Venator Materials (VNTRF) 26 Jul 222022 Q2 Earnings call transcript

Good morning and welcome to the Venator Second Quarter 2022 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, that this event is being recorded today. I would now like to turn the conference over to Kate Robertson, Venator Investor Relations. ahead. go Please

good for and XXXX I’m Robertson, Kate call. Thanks Materials. morning Welcome Relations Venator quarter to Investor Joe, everyone. Venator’s earnings second

Joining quarter CFO. and our This Turner, we released the are Kurt call release for accompanying Executive press morning, us website the release earnings CEO; posted second Ogden, and to and via at and Simon President Vice our on the XXXX slides President venatorcorp.com. today and

projections, current was we our such uncertainties call, During exclude involve of may All Additives water guarantees future. and about our future business, risks not for make in All call Performance expectations the treatment this comparisons statements while sold statements the XXXX. they expectation, and forward-looking May make are we are this which performance. reflect and our they on

SEC on should other quarters for XX-F Form for in regarding Annual the updating March X-K XX, projections results these that differ factors do ended and to information our XX, June quarter. forward-looking the could from You actual ended From the XX, expectations. any statements with plan revising and cause on materially the XXXX or We not review XXXX, Reports December year filings publicly the or XXXX, more our for

flow, will refer net and cash adjusted debt. financial to income, measures non-GAAP net such We free also EBITDA, as EBITDA, adjusted

earnings in turn at Simon. find directly which reconciliations www.venatorcorp.com. measures to now GAAP our been release, would over the like can posted You to to most our I the has financial call to website comparable

made in reviews. through $XX programs from million of shift a tailored Beginning second earnings quarter prior increased monthly our to million quarter in pricing year to our the our and $XX business underlying Thank in $XX million first the on business period. Total company the to EBITDA adjusted customer welcome second delivery you, everyone strengthening and Slide we’ve X, progress XXXX call. significant and improvement quarter Kate,

of manage challenges the significant supply external team chain delivered associates Our dedicated continue to and centered results. strong

Titanium our segment. Turning Dioxide to and Slide X

the XXXX $XX million in prior EBITDA TiOX in TiOX $XX Strong plastics $XX North Second of million, million segment in was the Europe and inks Demand demand quarter for end second sectors saw in into continued adjusted market all softer America. We for quarter the demand Europe throughout application in quarter and and normalized products coatings XXXX end year first into compared quarter. to was Asia. markets.

during quarter, by As partially we facility discussed call, on Scarlino, suspended Italy earnings one-third. last we the second of our our production

the compared above X% factors, prior volumes sales and period. As of sequentially a X%, year decreased result to the

cost reviews price We other manage quarter, margins the primarily continue continue our and, raw to energy and cost volatile this in from environment. flexibility monthly see materials our to feedstocks, second customer bring inflation in to tailored

for and X% intact average near-term, Our the to to compared In energy, remain XX%, currency. with in pricing period America, rates to the remain all our volatile. prices increased primarily we and see We demand in remaining in tailored Europe, customers. selling North Europe, prior local our for and reviews continue monthly strong We year sequentially in in expect elevated softer Asia. plan market customer

on Italy. to we facility raw pressure our continue. further expect TiOX other remain in see also and positive a broadly favorable provide material. further like would Underlying feedstocks I TiOX fundamentals We from Scarlino to and dynamic this update

nearby of byproduct and which the landfilled facility as of in the operated manufacturing by transported former parties. has generates reclamation and a a also Scarlino for third owned quarry gypsum use been on-site Our process,

continued of with for We governmental continue gypsum to authorities work Italian authorization the disposal.

of this available landfill remaining efforts, now capacity. suspended we site the to have two-thirds these our production While preserve from we continue

close the granted, be pathway that compelled to hopeful are otherwise, may We site and will entirely. authorizations have be a we

network. explore to ensure value options we and of to all the create production our optimize continue most the out to avoid continue will We we to outcome,

Performance Turning to our Slide and Additives X segment.

Our customer compared remains with prior prior goes This volumes organic programs, plastics $XX prior Segment sales, and million Additives and the of quarter, decreased strong continues our into been for mitigate Performance applications. mix and segment segment on achieved approach product demand pressures. which the Volumes sales blue primarily $XX XX% impacted and delivered of ultramarine our our XXXX, the quarter compared the perform softer of by $XX were for million use in products X% which in delivery in product, construction. improved Globally, adjusted improvement product year has well, to year successful million EBITDA focus period. demand growth, sequentially cost to period. through second tailored of availability to into business end

prices to During compared monthly quarter, our margins. by actions year raw quarter cost particularly on the logistics, persisted which pricing in energy, shipping increased reduce and sequentially second selling the XX% and local inflation was offset XX%, currency. the impact our materials, to prior Average to

I similar As in second earlier, third remain demand quarter. other to globally demand products the blue and strong markets ultramarine end to expect we mentioned quarter for to be

call to monthly continue which over customer to we expect our inflation, see to through tailored pricing initiatives. cost now pass Kurt. I'll We recover the

Thanks, Simon.

an The EBITDA $X prior due quarter. and Total Let's inflation million, our EBITDA sales offset primarily and partially in turn selling bridges. by adjusted was X compared by increase to to price, increase to cost lower higher average volumes. Slide the increased adjusted

partial attributable feedstock, saw at into softer and mentioned, on The applications. coatings to sales facility we raw energy, Asia commodity TiOX production our Simon primarily materials. As EBITDA in and suspension Europe demand was and lower inflation other impact from Scarlino the cost further volumes primarily

lower second compared due quarter. and inflation selling prices, quarter volumes. primarily by due $XX foreign sales exchange gains increased primarily and SG&A favorable of first the EBITDA to are in costs to prior adjusted SG&A/other Total offset million, year the Our the to costs compared XXXX lower period, partially cost to increased

our that go see products second the During we into uplift demand did for certain and additives construction in availability. the quarter, not product performance seasonal normal

We TiOX coatings and facility. demand also saw softer at production suspension our TiOX into partial Scarlino

gains were primarily XXXX. to due second in costs exchange foreign of SG&A and quarter favorable, other Our the

Turning Working quarter $XXX settlement to and flow second second was our of of of cash considerations, flow of $XX consisting including timing feedstock to of in ABL $XXX at million, capital $XXX cash Tronox. million the shipments, primarily million million quarter the Slide availability modest finished with cash and was a receipt inventories, positive $XX $XX free goods end replenishment valuations. under higher cash our use due of plus in the facility. Liquidity X million million, the cash of totaled

strong second and monetized through $XX multiple million the transactions cross resulted in and into and in we $X million currency cash new for million of total advantage This taken the $X U.S. benefit of third have quarter another the quarter in dollar of cash. benefit in reentered We swaps. a

pension expect contributions. annual the By to XXXX of $XX million approximately are see completed million lower reduction our cost be is than end a the than be reduction The successfully we reduction cash of for corresponding a uses. pension Capital expected cash program, million to expenditures of in Pori approximately of a including we million. to includes uses other will of selling improvement $XX of million come as from cash approximately result lower to million, pay investment site to other $XX and capital pension, cash million of closure, to following XXXX, $XX $XX expect approximately restructuring as and compared use cash finally, inflation, in $XX future of approximately substantial we which completion business XXXX, $XX uses prices cash lower our restructuring our around million, the modest XXXX. due be around use used, cash million, more and During uses support costs and $XX reduction of which a higher of approximately $XX to $XX working million, a to growth, and

a an uses reminder, the Simon. we to in most now years. us As milestone X.X behind will is I we cash back strengthen place important call take of as the this reduction to these expect turn Putting legacy Venator. next

Kurt. Thanks,

team presented The continue us. inflation and continue innovation pressure second X. and to Slide quarter expected is strong to be to delivered their to Turning teamwork to Cost Venator challenges the proud of I results half the ongoing with and working to our continue we our Russia with requirements the remain manage between costs XXXX second closely by the feedstock volatile of energy conflict on Ukraine. most supplier in navigate and base. European

pressures continue through these and We mitigate to strategies. procurement hedging

kilotons] manage a monthly Our monthly in our continue [XXX on basis, The Scarlino fundamentals has strategy our remain inflation broadly [ph] or in mitigate each prices We Venator TiOX of supportive instrumental and There supply margins. which pressures to intend industry, an to recent new Underlying uncertain. to capacity requires meaningful approach. situation is is of on review which approximately tailored fully no customer customers the pricing horizon for at review remains cost year. enabling new been positive.

While to site with we our suspended remaining from we preserve work governmental Italian have the two-thirds to authorities, production landfill TiOX available of capacity. continue our

to that granted. are site We hopeful the pathway authorizations and be maybe we a will close have Otherwise, compelled entirely.

result continue explore our we for additional customers segment. this delivered a our bespoke improve world-class strategy. to generating a improvement We all opportunities to Venator of has that and options successful improvement see continue [ph] pricing Performance highly our portfolio which optimization approach. cash portfolio, from Additives [customer-aided] as of EBITDA business product We to programs, through collection businesses within avoid long-term product Earnings outcome. to

production differentiating enhancing We continue sales and specialty optimize deliver are network from growth focused to on earnings. product value to of our

to reduce for shareholder the would reposition will by This for with In making I million addition, and questions. cash XXXX. call that, approximately success good And are open uses our to value. $XX by like we now progress business our enhance ongoing

question first Josh will [Operator ahead. Spector Instructions] from go UBS. The Please come with

morning. good Hey,

actually the demand on Asia from Thanks. if on ability and differentiate weaker Europe produce where two where I just you're I was seeing guess then second, other and demand? are what Italy the was softer if wondering regions, and was TiOX. sequential inventories to on you So, you versus what curious weakness in what's comment between within going on on just customer impact some could volume could questions move side? the your And

there. pick I'll handle a up sort Josh, trying passing still the delta Sure second is the year, about quarter, This get the your of to first on on out this. question

our Europe would The minority. in the in I came than and second was the a less still the So, what that occurred say be of moderation availability in of was of on Asia, the to of shortfall particularly softer basis, to if part sequential products we demand of about half TiOX coatings. out that is, the because you one of from of specifically, quarter a And product small in additives clear, because but volumetrically Germany, there of the think majority impact it Scarlino.

So, deals that I the of you me of I'd just that. appreciate could And question about second with if remind question, think the the part impact. your

[indiscernible]? Sure. your It just levels your was inventory inventories. are customer What in

through this painted We have or a a So large period Asia that in some that and and chain. some picture inventory Europe in customers pause. We could Europe. we I rebound this painted customers, have There there'd mean, be several in coatings the we think we customers see some see [common] some the have of from standpoint, made they inventory is [ph] have see Asia area, seen too. second in little an the very don't have a in some in that half softening know where come particularly not no doubt a bit picture, so bit improvement, – in there. We little is particularly where destocking

a So, product about I about would concerns heavy on which customers restocking. low lid concerned being call is availability, as and what are some course we see still keeping ongoing inventories further of

time. seen that at haven't We this

Thank Okay. you.

Our Alembic next Hassan from Global. go question ahead. will Ahmed Please with come

Simon Good Kurt. morning, and

well. as talk you obviously [ore guys terms are And you part price guys price] doing inflation, bit monthly you what reviews obviously as a pricing ore of you materials and [ph] are other guys inflation, about You raw seeing also obviously, availability? ore on seeing parcel as obviously with in your touched Can well. that,

on if the of on destruction signs also any if demand a all at of touch could you higher TiOX you're So, bit seeing pricing? significantly back

these we of sort We pretty from mean, record these And direct don't second past no. what the price-through been I there's years, own situation. it's sort the occurred or driven at straightforward, not years, Hassan, that I which that customers a also from if over of And Yes. point five see. could run-ups this And customers course, mean, cross about have good they've than to like. this appreciation time. recent answer you that the while see higher successfully have, four prices, of their highs is very passing

been materials ores as of spend terms has costs. your mean, the to item our ores, business I biggest raw about within variable typically it relates and question In our

dimensions past a X months seen have believe and done good in little an We and job securing that sort of the a improvement a we've sort period these through bit that around second situation navigating We half. months loosen supply believe that chain the we of to X in tighter will feedstocks.

forecast, across from think settled. of no headwind typically. has we're our dissimilar requirements to of our not of shipped. the always, of our but currently and second and I we're we our and course, contracts the well in and know getting around So, become, you're contracts being families these period, products, volatile foresee different as for more We aware, it's as problems would range The would getting on feedstock go I product month stable. Typically, have of comment. other. across second a a make in-line our allocation the sort costings feedstock. feedstock the more where We half course, elevated that but going. now been the like, met product half X situation energy feedstocks But standpoint, each our late, not with more of from characterize

mean as the I a you on of in mean flow end XX obviously, annual received, negative in of free cash you cash settlement quarter, highlighted that reduction cash And helpful. flow these amount but was scraping it, sort the away very generation guys sense, by the obviously uses of Makes guys free follow-up million side XXXX. it I

a better cash free positive So, of will trying as to I'm just get parts? sense all moving you turn a company flow you these when with feel different

look, a good becoming a here not from the That sure be it's financial I'm question. free highest we've to standpoint had cash legal continues settlement this is priority year. Hassan, and Yes. that absent our positive, benefits

becomes pull we like shot we but in at XXXX, it's free look will you we If operationally probably be those our we when these in XXXX. into And here a positive, flow out shed cash as then the flow and course lowers as got bar positive not more feel we've to free cash cash legacy XXXX, ability be move of probable and uses. we

doing continue can achieve the in that be So, hurdle the hyper will that goal. further we on everything the time, be, we go in to but we focused forward easier in it to order meantime and

Very helpful, Kurt. so and Thank you Simon much.

Thanks, Hassan.

go from question Our next will come Jeff Zekauskas with Please ahead. JPMorgan.

Scarlino much. very rate What's facility? of Thanks the the normal utilization

So, typically be capacity that of XX% its nameplate of we'd XX of sort run a kilotons. in band to XX% of to expected like

of putting you of the it what be? to to If facility The that would close the cost accumulated costs have rest? down,

Yes. mean, clear. let's I look, be

[ph]… facility. necessary are we to that to [some approvals had hopeful get are have authorities from the progress] operating We continue this going the we And

I was the down? wondering close be what would it cost to

sort numbers. got of and closures have we penalties to cost, think have to I Yes. contract point. but early of of the to would different historical over pretty we getting and And [ph], the to and prepared but are lower to at path] Look, to say put that like. multiple [components which experience there specific Scarlino range spread where on We've of the about severance, remediations too years, more the or numbers to plant closure the I typical, any through that got point end be haven't costs get would it's be what the we out work

And gain, there to taxes legal in are there flow And they? need that And the of how be cash any quarter? impact paid if in terms in are, much the of are was what gain future? the the legal

you Jeff, legal are the to related Pori if settlement…? referring

the I'm settlement No, sorry, legal from…

From Tronox?

that. about sorry Yes,

No, Yes. that's fine.

collection that second be So, in through out amount XX%. $XX with here second million a we the couple spread [ph] be collected the tax pay tax remaining and in the million balance with the of quarter million] will cash [$XX associated XXXX. the roughly associated and of We rate of that quarter, did will

Okay, great.

dropping, think you know, European more to XXX,XXX in And pretty So, don't in Chinese but haven't you know, the more shipped? being the I good, than tons XX% would demand talked XX% third fundamentals would coatings in difficult. don't year? I it is about last did I to sequentially they make TiOX? of expect first quarter that fundamentals grow volumes months Do six the operating those year-over-year?

would of in to let the levels on we So, sold up, the Jeff. in expect it the me to pick quarter your question, the part we sort TiOX. second quarter third of mean, volumetric in hold I second that

the level. at see So, in look into those fundamentals, reduction China, as in if month I any third similar if Coming decreases year, this if – we've to coatings we we sort shipped at you a think what's of seen look progressive back about sort that decrease, we've a Europe. and you Europe of mean, seen demand talk been outpace of

continue we moment in into shipping at the the Americas. in lower it's a Europe, the actually to to significant So, than of come but amount Europe see Chinese all

course, of year-on-year largely companies into gone that are significant sort overall pulled by up has XX%, of that's basis, a true. about to replace portion out. your have So, western on of Russia, that figures exports But

a yes, view, it's point So, of demand true. think I from

that exports. and deteriorating softness We in can continue we believe And second explained. an sort I've of Chinese manage some coatings the are don't of, as as see seeing – to level see quarter, that that we situation in we but that we do onward

of built. and is kilotons supply. over is be not supply not And do growing it on point time. getting being we expect year it and average this growing per hundreds is So, our really comes built market to back Supply underlying to by about

to we referred what that's there. So,

maybe a last I question. guess

as the come of remainder like trajectory can as Have So, we the best are for you end or year? rising? what's tell the an to price look we still

footprint we've certainly we see to see to local materials think in were already bigger we European up to second cost see No, there. and that pricings have that the of can you going is seeing think those. an and feedstock increases quarter we've in expect don't our the mean, by – to I up XX%. We I a numbers year-on-year half said and other course everyone exposure raw we've second come energy currency end. And and

and a monthly our will demand not in it's clear So the we the approach of intention to half. of softening bit there's will our strong with across that continue whether and determination through approach be to the yet That's but tailored same, price remain second increase. further trajectory push certainly

just one more. sorry, I'm

MMBtu So, remains does second the quarter, it course put it how is in you if does European much? relative third gas plus, there strain to the cost that quarter does, $XX the of – on And that terms an now if through of a structure? your

[strain] a our got puts that programs, you certainly up through And [ph] We the we've this number, type significant and some can we're causes and hedging is, is, manage prepared of this the but if not how break to it? it can imagine while Well, margin question elevated management. level much price pain. of

increases. So, deny that. can't We some be it our on price – we'll we that's bring why pushing pressure. does And

much. Okay, great. Thank you so

Thanks, Jeff.

Please from comes David with Our Deutsche ahead. next go question Begleiter Bank.

Simon you. you EBITDA Kurt, can QX? Thank TiOX sequentially think in in you and do grow

the get third quarter. going be to bit conditions volumetric And softer think a are in going to not there. tough. pretty We're Well, I uplift it's little

and come Europe even in as that better, to gets expect highlighted that extremely don't And quickly. we've Asia. we very think I

It's task. be question the going to I'd be difficult going answer yes. a your say to probably So, tough, to is

weakness that. perhaps expect in in macro Thank you performance further typical do that or the or similarly Additives, a given And similar a backdrop? business you for just Performance seasonal

it think I be expect we similar. to

look patterns. business. the you have construction to Performance a think in better quarter. expected seasonal of bit I about no our [ph] And Additives if second improvements result get. uptick, which that [cease] historical decent some from there's a suffered a quarter and because doubt in weaknesses second global business we've of to the still earnings And at we and performance sort we we made We look pretty didn't it

So, I in decent pretty think a the from seeing about Additive positive pretty third we're return quarter.

David, comp, got the year. quarter will of to third we've pretty easy say compared a that I last

it had So, to the we decrease than certainly a we the last from much stronger what year, seasonal be second. third expect into notwithstanding quarter

Very good. you. Thank

with go Our ahead. Stanley. question Vincent Andrews Morgan from next comes Please

is Thanks taking This guys. Vincent. for Will Tang for Hi, my on question.

during a guess the So, had inventory the kind of a a lack you of headwind purposeful of given, inventory inventory in function you've you quarter. the would capital $XXX kind Is a or here? guess past that position your kind I out million of ending how second guys guess, more, to characterize function of build working the And quarter called architectural inventory I own demand? just I weaker of of then kind

it goods. mentioned mean, see was don't raw in of finished higher taking steps quite that was with XXX timing We I issue the products to and on Yes. large I grow quickly us that a have being cost, have different inventory what I've does and inventory make set as the minimize. there of within different didn't control in our managing cash the quarter incentivized inventory. a chain, That intentionally look, negative plants highly the very in I in goods. restocked materials all be a A some mean, valuations frankly see program little inventory a from finished to number within build obviously we mean, I that and we seem we here. our said, modest to bit of our on vary. there. constrain inventories. feedstocks to coatings bigger up for we're mean, sort see customers are, did deterioration we They but we more, was and can number the they material

inventories the as relatively quite from say [ph] but still that as chain clearly would [tight] evidence I low, are in So, were. our they not

that's from I the you've of using Got to talked you of your any you kind it. using but how restructured you given you And rising past, work the is environment or achieved debt, to is against guess still then, there, there that? kind are the cash – plans changes that I still in about interest how that that settlement think guess, Tronox that rate on I plan

we to we of and pay that opportunity to an right we our our look optimization on the our structure. use do down continue Will, for Ideally, that would in cash debt. sheet connection Yes. some have the capital balance with of

we And so, the order window to to continue right that. for look in do

So, stay tuned.

Got it. Thank you.

comes Our next with Markets. BMO Capital McNulty Please go John ahead. question from

Thanks questions good Yes, already, for morning. to have taking my question. guess been I wanted my one A into I bit. lot dig asked a of but

of [ph] energy can got understand have [spigots] [ph] run Germany. that to you I us Germany, that? of guess, regarding You've to operate? a you to about the off Do from couple assets gasket] in way help to can think – plants a if happens the kind these you way what a cut is facilities, need [Russian procure there to the

think I general implies. look, mean, comments I Yes. some

the to cost the we some engagement that the been of in in in First is and to and situation. in German and energy close open been the authorities make are achieving help showing us and with our dialogue about Germany. arrangements could of looking our have positive regards that understanding Germany pretty at the plants based attempt authorities relationship foremost, a we've sure

signal positive to it very of a that's So, the understanding potential engage shows problems. and the willingness because

forward there should in sensitive that have keep that that rationing go allocation the the products positive and yet, the pretty think don't chance good regime we're about pretty Now, that that to and some this to second a we we do We're ability the maximizing sort well-positioned got be? there my impact. in we a guarantees But We we in course, the understands point. know thirdly, plants we be go can't is put European So, to course, staying assets we get. the they a or is a we winter And I'd there's should applications, to is tell And what are pharmaceuticals, look, make would products that, into and be flowing gas then availability. that we're – can fact with be of to government close like, of what's of to of you. know authorities on those sees that into no second we happen, building that to we concern Germany ultimately, of many energy very think going wouldn't are industries, these any point moderate have I that and basis other German as clearly And would whatever speculate we closely have place? like approaching, as German products but way talking it. there with sort the and but make don't

just helpful. That's it. business. And Performance question Got then maybe the one on

that maybe there's of a would does I or actually there seasonal kind would, So, the it quarter? get you construction lack play that related see way little how were the third catch the you of characterize in you didn't you indicated of just supply where what was issues way normally the you driving bit lift uplift? up didn't can guess seasonal season normally was that because out construction the

say would catch I I soft mean, see it it see it necessarily On don't up. though, I as deteriorating. a also don't demand. I Yes. was that

I to think we said see decent expect that delivering we third us pretty quarter. a

our construction at some franchise, Europe the saw colors volumetric Both in in volumetric demand which based but done course, North in where our of same. regions level. regions, the damage our main we both have EBITDA sales business Of are those downdraft and the Performance in was there's Additives America

Got color. it. Thanks the for much very

Our from next will come Laurence question Alexander go with Please ahead. Jefferies.

on just Hi. had Ukraine. a Estok question Laurence. morning. for is I conflict This about Hi, in good Kevin the

perhaps more let's is the curious, guess, year? then And of globally I just interrupting how the the more to wondering remainder supplies? how evolve broadly situation supply constraints you broadly, expect non-energy Just your related say over

sufficient a are pipeline] Yes. or out of comes energy for I the that that bit, little supply having overall may runs what really. either in I sort the selling raw but X mean, materially with It's in on performance one. improving situation Stream end, where materials issue I arena and that sort supply to what number don't Ukraine challenging the question not feedstock on it's previous we really of situation gas and think [Nord based political on our down main availability our is That's [ph] and chain, availability. concern. think like gas operations play around our impacting business

think pretty the everything I much else different we and all groups. our board, across need factories product we're getting across

you. Okay. Thank

RBC with next question Arun comes Our Capital Please Viswanathan from Markets. go ahead.

wanted I circle inflation just guess Thanks energy cost my to I Great. side. taking back the to question. for

So, what And you do guess could as bit this you cost given be, some is know natural guys? it gas your of a is more production part but little I onerous a I Europe, for have just so in that portion if you I maybe give much kind far of in Thanks. Europe as can metric on a of that forth? to How there's is as cost of as any wanted see and and so your structure? structure?

Yes. Europe. TiOX I mean, is the in based capacity look, of preponderance we have our

as middle we well-positioned. We U.K., concern Scarlino They're situations, is are I'd say sort We rate We've there Germany. around different is that lower Spain talked some that. in course, pretty running all a of have at across energy. somewhere Europe. five in the think and opposite of facilities probably is about well.

growing the year, the you if Asian we've the energy the structure products. biggest bill, course taking the like or it is now I sort that Historically, single facilities it's that item. remains at spend some and volatility course, is through these but feedstock been That seen some of than look cost energy of the the biggest spend and right significantly think higher So, single of U.S.-based significant this has of of energy is item, been large our a case of portion

the you probably materials largest we goods energy product, think I cost second I and would overall buy plus deny should that. the So, can't direct are a And structure not think component large and XX% being that indirect cost. now and of taken raw the about make cost of to together, of energy say we our and feedstock our structure part the

we're range an as finer think to about goods XX% just bit that, on basket is there's at] ore a cost feedstocks that about, us recognizing a point sense little sensitized sold, much XX% entire [we for that give [ph] unit that you of comprising on and business but a and energy. a meaningful to than energy Arun, more Yes. to energy of how ought depending feel put are which to talking our about to of a we're

guess Great. the That's on I outlook second the itself. was for just that. then, just, market very And helpful. Thanks question

those feedstocks, increases that I mostly industry correct slight be Thanks. on you So, forecasters have is – in some look costs? mainly energy both that and expansion trade or QX, it on of cover expect actually would or margin price it you rising potentially the to inflation, would this is think would ahead as but

pressures looking be we second think And quarter. And that quarter we see in we'll we inflationary think our decent across over we to pretty our in that [indiscernible], products. – third of the of portfolio onto most get quarter see to I third the to all of for TiOX in on costs set going target a those pricing input we're quarter. offset the third – our practically hold will demand

Asia, some note on trajectories they see by major as of well. about Europe the in some products also consumers some half particularly commentary in our We of second in terms what

Thanks.

ahead. come Please Petrie next Our will from with Eric question Citi. go

Hey, good Kurt. morning, and Simon

morning. Good

Hey Eric.

we last risk upside, going XXXX? is visibility In TiOX, second talked about quarter be pushed to that that what's like, re-stocking still is into or your and half order book

in I like more see I if of – demand we feels great has been Yes. there I because well seen some I haven't in mean, sort demand region. up America. think correction at think North some I think that by look softening. it We And re-stocking. mean, varies think Europe, course, we you of that it holding

larger Some and customers their ones potential are on about knock particularly concerned, own base. supply gas rushing effects on

it's sort going inventories be be I yet, rebounding. So, to they of [ph]. but – it their There leery see think probably for two] see of some but [the re-stocking, we down don't is could others Asia think running are we

certainly for there. it's pickup So, to half during some soft expect see And the we'd second us.

we chain the in of and see us in if earlier, ballooning see high don't we level second you As – inventories those half. sort like unduly I we're said an of don't the not

to that China smaller to the is exposure you then, compared how lockdowns know your China much And higher to the competitors, the attributable your but was demand think of I some exports? relatively impact and do

look, Shanghai down, though basis, I local in up. down by earlier about been Chinese to Demand sequentially on way the real the And as recently. there and local exports it's Yeah, second work in of it, the for a are demand. big has question mean, been a highlights doubt come It's impact still that quite lifted year-on-year And quarter demand. while has even China. impact no they an lockdown that's was been compensating a globally,

window, outside products. don't specialty have, You're a but window demand China, big shows right, we pretty the of we into have do weak

if And one-third full Okay. I what's timeline the at the utilization landfill of rate? Scarlino for capacity lastly reaching running may, operating

think the down. with, precaution have got got we sort bit taken to but out. continuity that time still window Yes. – I work I plant a we've don't come this be running. we've we it unlimited to We a careful keep to We've mean, to have the an here of

you Of course, we we shouldn't able through out already, we sort to on sorted in are have update to to with we'd further XQ be have get early as approvals. XXXX, like in where into of information these but

Thank Great. color. the for you

Eric. Thanks,

Thanks, Eric.

any Turner conclude would There back for time. are we conference Simon turn over this to no at like I questions And to with remaining remarks. that, will question-and-answer session. our closing the

for quarter feel questions in-person course, interest Okay. additional at you you And of events. Thanks, everyone second you continued speaking the your out in free thanks forward to with for operator, Venator. joining to earnings We coming to may Kate you. Thank please to any call. with our XXXX have. Thank look reach and

concluded. for now you has today's Conference attending Thank presentation.

your disconnect now may lines. You