Good day, ladies and gentlemen, and welcome to the Tronox’s Second Quarter 2018 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call maybe recorded. I would now like to turn the conference over to Senior Vice President of Investor Relations, Brennen Arndt. You may begin.

Thank you, Shelby and welcome, everyone, to Tronox Limited Second Quarter 2018 Conference Call. On our call today are Jeff Quinn, President and Chief Executive Officer; John Romano, Chief Commercial Officer; Jean-François Turgeon, Chief Operating Officer; and Tim Carlson, Chief Financial Officer. We'll be using slides as we move through today's call. Those of you listening by Internet broadcast through our website should already have them. For those listening by telephone, if you haven't already done so, you can access them on our website at tronox.com. Moving to the next slide. A reminder that our discussion today will 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, including those under the heading entitled Risk Factors in our annual report on Form 10-K for the year ended December 31, 2017. This information represents our best judgment based on today's information. However, actual results may vary based on these risks and uncertainties. The company undertakes no obligation to update or revise any forward-looking statements. During the conference call, we will refer to certain non-U.S. GAAP financial terms that we use in the management of our business. These include EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted earnings per diluted share and free cash flow. Reconciliations to their nearest U.S. GAAP terms are provided in our earnings release and in the appendix of the slide deck. Moving to Slide 3. It's now my pleasure to turn the call over to Jeff Quinn. Jeff?

Thanks, Brennen, and good morning to all of you. I’ll begin this morning with a few comments on the significant progress we've made over the last few weeks towards closing the Cristal acquisition. I'm going to share with you everything that I can that is public, not legally privilege or not confidential insensitive to the ongoing situation. However, due to those constraints, I may not be able to make any further amplification on this subject during the Q&A session. So please bear with me, if that is the case. As you know the hearing in the United States District Court in Washington D.C. to determine whether the FTC is entitled to a preliminary injunction to block our merger with Cristal is scheduled for next week beginning on August 7. We look forward to the opportunity to demonstrate in the District Court as we did in the recent Part 3 hearing before the FTC’s Administrative Law Judge, how this pro-competitive, output-enhancing combination will benefit customers throughout North America and around the world and position us to succeed in a fiercely competitive global market. In Europe, we received approval on July 4 from the European Commission conditional upon divestiture of our 8120 paper-laminate product grade that we supply on our Botlek facility in the Netherlands. As a reminder, our 8120 grade does not represent a significant amount of the volume at Botlek. And we do not believe the divestiture will have a material impact on Tronox. On July 16, we submitted to the commission and executed definitive agreement with Venator Materials PLC to divest the paper-laminate product grade. The approval process of that agreement has progressed very well. A so-called monitoring trustee has been appointed and has reviewed the definitive agreement and a proposed business plan of our transaction partner. A hold…

Thanks, Jeff. Moving to Slide 4. I'll start with a look at revenue growth in the second quarter compared to the year-ago second quarter. Our TiO2 segment revenue of $492 million increased 17%, higher pigment and zircon selling prices were the primary drivers of the increase. Foreign currency translation benefited the revenue growth by approximately 2% or $8 million due to the strengthening of the euro. Pigment sales of $354 million increased 16% as average selling prices increased 17% or 15% on local currency basis, while sales volumes were 1% lower. Pigment selling prices were higher in all regions. Titanium feedstock and co-products sales of $123 million increased 23% from $100 million in the year-ago quarter and the primary driver there was zircon. Zircon sales of $78 million more than doubled from $38 million in the year-ago quarter at selling prices increased 47% and sales volumes increased 39%. I’ll speak more about the favorable market conditions we see in zircon when we walk through the sequential comparison. Pig iron sales of $20 million increased 54% from $13 million in the year-ago quarter as selling prices increased 4% and sales volumes increased 52%. This volume gain was primarily driven due to the increase and availability as we brought one of our slag furnaces in South Africa back online. In feedstock and other products sales of $25 million declined from $49 million in the year-ago quarter due to the timing of shipments. CP titanium slag sales were $4 million lower than in the year-ago quarter and there were no ilmenite sales in the second quarter compared to $11 million of ilmenite sales in the year-ago second quarter. We are not actively selling ilmenite in the market at this time in preparation of our expanded internal requirements for the following the closing of…

Thank you, JF. Moving to Slide 7. Our June 30, 2018 debt was $3.17 billion and debt net of cash and cash equivalents was $1.48 billion, including $656 million of cash restricted for the Cristal transaction. Liquidity was $2 billion, comprised of cash and cash equivalents of $1.69 billion, including the $656 million of restricted cash, and $312 million available under revolving credit agreements. Our blended cost of debt was 5.5% in the second quarter and on June 30, 2018, 34% of our total indebtedness was set at a fixed rate. We expect cash interest expense for the full year, net of interest income to be approximately $170 million. Capital expenditures was $27 million in the quarter. This excludes the $14 million loans provided for the Jazan slagger project, where loans are recorded on our balance sheet within other long-term assets and recorded our cash flow statement separately from capital expenditures. Depreciation, depletion and amortization expense was $49 million in the second quarter. During the second quarter, we had a net $30 million foreign currency remeasurement gain that was recorded in other income. The gain was primarily driven by the weakening of the South African Rand used in the remeasurement of our U.S. dollar denominated open trade and notes receivable positions. This gain is included in our reporting EPS and adjusted EPS results, however it is not included and it's been removed from our total company in our TiO2 adjusted EBITDA results. We're reaffirming our expectations for capital spending, DD&A and cash tax in 2018 with capital spending of approximately $120 million, DD&A of $180 million to $200 million, cash tax of approximately $20 million. Each estimates is on a Tronox stand-alone basis. With that, I thank you, and I'll now turn the call over to Jeff for closing comments. Jeff?

Thanks, Tim. I’ll close by reiterating a few of the key points we left you to takeaway from today's call. First, we continue to work relentlessly towards closing the Cristal acquisition and have made significant progress over the last few weeks towards achieving that goal. We are anticipating final approval from the European Commission on the coming days. Under the terms of the MOU with Venator, we will proceed to negotiate a definitive agreement for the sale of the Ashtabula complex, if that divestiture is required to ensure that we are prepared to move swiftly with a remedy transaction at a reasonable valuation. We are making progress in that regard. Our focus is now on next week's hearing in the District Court, as that said, we look forward to the opportunity to demonstrate as we did in the recent Part 3 Hearing before the AOJ, how this pro-competitive, output-enhancing combination will benefit customers throughout North America and around the world and position us to succeed in a fiercely competitive global market. While we continue to work hard at securing regulatory approvals, we also continue our integration planning work. Our acquisition integration planning work is very advanced and has positioned us to hit the ground running on day one, following the closing of the acquisition to quickly deliver upon the synergies. Second, we see favorable market conditions across the entire value chain with supply and demand in relative balance. We believe producers globally are running at higher utilization rates, and despite transient inventory builds in some sales channels, inventories across the industry in aggregate, are at normal and not excessive levels. We do not see incremental capacity additions that would materially exceed levels needed to satisfy demand growth. We're getting early attraction on our value stabilization initiatives with our pigment customers with the intent to dampen margin volatility across the cycle. We see continued tightening of supply-demand balances in zircon and high-grade feedstock. As a fully integrated producer, we expect to benefit across the entire value chain from this trend. And third, both Tronox and Cristal continue to perform well. In our first quarter call, we raised our estimate for the 2018 pro forma adjusted EBITDA to the $1 billion to $1.1 billion range that is before synergies. With the benefit of second quarter results, we now expect 2018 pro forma EBITDA to be at the top of that range before synergies, in addition, we except year-one synergies of $100 million. As you have heard us say, consistently since the day we announced the transaction, this highly synergistic combination is all about increasing asset utilization, lowering our cost position, unlocking incremental product volumes to serve growing markets worldwide and generate strong cash flow. Our goal remains unchanged that is simply to create the world's premier TiO2 Company for our investors, for our customers and for our employees. With that, I thank you very much. And we now like to open the line for questions.

Thank you. [Operator Instructions] And our first question comes from John McNulty from BMO Capital Markets. Your line is now open.

Yes, good morning. Thanks for taking my question. I guess I had two questions on the stabilization initiatives that you've been making on that – on the pigment side, can you give us an update as to how far along you are on that and kind of what you were your targets are? Where you are at least relative to your targets?

Yes. This is John Romano. Again, as I mentioned on the call, we've made progress with that. We're not going to provide a whole lot of color with regards to exactly where we are by customer, but it's our objective to try to get somewhere in the range of about 50% of our business in line with these agreements. And we're further along with some than others but we made progress in the second quarter.

Okay. Fair enough. And then I guess a follow-up question on – regarding the Cristal assets, I know you don't own them yet to it. I'm sure, there's some curtain up in between here at this point. But I guess some of the court documents that we had – that we've gone through, it looks like that was running kind of in the first half at run rate of about $350 million of EBITDA. Is that kind of the right type of run rate to think about as we look at 2018 in totality? Or is there – are there some puts and takes that we should be thinking about?

I think the crystal business continues to perform very, very well. And as I said in my comments, my hats off to Cristal and their entire team there because in some phase of tremendous uncertainty, they pickup their focus and have continued to perform. I think the Cristal results were embedded in Tasnee’s earnings release and we probably cannot – we shouldn't speculate beyond that because we don't want to get beyond what Tasnee has disclosed in their release, John.

Okay. Fair enough. Thanks very much for the time.

Thank you. And our next question comes from Hassan Ahmed from Alembic Global. Your line is now open.

Good morning, Jeff. Just as we know, obviously, no two cycles are the same. But as I have sort of tried to sort of think through the previous up cycle, call it 2010 through 2012, we saw this major escalation in ore price and there was kind of this back and forth in terms of upward mobility the ore guys would come out announce price hikes, there would be a bit of a margin squeeze on the pigment side. The pigment guys would obviously follow suit and it seem that supply-demand fundamentals on both ore and pigment were relatively tight. Now this time around, obviously, utilization rates quite tight on the pigment side, ore pricing thus far – I mean it seems, it's beginning to show some signs of life. But the upward movement in ore prices has not been that significant. So two part question, one is what's your view now having the luxury of sort of – having your stores in both places. What's your view in terms of supply-demand fundamentals on the ore side? And if at all they are tightening and let's say that ore prices start moving up in 2019 and onwards, most of the other guys apart from yourself and on integrated, would that not translate to further upward movement in pigment pricing going forward in a relatively tight TiO2 utilization rate environment.

Yes, this is John Romano. From the – on the high-grade feedstock side, I'd say that it's definitely tightening up and although we're not selling significant volumes of high-grade feedstock at on the open market prices are moving. To your point, they have been moving, I would say, probably as rapidly as they were in the previous up cycle. But there's also been a number of disruptions that have exacerbated the tight supply-demand situation. So from that standpoint, I would expect that as we move forward. We're going to continue to see pressure on high-grade feedstock. And again, that’s something that will benefit us because our vertical integration. And as I said in my comments, I think when that occurs, you will benefit from that and also benefit from what maybe, no, upward pressure on pigment prices as other producers incur those costs, because they're not fully integrated.

Understood, I understood. Now I know, you guys mentioned, as you know, I mean there were two calls going on. So it was a bit distracted. But returning back to sort of your views about incremental Tio2 supply and supply-demand fundamentals on the TiO2 side of things, obviously, all eyes are tend to be focused on China and particularly, sort of – certain or a Chinese producer announcing chloride-based capacity out there. Now two things, one is – what's your view in terms of utilization rates in China, number one. Number two, it seems that the chloride-based capacity that operates in China, operates at relatively depressed operating rates, right. I mean, it's a new technology to them and they like, even if they were to bring about chloride-based capacity, at least in my mind and I'd love to hear your views. I'd imagine it take much longer than most people expect. And eventually once it comes online, again, similar to what we've seen in the last few years, I would imagine, it would run at depressed operating rates. So again, chloride capacity specific, question around timing of the arrival of capacity and what sort of run rate, utilization rates, we should think about as we think about operating rates for those facilities?

So on the chloride question, based on the announcements that came out from Loman. They had indicated a couple of hundred thousand tons coming online late in 2019. And I think on the last call, I made the comment that seem to bit aggressive considering. They just announced it, earlier this year. And typically, you're going to see a little bit of a longer transition when chloride capacity tons come on just due to the nature that effects relatively new technology there. On the sulfate side, when we think about demand, our capacity there, you've really got two buckets, you've got the small and medium sized plants that typically can't run at rates much higher than the low to mid-70s as far as capacity utilization and then the bigger plants that are running maybe in the low-80s to mid-80s on that so. Capacity utilization, when it's running at its highest, it’s nowhere significantly north of 80%. That's why we made this comment on the call regarding, what effective capacity is versus nameplate. Nameplate capacity can easily be adjusted if somebody is using a three-day run rate. And we don't typically do that.

Fair enough.

Is that answer your question?

Yes.

Thank you. And our next question comes from Matthew DeYoe from Vertical Research. Your line is now open.

Good morning, gentlemen. So I know you mentioned we may hear something from U.S. District Court in a matter of weeks. But does the 90-day timeline from the EC impact your ongoing process with the FTC and your ability that maybe go the distance, should the case get drawn out?

I don't think it does matter. I think the timing of work because the closing of the Cristal acquisition is obviously, a condition preceding to divestiture the paper-laminate grade. So I don't think we get into a situation where we're running, and we run out of time to get that being done in Europe.

All right. That’s helpful. And then so you're saying price pressure in European pigment markets just due to the premium price there and global trade flows capturing the margin. But at some point, it's going to run its course in the U.S. market, it will probably regain its status as the highest global rate in the market. So how sheltered from any excess supply do you think the U.S. market, it will be given quality standards or product trade flows unlike?

Well, look, as we continue to say, with the FTC for the longest time. This is a global market and prices tend to move globally. So there will be points in times where pricing in Europe is higher that be point in times where pricing and North American markets higher. As we move forward and look Q2 to Q3 based on some of the work that we're doing with our value stabilization program, we don't see a significant change Q2 to Q3 with regards to our volume – our pricing. So it ought to be somewhat similar and I prefer not to really get into regional price variances.

Sure. That’s fine. Thank you.

Thank you. And our next question comes from Jim Sheehan from SunTrust. Your line is now open.

Good morning, thanks for taking my question. Could you talk about where we are in the high-grade titanium feedstock in terms of reinvestment economics? And also related to that where do you see the cost being for developing new feedstock capacity? Jean-François Turgeon: Look it’s JF Turgeon, Jim. The high-grade business obviously depends on the ilmenite that feed those high-grade plants. And the value come when you can use a technology that enhance the co-product that you generate from that ilmenite. And that's why in the case of Tronox, we're very excited with the Option Agreement that we have sign with Cristal to start their slagger and we able to take of all that ilmenite that cannot be used in a chloride pigment plant. And convert it into a high-grade feedstock that could make our pigment plant more competitive. So look obviously, that's slagger was already built. It just needed someone with the expertise and we have that expertise to make it work. So the economy for us were very, very attractive to basically make that slagger run and produce material to feed our plant. That slagger has the capacity of 0.5 million ton of slag, so 500,000 tons. So it's a significant aside, in fact Jeff and I had the chance to visit the slagger two weeks ago. And it's a very well built asset. And in the first quarter of this year, we're going to start operating that unit. If there need for additional high-grade feedstock to come on to the market. Absolutely in time, they will, because the ilmenite that could be directly use in pigment production those mine are running down and they're not easy to find. What you can find is ilmenite that could be used for high-grade feedstock, but ilmenite that can use directly in chloride production is quite rare. And that's why, you will need the high-grade feedstock price to continue to move up to justify further investment. So the feedstock can meet the demand of the pigment.

I hope that does answer your question, Jim.

Yes, yes. It does. And also on the situation in Europe with a competitor having an extended outage and maybe a delayed timeline for rebuilding their plants or perhaps not completing the rebuild. What impact do you think that might have on pricing in the second half of the year? Do you think that Chinese exports into the region are fully offsetting that or do you expect more price going forward?

Look, with regards to exports into Europe clearly those have gone up significantly. We’re able to track those with import and export steps to show that Loman’s taken a significant piece of that volume. Loman has in the recent weeks announced within the last 30 days, $50 to $80 of price increase for export volumes. So it’s kind of too early to get any indication on where they may actually be with that. But I would expect that we’re probably – as I mentioned earlier, we’re not forecasting a significant amount of growth on pricing globally. And there maybe puts and takes regionally.

Thank you.

Thank you. And our next question comes from Roger Spitz of Bank of America. Your line is now open.

Thanks very much. It sounds like the slagger will start-up in Q4, you’re putting $25 each in more loans in Q3 and Q4. That leaves $61 million-odd that you could be loaning I guess for start-up costs. Do you expect in 2018 as the slagger starts up to put in more loans? And if so, do you have a view of how much of the additional $60 million-odd you’d have to loan into it?

The Jazan slagger actually has two furnaces. The first furnace is expected to come up early in Q3, the second furnace in 2019. We’ve committed the loans up to $125 million, $25 million in quarters, so we would expect to continue to loan on a quarterly basis in Q1 and Q2 of 2019.

Sort of that same $25 million a quarter basis.

Correct.

Yes.

Great. I take it from your prepared remarks at those zircon six month contracts. Within those contracts it sounds like prices you have fixed over the six months. Is that correct? And has – is that just you or is it more of the other sellers in the industry and buyers in the industry entering six months contracts meaning, you’re entering a new contractual regime for zircon.

Yes. So look over the course of the last 12 months we’ve been working actively with customers to try to make sure we don’t repeat what happened the last time in the market when it peaked. And we believe that along those same lines of value stabilization that six month pricing agreements for us make more sense and for our customers. I can’t speak too much specifically with regards to what our competitors are doing at this time, but I believe it’s been viewed favourably by our customers and for us. It’s good for planning and as we move into the second half, as I mentioned we do see further price improvements on that six month basis.

And you would presumably renegotiate pricing when it rolls over saying, I guess, July 1 or something. Is that what you do, or within these contracts – evergreen project.

I’m sorry, go ahead. We have already renegotiated…

Please, go ahead.

I’ll go and if I don’t answer your question you can ask it again. We have already renegotiated pricing for the second half. So, yes, it was done prior to July 1. And we would do that again beginning to Q1 of 2019.

I guess, I was going to add, these contracts have sort of evergreen where it’s basically you just renegotiate the price every six months. But the contracts – the volume contracts continue or is it a new contract every six months looking back to six months presumably?

Yes. I think what I specified in the comments where they were six month price agreements the contracts are longer than six months. So it’s not renegotiating six month contracts, it’s just six month price agreements with the existing contracts that we have which are longer-term.

Got it. Thank you very much.

Thank you. And our next question comes from Duffy Fischer from Barclays. Your line is now open.

Yes. Good morning fellas. I apologize, I missed the first part of the call. On the deal there is a potential deal with Venator, there used to be some thought that maybe one of the remedies would be splitting Ashtabula and only remedying half of it or one of the lines. There doesn’t seem to be anything in that agreement. Is that half of Ashtabula remedy off the table now where it’s basically either all or nothing?

Duffy, in my comments, I tried to layout the most likely scenarios and the scenarios that are covered under the Venator agreement. It’s probably – there are other potential outcomes and remedies that maybe less than the entire Ashtabula complex might be less than one plant or whatever. So I’m really not going to speculate on that. We kind of outlined what the Venator agreement covers and we think those are the most likely scenarios.

Fair enough. And then on your inventory question or comment where you said there are parts of the chain where inventory is high but through the whole chain you think it’s normal. Where do you see those high levels inventory and then where do you see the low levels of inventory that would offset the high to make it neutral?

Yes. So, on the inventory when we talked about specific channels it’s typically agents and distributors. They will buy regular volumes from us and I’m talking specific at Tronox because I can’t speak for the rest of the competition. But when they buy from us they’re buying regular volumes and to the extent they maybe building a little bit of inventory in the channel that’s what I’m specifically referring to and that’s largely in Asia.

Okay. Thank you, guys.

Yes, and I think – go ahead.

No, go ahead.

I’m just going to add to that because I didn’t answer the question on the other side and that was when we say that it’s balanced our inventories are at or below when I say at Tronox’s inventories are actually at or below seasonal norms and when we look at North America and Europe we don’t see any significant build in inventory.

And our next question comes from Owen Douglas from Baird. Your line is now open.

Hi. Good morning, guys. So I just wanted to go back to the comment about supply-demand balance and as it play different way. As far as the period of a time which you kind of looking forward and saying, you believe that the incremental capacity or supply is going to essentially meet demand. Can you give me a make sense for what time period and what is that demand growth rate that you guys are anticipating for pigment?

Yes. So, demand growth rate typically runs about 3% and when you think about consumption being about 6.2 million tons per year in 2017 that’s about 180,000 to 200,000 tons of additional capacity that’s needed just to stem and feed the existing demand as it grows at a regular rate. When we think –China specifically we don’t see any significant growth in capacity moving into 2019, it’s largely flat with some larger plants expanding some volume and some other plants actually closing or de-rating their plants based on the environmental regulations. So quite frankly with the capacity as that are known out there, they’re are not largely keeping up with demand as it grows at 3%, as it is today.

Okay. So at this point in the economic cycle you are still using that 3% CAGR as the baseline expectation.

We haven’t completed our budgets for 2019 yet, I use that 3% as an average growth rate over the time period.

Okay. I understood. And just a quick one on the feedstock. So as you guys think about it so you’ve divested or you have an agreement Memorandum of Understanding for Ashtabula. But just kind of trying to understand on a go forward basis, where do you see the majority of the benefit to Tronox if there were to be a material price move upwards in terms of feedstock. Will that be primarily in terms of thinking about your actual feedstock third-party sales or would it be just more that implied savings you get by not having to be a big third-party buyer. Jean-François Turgeon: That’s JF answering your question Owen. And it’s the latter which is basically we’re going to use that material internally and obviously internally it’s the cost of producing that material that we have sold. So we won’t have the pressure of the increased price of feedstock.

Okay. Great. That’s very helpful. Thank you very much guys.

Thank you. And our next question comes from John Roberts from UBS. Your line is now open.

Thank you. When you entered into the agreement with Venator for Ashtabula were you thinking any trust with Venator’s Kronos JV wouldn’t be an issue for you doing a possible deal with them? Or were you thinking that Venator would sell that JV to be able to do a deal with you?

John, the whole regulatory approval conditions and obligations are something that would be set forth the definitive agreement that’s been negotiated. So, we’re very aware of the situation and believe that regulatory approval can be obtained for that. And that will be sorted out in the definitive agreement in terms of what actions may be required in that regard.

Okay. Thank you.

Thank you. And our next question comes from Vijay Vikram from Goldman Sachs. Your line is now open.

Hey guys, just a quick question on – to the extent that you do the Ashtabula sale and you receive $1.1 billion. Could you just give some clarity around how would you go about using that would that be primarily directed towards debt reduction or something else? Thanks.

Yes. A chunk of it would absolutely be directed at debt reduction. However, we would look very closely at also opportunities return some capital to share owners in terms of the share repurchase or dividend.

Thank you. And I’m showing no further questions. I would like to turn the call back over to Jeff Quinn for any further remarks.

Thank you, operator. I just wanted to thank all of you for being on the call this morning. We look forward to reporting our progress as we move forward on each point we discuss today. We look forward to the District Court proceeding next week and the chance to defend the Cristal acquisition on the merits and notwithstanding the focus on securing regulatory approvals. We have our eye clearly on the ball in terms of running our own business and we continue to run very well. The business is functioning well. Thanks to the talented team, we have here at Tronox not only profitably but very safely as well. So thank you for your time this morning and we’ll talk in the next few weeks to update you on the progress. Thank you.

Ladies and gentlemen, thank you for participating in today’s conference. This concludes today’s program. You may all disconnect. Everyone have a great day.