said earlier. You know, when we came out with that recession case, we were not anticipating that 60 day to late, 60 days later we'd start to see that recession case hit. You know, we're starting from a lower point now, exacerbated by what JF just said. Still believe in that recession case. It's just going to take a little bit of time to recover due to the points that we just noted. Understood. Understood. Just sort of carrying forward with that sort of, call it recession case and how you guys are modeling it and thinking about it and the like, as it pertains to free cash flow generation, right? I mean, you know, obviously, despite all of these sort of headwinds and the like, I mean, $126 million in free cash flow generation in Q4, which, you know, is around $0.80 a share, you know, annualized $3.20, you know, and your share price is $15 and change, right? I'm just trying to sort of reconcile how you guys are thinking about the free cash flow generation ability of the company and how you parlay that with share buybacks. Because, you know, if my, you know, numbers serves me right, I mean, you guys just bought back two and a half million shares in Q4. Yeah. We didn't buy any shares back in the fourth quarter, so I'm not sure how you backed into that. Say that again. I'm just looking at the share count where it was in Q3 relative to what you guys have logged in Q4. Yeah, the weighted average shares, obviously, are coming down because we did buy $50 million of shares back in Q1 and Q2, but that's a weighted average calculation by quarter. How are we thinking about buying back shares on a go-forward basis, particularly with the strong free cash you guys have? We'll continue, Ahsan, to evaluate, you know, based on what we expect from the market. At the moment, you know, we, as John mentioned, we are seeing some working capital that is playing against us in Q4 was the case, and in Q1 it will still be the case, and that's playing against us because, I mean, the drop in demand has been so strong. Even if we're slowing down our pigment plant and our mine, we're not slowing as fast as the demand. In the second half of the year, though, we will see a reverse of that should help, we're obviously trying to improve that working capital use for the use of 2023. Our plan is obviously with the free cash flow to maintain dividend and to evaluate on an opportunistic basis, you know, if we should pay down debt or if we should buy back share. As you know, we have still $250 million approved by the board to buy back share, John and I are still committed to that approach of using the free cash flow. Very helpful, guys. Thank you. Thank you, Hassan. We now have the next question from Michael Leithead of Barclays. Please go ahead whenever you're ready. Great. Thanks. Good morning, guys. First question just around working capital. I think last quarter you talked about it potentially being a $200 million+ hit for 2022. It looks like it came in a lot better than that. Can you just kind of square kind of what the delta was as 4Q unfolded? There's obviously a lot of moving pieces in the fourth quarter. Yeah. There were a number of pieces, Mike, as it relates to our activities in Q4. One of the pieces is we securitized our receivables out of Australia. We also did quite a bit of work in terms of our credit and collections team, significantly reducing DSOs below what we've had previously. They did a great job at the end of the year in terms of managing cash. We also got a couple more days out of DPO and collected quite a bit of deposits in some of our other receivables that we had outstanding. Got it. Makes sense. Secondly, I just wanted to kind of come back to cash flow and balance sheet, but maybe from a different angle. I think after 1Q, you'll be about 3 times trailing leverage, my guess is it probably ticks up a bit in the second quarter from a record 2Q22. You laid out about $600 million of cash costs, your dividend's about $85 million. Do you think you're gonna be able to fund the dividend from operating cash flow? I guess it's kind of a back-end way of asking you if you think full year EBITDA will be above $685 million. If there's any Absolutely. EBITDA. Great. Excess cash flow, should that go to debt pay down or how should you think about, excess cash flow beyond that? Excess cash flow between, you know, We will look at that opportunistically as debt pay down or share buybacks, depending upon, you know, as we move through the year. Continue to be consistent with what we said previously. Great. Thank you, guys. Thank you. We now have Matthew DeYoe of Bank of America. Please go ahead when you're ready, Matthew. Morning, all. Like, just to hit a little bit on the energy cost side in Europe, word is some of the idled capacity is starting to restart across some of your competitors. Are you worried that perhaps some of that capacity comes back online 'cause lower cost, but isn't necessarily needed by the market? I'm just kind of worried about ramifications to price deflation in Europe if we see a big, big ramp there. Yes. I'll make a comment, then I'll let Tim do that. Look, there's been a lot of capacity that's been slowed down in the fourth quarter and even in the third quarter due to high energy costs. There wasn't, you know... Whether or not that capacity actually goes down over time, that's yet to be seen. We did anticipate as energy started to abate a bit, that we'd see that capacity come back online. I'd say the short answer is it wasn't an issue before, and we don't expect that to be an issue. We expect demand to start to pick back up. As we mentioned, Europe, we're seeing a strong recovery. It's not as strong as we have been previously, but we would expect some of that volume that's, you know, being brought online to be offset by some of the exports that were coming from China into Europe. There was a significant increase in the fourth quarter of exports from China into Europe, now with the China economy picking up, we would expect some of that's gonna stay in country. We talked generically about pricing. Pricing in China, out of China and in China is moving up. You know, we saw about a $150 increase in our pricing on China, and we would expect that to continue to move up. Tim, I don't... If you wanna make a comment. The only other comment I'd like to make, Matthew, as it relates to energy. You know, energy was about 20, 12% of our cost of product in 2022. We see that coming down to 11%, so a little bit of moderation, but not a lot. It ranges from 4%-20% depending on our facility. The highest costs are obviously in the U.K. When we do the modeling of our U.K. facility, yes, we do have some benefits, but they're not significant relative to the significant increases we saw in 2021 and 2022. Some of the modeling that we've done in terms of, you know, competitive cost per ton, energy prices would have to fall significantly, you know, we believe, for there to be any potential market pressure on us. All right, that's helpful. I guess if I were to think about just overall cost inflation for 2023, that number was astronomical last year, but, you know, I think the old rhetoric was normal years $40 million. Where are we? Is it $80 million? Obviously, you've got $25 million coming in from Atlas again, what do you think the bogey is for this year? Look, Matthew DeYoe, obviously, what we'll see is more kind of flat to 2022 for 2023. We would obviously have liked to see it going down, but that's not what we're experiencing at the moment. You're absolutely right. I mean, there was a huge jump from 2021 to 2022. Remember, I mean, if you go all the way to 2020, I mean, we saw more than $400 million of increase in those two years. What we're expecting for 2023 is more of a flat position to what we had as a cost in 2022. We would expect, you know, first, second quarter not seeing as much move on raws, but we'll start to see that move more likely in the third and the fourth quarter. You know, I think that flat number includes some additional fixed cost absorption and cost attached to, you know, what's happening in Australia. On average flat, but in some other areas, it's down. That additional cost that we talked about is what's kinda getting us to that flattish number for 23. Thank you, sir. Thank you. We now have John Roberts of Credit Suisse. Please go ahead when you're ready. Thank you, and best wishes, Tim. You mentioned China's picking up. There's some debate about whether the China recovery will be primarily a services recovery and not materials. Could you give us a sense post-Lunar New Year, where the orders are versus a year ago? Yeah. It's a good point on Lunar New Year because, you know, in January, our volumes were down in China, probably 50% lower than what we would have seen in the prior fourth quarter. As we get into February and March, we're starting to see those numbers up maybe 40%, 50% from where they were in January. We're starting to see that recovery. You know, good question on whether or not that's a service industry or not, but our opinion and based on what we're seeing in the market right now is that demand in China is starting to pick up. Pricing in China is starting to move up. We would expect that we'll continue to see price increases moving into the third quarter from China. Remember, we have a plant there. It's not a large facility, but we have a good handle on what's happening. I think it still jury's out on how much of that service industry, but we are seeing a pickup in demand, which is being reflected in the forecast as we talked about that. You know, part of that is helping us as we move through Q2 and Q3 to get back to more normal volumes. On your rare earth initiative, the world's been worried about China's dominance for decades. Was there something in the past that kept you from exploring that opportunity? I think, John, what I would say is, the fact that the world is worried about China create the opportunity at the moment for us, because there's interest from government. Because our mine are situated in Australia and in South Africa, and that material could be upgraded without having to go to China, that's where the interest is coming at the moment. Look, we obviously are stockpiling that material for a few years now, so we have accumulate material, and we have a nice reserve of this. Look, we're selling it, and as John mentioned, we're getting some revenue out of it, and this is moving at a fast pace. The value would really be if we concentrate that tailing into monazite and if we concentrate that monazite into rare earth. We're doing some work and we are doing some lab tests and upgrading and we're developing, if you want, a plan to create real value for our investor out of that. We think that it's a, it's a nice fit with our existing business. We've been selling tailings for years. I guess the reality is, you know, the Chinese have been very capable of controlling investment into the rare earths by manipulating the price. To J.F.'s point, there's a lot of interest now that's out there, which is allowing us to actually get more value. You know, those monazite streams for 2024 are gonna be more or those rare earth streams are gonna be more worth like $40 million-$50 million for us. It's a significant uptick, and we see that there's upside. It's a natural extension of what we currently do with our mines, so we're gonna continue to evaluate what that opportunity will be. And there... I will say that there's obviously some interest, in some of the governments, as JF mentioned, on trying to get us to help maybe speed that up a bit. Yeah. John, I hope it's clear that we're still selling tailings at the moment. We're not concentrating anything yet, but that's the plan, you know. That's where you really start to adding value, when you move from tailing to monazite and when you move from monazite to rare earth. Thank you. Thank you. We now have next question from the line of Vincent Andrews of Morgan Stanley. Your line is now open. You may proceed. Hey guys, this is Will Tang on for Vincent. Thanks for taking my question here. Just a quick one for me. I know you guys talked about, you know, your expectations for raw materials kind of outside of PI2 feedstock briefly, but wondering if you could go into more detail around that, and I guess more specifically around, you know, your chlorine costs. Yeah. Look. I'll touch on chlorine cost, at least in North America because that's the one that seems to be spotlighted. You know, chlorine cost is clearly something that we spend a lot of time on. I'll just say generically that we haven't seen a pullback on chlorine at this particular stage. We don't expect a significant uptick from the prior year, and we continue to look at opportunities to try to maximize the benefit that we can get from the chlorine usage that we have with regards to how we use it and how we consume that. In the rest of the world, chlorine, it's an impact, but North America is the one that has the biggest, I think, impact with regards to inflation that we've seen in the last two years. That's spot on, John. Significant increases in 2022, you know, to the tune of, you know, $40 million and, you know, just a couple single-digit million is what we're expecting in 2023 for the year. Got it. Thank you, guys. Thank you. Our final question from the phone lines comes from Roger Spitz of Bank of America. Please go ahead when you're ready, Roger. In March 2022, you entered a $75 million AR securitization facility. It looks like you sold those $75 million receivables, and you derecognized them from your balance sheet. These look like U.S. receivables. On last quarter's calls, and I guess just a few minutes ago, you said, you had entered a $125 million AR securitization facility, which were Australian receivables. The two questions I have is, these are two different facilities. You're, and you've presumably sold the $125 million as of December 31st. At the end of the year, you've got $75 million of sold and derecognized U.S. receivables and then a $125 million sold and derecognized Australian receivables. Do I have that understanding correct? Close, Roger. Just to let you know that the facilities themselves, they are linked, but they are two separate facilities. The facility in the US is 75. The facility in Australia is 125, so a total of 200. We only had 147 available as of the end of the year because of the significant drop-off in sales due to destocking. We do expect to recover a significant chunk of that as sales continue to recover in Q2, Q3, and Q4, and those facilities should be utilized before the end of 2023. Got it. Just to make sure I understood, $147 million of combined facilities was sold at the end of the year and derecognized from the balance sheet as of December 31st. Correct, with the total availability of $200 as revenues recover. Right. Thank you very much. Thank you, Roger. Thank you. We have no further questions in the queue. I'd like to turn the call back to Mr. Turgeon for some closing remarks. Brika, thank you. Thank you everyone for joining the call today. As we enter into 2023, we will maintain a relentless focus on sustainability and safety, continue to align production with customer demand, and prudently reduce costs accordingly. Manage our key capital project without losing sight of the long-term benefit to Tronox, including reducing our cost per ton, and generate free cash flow across any economic scenario. That conclude the call, and thank you everyone for listening. Have a great day. Thank you all for joining. That does conclude today's call. Please have a lovely day, and you may now disconnect your line.