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Tronox Holdings plc (TROX) Q4 2022 Earnings Call Transcript

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Tronox Holdings plc (NYSE:TROX) Q4 2022 Earnings Conference Call February 16, 2023 8:00 AM ET

Company Participants

Jennifer Guenther - VP, IR

John Romano - Co-CEO

Jean-Francois Turgeon - Co-CEO

Tim Carlson - CFO

John Srivisal - SVP, Business Development & Finance

Conference Call Participants

Duffy Fischer - Goldman Sachs

James Cannon - UBS

David Begleiter - Deutsche Bank

Frank Mitsch - Fermium Research

John McNulty - BMO Capital Markets

Jeff Zekauskas - JPMorgan

Hassan Ahmed - Alembic Global

Michael Leithead - Barclays

Matthew DeYoe - Bank of America

John Roberts - Credit Suisse

Will Tang - Morgan Stanley

Roger Spitz - Bank of America

Operator

Welcome to nan Tronox Holdings Q4 2022 Earnings Call. At this time, each participants are successful a perceive only mode. A little question-and-answer convention will travel nan general presentation. [Operator Instructions] Thank you.

Now, fto maine move nan telephone complete to your host, Jennifer Guenther, Vice President, Investor Relations. So Jennifer, you whitethorn statesman your conference.

Jennifer Guenther

Thank you, and invited to our 4th fourth and afloat twelvemonth 2022 convention telephone and webcast.

Turning to Slide 2, connected our telephone coming are John Romano and Jean-Francois Turgeon, Co-Chief Executive Officers; and Tim Carlson, Chief Financial Officer; John Srivisal, Senior Vice President, Business Development and Finance. We will beryllium utilizing slides arsenic we move [Technical Difficulty] entree nan position connected our website astatine investor.tronox.com.

Moving to Slide 3. A friends reminder that comments made connected this telephone and nan accusation provided successful our position and connected our website see definite statements that are forward-looking and taxable to various risks and uncertainties, including but not constricted to nan circumstantial factors summarized successful our SEC filings. This accusation represents our champion judgement based connected what we cognize today. However, existent results whitethorn alteration based connected these risks and uncertainties. The institution undertakes nary responsibility to update aliases revise immoderate forward-looking statements.

During nan convention call, we will mention to definite non-U.S. GAAP financial position that we usage successful nan guidance of our business and judge are useful to investors successful evaluating nan company's performance. Reconciliations to their nearest U.S. GAAP position are provided successful our net merchandise and successful nan appendix of nan accompanying presentation. Additionally, please statement that each financial comparisons made during nan telephone are connected a year-over-year ground unless different noted.

Moving to Slide 4, it is now my pleasance to move nan telephone complete to John Romano. John?

John Romano

Thanks, Jennifer, and bully morning, everyone, and convey you for joining america today. For those of you who person joined and whitethorn beryllium a spot caller to nan Tronox story, we're nan world's largest vertically integrated TiO2 shaper pinch 9 pigment plants, six mines and 5 upgrading accommodation crossed six continents.

Our 2022 gross totaled $3.5 cardinal and was reasonably evenly distributed crossed nan Americas, Europe, Middle East and Africa and Asia-Pacific. Our $1.1 cardinal tons of pigment capacity supports our well-balanced guidelines of astir 1,200 customers globally. Vertically integrated business exemplary supplies astir 85% of our soul feedstock needs astatine afloat effective capacity and this ensures accordant and unafraid proviso for our customers.

In summation to TiO2, we besides generated important worth arsenic nan world's 2nd largest shaper of zircon pinch astir 300,000 tons of capacity. Our strategy is focused connected positioning Tronox arsenic nan advantaged world TiO2 leader to nan accumulation of safe, quality, debased costs sustainable tons.

Now let's move to Slide 5, wherever I want to return a infinitesimal to screen nan important strides we made successful 2022 successful our sustainability performance. In our sustainability study released successful June, we accelerated nan c simplification targets we had published antecedently expanding our 2025 extremity to 35% from 15% emanation reductions and we accrued nan 2030 extremity to 50% from 35% emanation reductions comparative to our 2019 baseline.

We stay committed to our nett zero extremity by 2050, arsenic good arsenic different sustainability related commitments, including zero discarded to externally dedicated landfills by 2050 and targeting zero workforce injuries. The revision to nan targets was made imaginable mostly owed to nan important renewable power task we announced successful 2022 successful South Africa. This 200 megawatt star task pinch SOLA Group is expected to supply 40% of Tronox's South African energy needs and trim our vulnerability to energy costs increases successful nan region.

It's besides expected to little our Global Scope 1 and 2 emissions by 13%. And we're very excited astir nan affirmative effect this task will person connected our statement some locally and globally arsenic it is expected to beryllium completed by nan first 4th of ‘24. We besides added further disclosure connected ambiance related risks successful accordance pinch TCFD and aligned our reporting to SASB standards. We are continuously moving to understand nan standards and expectations of our stakeholders and align our soul priorities accordingly.

Finally, arsenic we highlighted past quarter, we are continuously realizing expanding worth from higher worth co-product streams including uncommon world minerals. We proceed to spot request for nan types of uncommon world elements recovered successful our monazite reserves increasing, fixed their usage successful nan greenish economy. We are exploring opportunities to upgrade nan uncommon world contented of what we waste to extract much worth from our mineral resources.

Now let's move to Slide 6 to reappraisal nan cardinal messages for 2022. 2022 was decidedly a communicative of 2 halves and we're proud of nan perseverance of our statement passim 2022 arsenic we ended nan twelvemonth very different from what it began. The first half of 2022 began pinch sizeable momentum, while nan 2nd half was characterized by important marketplace pullback starting successful China, followed by nan remainder of Asia-Pacific, EMEA and nan Americas.

Despite a 34% TiO2 measurement diminution successful a 44% zircon measurement diminution successful nan 4th fourth of 2022 compared to nan anterior year, we were capable to execute afloat twelvemonth 2022 adjusted EBITDA of $875 cardinal and adjusted EBITDA separator successful nan mid-20s, while generating afloat free twelvemonth rate travel $170 cardinal aft investing $428 cardinal successful superior expenditures. These results were driven by prudent guidance of accumulation and our costs building to align pinch nan existent marketplace situation while remaining focused connected our commercialized pricing strategy.

Our superior finance of $428 cardinal successful ongoing cardinal superior projects included Project newTRON and our mining description projects that reenforce Tronox's committedness to strengthening our business model. The $170 cardinal of free rate travel generated successful nan twelvemonth came successful good supra our expectations. Despite nan summation successful costs pressures successful nan 4th fourth and nan AR securitization inaugural coming successful little than anticipated owed to little receivables. We successfully managed rate -- our rate position to much than offset these headwinds.

In nan year, we returned astir $137 cardinal to shareholders, including stock repurchases and dividends. As we highlighted successful nan 4th quarter, nan unanticipated events, namely nan occurrence astatine our KZN penetration successful South Africa, and historical flooding successful Australia unfavorably impacted costs by $30 cardinal successful nan 4th quarter. We were besides negatively impacted connected nan costs broadside by little absorption arsenic we adjusted our accumulation to beryllium much intimately aligned pinch nan little marketplace demand.

In total, we incurred complete $60 cardinal successful costs from 4th fourth events and unfavorable absorption charges. We expect to spot continued impacts of these events successful nan first quarter, namely connected zircon tons disposable waste and nan costs of ore from nan caller mine. However, these impacts are expected to statesman to amended wrong nan first 4th and therefore, we expect greater recoveries to EBITDA arsenic we move into nan 2nd and 3rd quarters.

Slide 7 provides a spot much item connected nan afloat twelvemonth capacity for your reference. So let's move to Slide 8 and we'll reappraisal nan 4th fourth successful much detail. Revenue of $649 cardinal was impacted by a swift marketplace contraction crossed each regions. Improvements and pricing were much than offset by operational costs increases and little income volumes.

As I antecedently outlined, nan 4th fourth includes astir $60 cardinal of idle installation and little costs to marketplace charges on pinch higher costs from Q4 events and little fixed costs overhead absorption. Our effective taxation complaint for nan 4th was 26%, while our normalized complaint was 24%. Our GAAP diluted nonaccomplishment per stock was $0.09 and our adjusted diluted nonaccomplishment per stock was $0. 17.

Adjusted EBITDA successful nan 4th was $113 cardinal and our adjusted EBITDA separator was 17.4% impacted by higher arena driven operational costs successful nan quarter. And our free rate travel successful nan 4th was $126 million.

Now let's move to Slide 9 for a reappraisal of our commercialized performance. While we did spot a important simplification successful request crossed each regions, our TiO2 volumes came successful wrong our antecedently guided scope for nan quarter. Pricing crossed some TiO2 and zircon was successful statement pinch our anticipation driven by continued execution of our commercialized pricing strategy.

TiO2 volumes declined 28% sequentially, while mean trading prices declined somewhat by 1%, while FX impacts were little than half of a percent (ph) favorable. Zircon value -- zircon volumes declined 30% compared to nan anterior 4th owing to little accumulation from nan 4th fourth and our zircon pricing remained comparatively level to nan anterior quarter.

Revenue from different products was $80 million, a alteration of 12% to nan anterior twelvemonth mostly driven by little pig robust sales. The strengthening of nan U.S. dollar successful nan 4th was a headwind to gross compared to nan anterior twelvemonth owed to unfavorable translator impacts chiefly from nan weakening of nan euro. We firmly judge we saw nan trough successful our TiO2 volumes successful nan 4th fourth arsenic we stated antecedently and we're already opening to spot a rebound.

We expect nan first 4th pigment request to summation from nan 4th quarter, driven by a larger rebound successful Europe than successful different regions. We expect North America and Asia to retrieve a spot slower arsenic request continues to stay low, though still up from nan 4th fourth lows. We expect nan betterment successful request to proceed arsenic we participate into nan coating play and expect seeing progressively improving income volumes successful each regions arsenic we move passim nan 2nd and 3rd quarters.

We besides proceed to spot nan benefits of our separator stableness initiatives and our financial results. Even pinch nan caller important measurement reductions, we expect our wide TiO2 pricing successful nan first 4th to stay comparatively level to nan 4th fourth level. This is driven by nan assortment of statement arrangements we person successful nan marketplace pinch our customers that support our separator stableness initiatives.

As we've communicated antecedently and demonstrated successful Q4, we do not expect pricing to move arsenic it has successful erstwhile economical transitions. Owing successful ample portion to nan commercialized attack we successfully implemented complete nan past respective years.

I'll now move nan telephone complete to JF for a reappraisal of our operational performance. JF?

Jean-Francois Turgeon

Thank you, John, and bully morning. Turning to Slide 10. Our adjusted EBITDA sequential diminution was driven by little income volume, higher costs, including freight and unfavorable pricing impact. FX complaint were a favorable offset. As John outlined, nan 4th was importantly impacted by a occurrence astatine our KZN installation successful South Africa and an historical flooding successful Australia, which delayed nan commissioning of our Atlas Campaspe mine.

In South Africa, we are replacing nan last spiral this period that suffered harm from nan occurrence and we will beryllium backmost to 100% accumulation level astatine nan tract by nan extremity of this month. As a result, our first 4th will besides beryllium impacted by nan little zircon disposable for income and nan little fixed costs absorption.

In Australia, while nan dense rainfall abate precocious past year, nan area wherever nan excavation is located is successful a basin. Where nan h2o continued to cod and consequence successful ne'er earlier seen flooding level successful this millennium. We were capable to scope an important milestone this period astatine Atlas Campaspe owed to important effort and speech by our team, nan dense mineral ore being produced is now successfully being trucked disconnected nan tract utilizing an alternate aged road, albeit astatine a higher cost.

A bully accomplishment fixed nan important effect of nan flood connected our inability to usage nan original roadway. We are enthusiastic astir nan worth this excavation will bring to our cognition and nan betterment to our bottommost line. We will spot from utilizing nan feedstock. We will statesman to spot this successful our 2nd 4th consequence successful nan shape of incremental zircon sale. All done nan costs use for nan ore will beryllium further hold arsenic it will return clip for nan ore to travel done our pigment plant.

We expect to spot a much important use arsenic we move into nan 2nd half of nan year. In total, these events effect our consequence by $30 million. As we antecedently communicated, we besides slowed our accumulation to align much intimately pinch nan little marketplace request successful nan 4th quarter, resulting successful little fixed costs absorption and idle installation and LCM charge. This impacted consequence by an further $30 million, resulting successful a full of astir $60 cardinal of effect to nan 4th fourth EBITDA.

We expect to spot continued effect from these events successful nan first quarter, namely connected zircon ton disposable for income and connected nan costs of ore from nan caller mine. As a consequence of nan commercialized move John antecedently outlined and nan hangover effect from nan 4th fourth event, we expect nan first 4th 2023 adjusted EBITDA to beryllium successful nan scope of $120 cardinal to $130 cardinal and adjusted EBITDA separator to stay successful nan high-teens.

The effect to zircon accumulation and our Australian ore costs is expected to statesman to amended wrong nan first 4th and we truthful expect a greater betterment to EBITDA arsenic we move into nan 2nd and 3rd quarter.

Turning to Slide 11. As a consequence of nan macroeconomic backdrop, we are taking action to navigate nan existent scenery and position Tronox for success. We employment a robust process arsenic a portion of our forecasting reappraisal that alteration america to scheme for a assortment of economical scenario. Combined pinch our endeavor optimization model, we are capable to respond swiftly and optimize our portfolio. We proceed to beryllium laser focused connected costs simplification and person a number of levers to optimize capacity crossed a assortment of script that we are executing on.

We person already begun executing connected our costs simplification playbook. We person implemented a hiring freeze. We are reducing master fee, recreation and different discretionary costs. We are besides optimizing our fixed costs and driving further proviso concatenation initiative. We are prudently managing moving capital. Declining request drove accrued TiO2 inventory level successful nan 3rd and 4th quarter. One use of this was enabling nan replenishment of our information stock, which has been beneath seasonal norm level successful nan first half of 2022.

Our target to beryllium an 85% vertically integrated TiO2 shaper is portion of our semipermanent strategy. This led america sorb marketplace change while optimizing our feedstock asset, which person higher fixed costs comparative to our TiO2 asset. As a consequence of existent little TiO2 accumulation level driven by customer demand, which is down successful nan 30% scope year-on-year we are taking action to trim our feedstock accumulation level. This will consequence successful somewhat higher mining and beneficiation costs successful nan first and 2nd 4th of nan year.

On superior expenditure, arsenic we person highlighted previously, vertical integration finance and newTRON are cardinal task to support our mean and semipermanent profitable maturation initiatives. However, we person implemented scheme to importantly trim our yearly superior walk to beryllium beneath $275 cardinal successful 2023 to accommodate to nan macroeconomic situation arsenic it unfold.

While this will hold our expertise to recognize use from these project, we do judge this is nan due determination for nan business astatine this clip and is accordant pinch our expertise to flex our superior spend. We expect these actions will alteration Tronox to make affirmative free rate travel crossed a assortment of script including our recession case. We will proceed to equilibrium rate procreation while ensuring we person nan merchandise basal to meet our customer needs and are efficaciously positioning Tronox for early success.

I would now for illustration to move nan telephone complete to Tim Carlson for a reappraisal of our financial position. Tim?

Tim Carlson

Thank you, JF. Turning to Slide 12. We ended nan twelvemonth pinch full indebtedness of $2.5 billion. Our nett leverage astatine nan extremity of nan twelvemonth was 2.8 times. Our equilibrium expanse remains beardown pinch nary adjacent word important maturities until 2028 and nary financial covenants connected our word loans aliases bonds. Total disposable liquidity, arsenic of December 31 was $608 cardinal including $164 cardinal successful rate and rate equivalents, which is good distributed crossed our world operations.

Capital expenditures totaled $428 cardinal successful 2022 astir $125 cardinal was for attraction and information capital, $75 cardinal was for task newTRON, and $200 cardinal was for operational vertical integration projects, including Atlas Campaspe. Depreciation, depletion and amortization disbursal was $269 cardinal for nan twelvemonth and our free rate travel totaled $170 million, owed to our beardown rate earnings.

We returned $137 cardinal to stock owners successful 2022 successful nan shape of dividends and stock repurchases. As this is my past net telephone earlier my status from Tronox connected April 1, I would conscionable for illustration to opportunity convey you for your support complete nan past six years. I'm highly proud to person played a domiciled successful Tronox's translator to wherever it is today, well-positioned to navigate nan existent situation and present meaningful worth successful nan early and I look guardant to remaining a shareholder for galore much years.

I'll now move nan telephone complete to John Srivisal, who will talk nan first 4th outlook. I person worked very intimately pinch John complete nan past respective years arsenic a business partner connected nan executive squad and I'm assured that nan leadership, financial skills and strategical vision, he brings to nan domiciled will proceed to position Tronox for success. John?

John Srivisal

Thank you, Tim, for those benignant words. Hello, everyone. I'm excited to beryllium present this morning. I've been looking guardant to gathering galore of you complete nan coming months.

Turning to Slide 13. At Tronox, we employment a robust bottoms-up study of our markets, operations, and nan risks and opportunities successful processing our forecast. While nan gait and timing of nan betterment remains to beryllium seen, we are assured that we person seen nan trough connected TiO2 volumes. However, arsenic John and JF outlined, we expect to proceed to spot nan effect of zircon volumes and operating costs successful nan first 4th from 4th fourth events.

Based connected this successful our existent bottoms-up analysis, we expect adjusted EBITDA to beryllium successful nan scope of $120 cardinal to $130 cardinal for nan first quarter. This assumes that TiO2 volumes will summation sequentially successful nan debased to mid-teens range. As John indicated, this besides assumes comparatively level TiO2 pricing fixed nan reset successful immoderate of our separator stableness contracts.

With respect to zircon, we do expect volumes to diminution sequentially by astir 5,000 tons, owing a little accumulation astatine KZN successful Australia for nan reasons discussed earlier. Furthermore, owed to these 2 events, we person incorporated into our first 4th range, astir $25 cardinal successful higher accumulation costs. The scope besides assumes a headwind from FX, chiefly driven by nan Australian dollar and South African rand.

Now stepping backmost from nan quarter, arsenic you would recall, we introduced a recession lawsuit astatine our Investor Day successful June 2022. While we guidelines patient down nan study supporting that range, location are 3 important factors to see successful nan clip since then. First, we modeled nan marketplace correction starting 12 months to 18 months from our Investor Day.

Instead, we saw nan commencement of a downturn wrong 60 days of Investor Day. We truthful hadn't afloat realized nan newTRON benefits we had primitively assumed we achieved by nan extremity of 2023. Instead, we person now delayed aspects of nan task to trim capital, which besides delays nan realization of savings antecedently anticipated.

Second, nan humanities flooding successful Australia has importantly delayed nan benefits from nan Atlas Campaspe mining project. And third, TiO2 volumes declined 15% year-over-year successful 2022, while nan recession lawsuit assumes a 10% decline. While we expect TiO2 volumes to sequentially summation from nan Q4 trough, we expect 2023 afloat twelvemonth volumes to beryllium level to somewhat up from 2022.

Importantly, however, pricing dynamics person played retired precisely arsenic we anticipated. As we person emphasized complete nan past respective years, nan stableness programs our commercialized squad has put successful spot person successfully reduced nan volatility successful nan market.

Moving to our expectations for 2023 rate uses, we expect moving superior to beryllium astir $150 cardinal use, which is higher than wherever we'd for illustration it to be. We are moving to trim these expected outflows done further optimization efforts. We expect nett rate liking disbursal to beryllium astir $130 million, rate taxes of astir $35 cardinal and superior expenditures of little than $275million.

JF shared earlier nan actions we are presently taking arsenic a business. We will proceed to measure and execute against nan levers we tin propulsion depending connected nan economical scenarios to guarantee capable liquidity and continued alignment of our accumulation and costs to nan economical backdrop. We stay focused connected delivering connected our commitments.

That concludes our prepared remarks. With that, I'd for illustration to move nan telephone complete for questions.

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] The first mobility we person from nan telephone lines comes from Duffy Fischer of Goldman Sachs. Your statement is now open, Duffy. Please spell ahead.

Duffy Fischer

Yes. Good morning. First question, conscionable connected nan past comments astir nan differential from your trough case. Can you quantify astir what those 3 buckets would do to your trough case?

John Romano

Sure, Duffy. And bully to talk to you again. So if you return those 3 buckets separately, we first focused connected newTRON savings. And arsenic we presented astatine Investor Day, we expected astir $150 to $200 per ton of savings. And arsenic we shared arsenic well, astir a 3rd of that related to volumes. So fixed this marketplace environment, we don't expect to spot those savings travel done until nan marketplace picks up later successful 2024. Additionally, a information of that related to costs savings, which required afloat integration of our ERP crossed nan globe. So a information of that magnitude related to those that we won't spot for a while.

Turning to nan Atlas, arsenic we mentioned before, we expect astir -- we had initially assumed and subordinate to you that astir $50 cardinal of use we'd spot from nan Atlas. However, arsenic you tin expect, conscionable fixed nan downturn successful nan market, fixed nan hold successful nan excavation opening up, we do spot immoderate further costs coming through. So pinch that and nan activities that we're doing to effort to bring that ore to accommodate for nan floods, we'll spot further costs hitting. So that's astir about $25 million.

And past finally, arsenic I mentioned, recession lawsuit presume 10% measurement declines and we're seeing much than that.

Duffy Fischer

Okay.

Jean-Francois Turgeon

And location is an element. It's costs and it's nan measurement connected that zircon that we're not getting early successful nan twelvemonth arsenic well.

Duffy Fischer

Okay. And past conscionable benignant of a equilibrium expanse question, volumes were down large past year, but yet your inventory was up complete $200 cardinal and now you're guiding to moving superior being up different $150 cardinal this coming twelvemonth arsenic you're calling volumes benignant of flattish. So what is that? Why do we request truthful overmuch much moving superior than we did it a twelvemonth ago?

John Romano

Duffy, we're still building inventory. We person brought down accumulation astatine our sites, but not arsenic overmuch arsenic nan measurement connected TiO2 person travel down. Additionally, we are building feedstock. So that's a large information of nan build successful nan inventory level.

Jean-Francois Turgeon

Duffy, you would recognize that I mean we're 85% vertically integrated. And successful Q4, we saw a driblet successful that (ph) and TiO2 request successful nan bid of 30% and we're expecting nan aforesaid driblet successful Q1 versus a twelvemonth agone quarter. So we person to slow down our excavation and smelter and those are precocious fixed operations. So we don't want to slow them down excessively much. So that's why we're still building inventory astatine nan moment. Look, obviously, that would position america very good for nan 2nd half, if we spot nan marketplace picking up.

Tim Carlson

Hey, Duffy. It's Tim. The different constituent of moving superior and astir apt nan much important constituent is receivables. Q4 of 2022, evidently was a trough for nan levels we've ne'er seen before. We spot nan uptick successful Q1. We spot nan uptick continuing done Q4, truthful conscionable inventory levels successful Q4 year-on-year astatine somewhat improved DSOs will origin an summation arsenic well.

Duffy Fischer

Great. Thank you, guys.

Operator

Thank you. Our adjacent mobility comes from nan statement of Josh Spector of UBS. Please spell ahead, erstwhile you are ready, Josh.

James Cannon

Hi, guys. This is James Cannon connected for Josh. I was conscionable going to inquire astir your 1Q outlook. It seems a small spot much optimistic that upward (ph) to mid-teens versus a competitor that was a small little optimistic. I was wondering, if you could conscionable remark connected what gives you assurance successful that betterment and whether you've seen that pickup truthful acold successful nan 4th aliases you're expecting further betterment to come?

John Romano

Yeah, James. So look, I mean, we tin show you what we're seeing successful nan market. And what we're seeing successful nan market, arsenic we mentioned successful nan anterior quarter, we thought nan 4th fourth was going to beryllium a trough. And successful fact, it was our volumes are picking up successful each regions. We made reference connected nan telephone that Europe is picking up a small spot aliases really quicker than nan remainder of nan world, but we're seeing an summation successful North America. We're seeing an summation successful Asia. There's a batch of optimism going astir successful India correct now.

India is simply a large information -- I deliberation a batch of our investors deliberation China is simply a large portion of our business. India is simply a bigger portion of our business than China is astatine this peculiar shape and there's important maturation going connected there. So erstwhile we deliberation astir wherever we are coming compared to wherever we were successful nan 4th quarter, pigment volumes are picking up that's why we're assured that those margins that we referenced are going to continue. We besides referenced wherever we were connected nan pricing. We referenced that pricing was going to beryllium comparatively flat. We person a batch of agreements that person adjusted connected nan separator stableness broadside that person allowed america to offset and really astir apt flooded immoderate of nan decreases.

So net-net erstwhile we deliberation of comparatively flat, that could beryllium level to somewhat up depending connected what happened. So we're assured successful what we're seeing successful nan first 4th and that first 4th build is going to build into nan 2nd 4th because we expect to spot volumes to proceed to increase.

Jean-Francois Turgeon

And James, I would adhd to that, that evidently successful Q4 pinch nan driblet of 30% of measurement and pinch what we expect for Q1, arsenic John said, is an improvement, but still acold from what was our normal measurement and this driblet is measurement much than what our customer are experiencing. So it was not sustaining to spot nan type of driblet that we person successful Q4.

James Cannon

Got it. Thanks guys.

Operator

Thank you. We now person David Begleiter of Deutsche Bank. Please spell ahead, erstwhile you're ready.

David Begleiter

Thank you. Good morning. Just connected zircon, really does nan marketplace reacting to nan nonaccomplishment of your volumes and what does that mean for pricing do you deliberation for nan afloat year?

John Romano

Well, arsenic we talked -- and we referenced successful nan call, our measurement -- our pricing for nan 4th fourth -- from 4th fourth was level and we expect to see, I'd say, unchangeable pricing moving into nan first quarter. So pinch China being down, I would opportunity that location was a spot of a alteration successful demand. It didn't effect america because arsenic you know, we were short connected inventory to statesman pinch and nan Atlas Campaspe hold continued to propulsion backmost connected our inventory.

So we're still assured that arsenic we move into nan first 4th and into nan 2nd that we're going to spot pricing that remains comparatively level to wherever we are today. And arsenic erstwhile we commencement reasoning astir nan effect of what's happening successful Atlas, if we would person had that production, we would person had astir 5,000 to 10,000 much tons successful nan first 4th and we judge we could person placed those astatine nan aforesaid price.

David Begleiter

Very good. And conscionable connected newTRON, each nan existent savings successful ‘22, what do you deliberation they'll beryllium successful ‘23 and moreover ‘24 now?

Tim Carlson

So connected newTRON, David, Remember, we talked astir an betterment of astir $50 cardinal for 2022 and we will support that evidently successful 2023 and we're astir apt going to somewhat summation it by, I'd say, different $20 cardinal done automation of immoderate of our works and continuous improvement of our precocious process power and our attraction believe because each of those elements, nan investments were done successful '22 and nan use will commencement to show successful '23.

As John mentioned, we person paused nan ERP deployment worldwide. So that will slow down a bit, nan benefits related to that portion of nan project. And obviously, each nan further ton astatine newTRON worthy giving us, it will beryllium disposable erstwhile nan marketplace picks up. So that's successful a nutshell wherever we are.

David Begleiter

Very good. Thank you.

Operator

Thank you, David. We now person Frank Mitsch, Fermium Research. Your statement is now open.

Frank Mitsch

Thank you, and champion wishes connected your retirement, Tim. It was a pleasance moving pinch you for sure. John, successful consequence to 1 of nan questions that was asked earlier, you talked astir mislaid revenues and profits from zircon. And truthful benignant of begs nan question, you had a $60 cardinal antagonistic effect from nan flood and nan occurrence successful 4Q. On your slide, you mentioned a $25 cardinal effect successful 1Q, but it sounds for illustration nan effect mightiness beryllium higher than that. Can you benignant of measurement america done arsenic to what nan impacts mightiness beryllium present successful 1Q and what lingers into 2Q?

John Romano

Yeah, Frank. So again, erstwhile we deliberation astir -- let's commencement pinch what's happening successful Atlas correct now. So Atlas is really up and running. And erstwhile we propulsion that [indiscernible], erstwhile we propulsion nan dense mineral ore retired of Atlas, it has to spell to Broken Hill and that's nan issue. The roadworthy to Broken Hill is still flooded. We person travel up, arsenic Jeff mentioned successful his comments, we're now shipping HMC from Atlas to Broken Hill via an alternate way that existed. The superior roadworthy hasn't been repaired yet. So we are getting worldly there.

And arsenic we get into nan 2nd quarter, we'll commencement to spot much use from what's coming retired of that asset. But nan large effect successful nan first 4th and successful nan 4th fourth was that Broken Hill wasn't really running. You had fixed costs there. We besides had our excavation successful Ginkgo that was expected to travel down, which we proceed to tally truthful that we tin proceed to tally ilmenite done Broken Hills truthful that we tin person ilmenite to nutrient pigment.

So location are a assortment of compounding effects that person happened from that flood that are continuing to rotation into Q1 and erstwhile we deliberation astir wherever we are now successful our expectations, arsenic we said, arsenic we would expect to spot nan 4th fourth costs are actually, our costs to amended arsenic we move into nan second half of nan twelvemonth arsenic we commencement to get nan roads backmost successful afloat accumulation done nan further capacity, we'll beryllium capable to vessel connected that superior roadworthy again.

Jean-Francois Turgeon

Yeah. And Frank, we will evidently adjacent nan excavation that is nan precocious costs excavation arsenic soon arsenic we could scope afloat accumulation from that roadworthy and that's nan large chartless for america this twelvemonth because we don't cognize erstwhile that roadworthy will open. We're evidently moving pinch nan region and pinch nan section authority to effort to moreover thief them reopen that roadworthy and do what's necessary. But that's why it was difficult for america to foretell what would hap for nan full year.

Frank Mitsch

Understood. So nan measurement that we deliberation astir it is not conscionable nan $25 cardinal successful nan accumulation costs, but nan mislaid zircon tons, truthful you're astir apt talking different worldly nonaccomplishment profitability successful 1Q? Is that not really we should deliberation astir that? And past immoderate of that spills into 2Q arsenic well?

John Romano

Yeah. It's astir $15 cardinal connected zircon, $10 cardinal connected Atlas and $15 cardinal connected South Africa, which is not going to repetition because arsenic JF mentioned, South Africa is coming backmost online astatine nan extremity of this period and that's from nan fire.

Frank Mitsch

Got you. All right. Great. And past conscionable a mobility regarding inventory levels downstream, pinch ‘22 being beneath nan recession lawsuit successful position of TiO2 volumes. Is your anticipation that nan downstream volumes are astir apt beneath mean aliases would you opportunity that your customer inventory levels are astir apt successful line? And truthful I'm conscionable trying to judge, is location a imaginable successful ‘23 aliases possibly ‘24 that we spot a restocking use downstream?

John Romano

That's a awesome question. And nan reality is erstwhile we talked successful nan 4th fourth that was a batch of nan destocking going on. Clearly, there's been a resistance connected effect from demand. So I deliberation you're precisely right. We judge nan mostly of nan destocking has stopped because we're starting to spot our customers’ bid a spot quicker than they had before. So erstwhile we -- arsenic you -- I mean China is simply a awesome example. In nan period of January, we person -- from January to February, we've seen a important move successful measurement requests from customers arsenic China starts to prime up.

So you'll commencement to spot what was being exported retired of China absorbing immoderate of that further growth. And I do judge location is opportunity arsenic we get into nan backmost half of nan twelvemonth for a restocking of it. It won't beryllium arsenic important arsenic it was possibly 2 years agone successful bid to get backmost up to wherever we were successful nan twelvemonth wherever we had each nan COVID use from nan further money that was coming into nan strategy successful nan shape of subsidies. But we do judge that there's an upside successful restocking and it could hap earlier nan extremity of nan year.

Frank Mitsch

Thanks truthful much.

Operator

Thank you. We now person John McNulty pinch BMO Capital Markets. Please spell up erstwhile you're ready.

John McNulty

Yeah. Thanks for taking my question. So I conjecture tin you speak to power costs? 2022 obviously, Europe had a immense spike, remainder of nan world was benignant of mixed. You guys were somewhat immune to that because nan hedges now power plunged backmost down. I conjecture tin you benignant of thief america to deliberation astir really power will effect you in’23 versus ‘22 overall? How should we beryllium reasoning astir that?

Tim Carlson

Hey, John. It's Tim. From an wide power standpoint, it will beryllium somewhat neutral for us, ‘23 versus ‘22, a small spot of incremental costs that we've built into our scheme arsenic a consequence of immoderate concerns that we person successful Europe, but obscurity adjacent nan level of increases that we saw successful ‘21 aliases successful ‘22, sub-$10 million.

John McNulty

Got it. Okay. And past possibly conscionable to explain because admittedly, I'm a small spot confused by immoderate of nan earlier questions. So pinch respect to nan mine, excavation issues that you guys faced successful nan 4th quarter, it sounds like, from a costs perspective, successful nan 4th quarter, you had astir a $60 cardinal hit. In nan first quarter, you're going to person much for illustration a $25 cardinal hit. And past connected apical of that, there's going to beryllium immoderate benignant of rumor astir zircon and your expertise to move zircon. I conjecture tin you speak to -- comparative to nan 4th quarter, will your zircon income and volumes, I conjecture beryllium up aliases down aliases flat?

John Romano

So John, to return nan different pieces of that, arsenic it relates to our Q1 tally rate, there's astir $10 cardinal of incremental Atlas costs that we usually would not person had. There's astir 15,000 tons of zircon income successful nan 4th that we would person had if successful truth Atlas had been online and if successful truth we did not person nan KZN successful fire. In summation to that, arsenic Jeff mentioned arsenic portion of his prepared remarks, volumes are down 30% year-on-year successful nan 4th quarter. And we spot that again successful Q1 conscionable fixed nan guideline that we gave you connected volumes.

And erstwhile you're down 30%, our benefits of vertical integration, we struggle a spot because we target 85%, but erstwhile you're down 30%, we've sewage to slow our mines down a small bit, which we are doing arsenic portion of Q1 and that's an further $15 cardinal of unfavorable complete absorption. So it's really those 3 pieces successful Q1 that are impacting our Q1 guide.

John Srivisal

I mean conscionable from nan zircon mobility though, I mean, truthful nan first 4th of ‘23 is going to beryllium astir 5-ish down from wherever we were successful nan 4th fourth and past it starts to move up. But erstwhile we talk astir nan road, this alternate roadworthy from Atlas to Broken Hill. It's not nan roadworthy that had nan capacity to return nan measurement that we would person been utilizing connected that superior road. So we've sewage support to usage that roadworthy connected a smaller measurement of worldly going from Atlas to Broken Hill to move to person that into MAGs and non-MAGs. And ultimately, we won't person afloat capacity until we get astir apt much successful nan mid-year erstwhile that superior roadworthy is backmost up and running. So that's nan limiting effect. And past erstwhile you get into 3rd quarter, you commencement to spot zircon numbers move backmost up to what those normal levels would be.

John Romano

John, if you look astatine Q4 to Q1 specifically, arsenic I mentioned earlier connected nan call, we're going to beryllium down 5,000 tons quarter-over-quarter from zircon.

John McNulty

Got it. Okay. No, acknowledgment very much. That decidedly helps to clear it off.

Operator

Thank you. We now person Jeff Zekauskas of JPMorgan. Please spell up erstwhile you are ready, Jeff.

Jeff Zekauskas

Thanks very much. Your titanium dioxide volumes were down 34%. Can you talk astir nan location differences? If you group it into Europe, America and Asia, what were nan comparative changes? And past if you tin overlay request from coatings and insubstantial and integrative additives. How did those request changes work?

John Romano

Yeah. So successful nan 4th quarter, Europe was down much importantly than Asia-Pacific. Asia-Pacific was down, I conjecture I'd say, 2nd to nan Europe, Middle East and Africa market. And past North America, had not moved down arsenic much, but it was still down. So erstwhile we deliberation astir really that breaks down into nan segments, I wouldn't opportunity location was a important push successful either direction. Maybe location was a spot much of a pullback connected nan insubstantial laminate broadside successful Europe than location was connected nan coating side.

But we saw a destocking effect going connected successful nan 4th fourth that was beautiful accordant astir each marketplace segments. It wasn't heavy weighted successful nan coatings. Now, obviously, arsenic we look into Q1, I mentioned that Q1 is stronger than Q4 successful North America, although, it's increasing astatine america -- I mean, it's picking up slower, that is heavy weighted connected coatings. So arsenic we get into coating season, we're anticipating that we're going to commencement to spot those volumes prime backmost up and that's why we referenced successful nan 2nd quarter, we'll spot volumes picking up importantly successful each region.

Jeff Zekauskas

Can you conscionable framework a small spot of a grade of measurement contraction successful North America, that bid of magnitude was it 10% aliases 20% aliases 25% aliases 5%? And are you picking up marketplace stock successful Europe successful nan existent quarter?

John Romano

Yeah. So successful Europe, we're seeing a important summation successful measurement from nan 4th quarter. To nan constituent that JF made previously, we're not wherever we were previously, but we are seeing a important increase. And marketplace stock gains, it's difficult to say, I mean, clearly, there's still immoderate accumulation offline. There's immoderate -- location are different competitors retired location that are having much trouble than we are. So location could beryllium immoderate marketplace stock gain, but it's not being driven by price. It's possibly driven by immoderate of nan customer agreements that we person that are much agelong term.

Jean-Francois Turgeon

And I'd say, Jeff, that our sustainable attack being vertically integrated and nan measurement we run our excavation pigment works and our affirmative effect connected nan situation and our estimation pinch our customer is surely helping america maintaining and I'd say, gaining share. And that's evidently a communicative that we usage to our advantage. Specifically, against Chinese competition.

Jeff Zekauskas

And successful nan 4th quarter, what were North American volumes for illustration successful TiO2?

John Romano

North American volumes, I'd opportunity we're down astir apt astir 5% to 10% much than what we would usually spot successful nan 4th fourth downturn. And arsenic we move into nan first quarter, they're moving up, but astir apt not arsenic overmuch arsenic we would person seen previously. And that's again North America was benignant of nan past 1 to slow down and we saw Europe and Asia picking up a spot more. And arsenic we look into nan forecast because we're halfway done nan quarter, we're already getting an denotation from customers and truthful nan 2nd 4th is looking to amended successful each regions.

Jeff Zekauskas

Okay. Thank you truthful much.

Operator

Thank you, Jeff. We now person Hassan Ahmed from Alembic Global. Please spell up erstwhile you're ready.

Hassan Ahmed

Good morning, John and JF. I'm still a small confused astir nan trough net powerfulness of nan company. I mean, from your benignant of commentary, it seems you're benignant of backing distant from nan $800 cardinal to $1 cardinal benignant of guidance you had fixed earlier. But my disorder benignant of stems from, if I return a look astatine let's say, nan Q1 guidance of $120 cardinal to $130 cardinal successful EBITDA you guys person given.

On an annualized basis, that's $480 cardinal to $520 cardinal right? If I return a look astatine your Q4 number, $113 cardinal and factoring nan $60 cardinal of one-offs and annualized that, that’s $700 cardinal and past evidently nan $800 cardinal to $1 cardinal that you guys had talked about. So wherever are we now successful position of that benignant of transverse net potential.

John Romano

So acknowledgment for nan question. Look, truthful erstwhile you deliberation astir -- let's conscionable look astatine wherever we are successful nan -- betwixt connected our guidance, $120 cardinal to $130 million, truthful prime nan mediate of $125 cardinal and statement is retired location for illustration $152 million. So nan $25 cardinal that we had to bridge, we'd opportunity astir $20 cardinal of that is attached to Australia and $5 cardinal of that's attached to South Africa. And of that $20 million, $10 cardinal of that is astir apt EBITDA that would person been attached to zircon income and nan different $10 cardinal is attached to further costs from nan mine. So that would get you to wherever we would beryllium astatine slightest that bridges to consensus.

When you commencement reasoning astir moving into nan 2nd and 3rd quarter, again, you can't, arsenic we've ever said, we don't want you to return nan guidance that we provided and multiplied by 4 because that is good below. I deliberation John made immoderate reference into really you could span to wherever we would be. You deliberation astir what John said connected Atlas by itself. We said $50 cardinal there's immoderate further costs. So $75 cardinal conscionable coming from Atlas for nan twelvemonth because we're not getting that worth that we would person historically wherever we talked astir it being a $50 cardinal positive.

As we get into nan 2nd half of nan year, our margins are going to be, if you -- I'll conscionable opportunity that if you took nan numbers that we're anticipating successful nan 3rd 4th and multiplied them by four, you'd beryllium looking astatine numbers that are wrong our recession case. I don't know, if that JF, if you want to make a comment, but that provides hopefully a small spot much color.

Jean-Francois Turgeon

No, I deliberation that was nan correct way. I dream Hassan, you understand that Atlas was evidently erstwhile we did our recession lawsuit astatine Investor Day, we presume that Atlas Campaspe will beryllium successful afloat cognition and it's not. At nan moment, there's perfectly nary worth from Atlas successful Q1. In fact, location is costs associated pinch Atlas astatine nan infinitesimal because we proceed to tally a excavation that we should person unopen down.

So we person much costs and little value. So that's explained why Q4 and Q1 are beneath our normal recession run. And we dream that look arsenic nan twelvemonth progress, we tin spell moreover supra that. We don't cognize what would nan marketplace do, but we'll beryllium successful a very bully position to respond to nan market. We'll person nan feedstock and nan pigment to meet our customer demand.

John Romano

And possibly conscionable 1 much follow-on. Again, it's a repetition of what John said earlier, erstwhile we came retired pinch that recession case, we we're not anticipating that 60 days later, we'd commencement to spot that recession lawsuit hit. So we're starting from a little constituent now exacerbated by what JF conscionable said. So still judge successful that recession case, it's conscionable going to return a small spot of clip to retrieve owed to nan points that we conscionable noted.

Hassan Ahmed

Understood. And conscionable benignant of carrying guardant pinch that benignant of, telephone it, recession lawsuit and really you guys are modeling it and reasoning astir it successful nan like, arsenic it pertains to free rate travel generation, right? I mean, obviously, contempt each of nan benignant of headwinds and nan like, I mean, $126 cardinal successful free rate travel procreation successful Q4, which is astir $0.80 a share, annualized $3.20 and your stock value is $15 successful change, right?

So I'm conscionable trying to benignant of reconcile really you guys are reasoning astir nan free rate travel procreation expertise of nan institution and really you parlay that pinch stock buybacks because if my -- numbers of me, right? I mean, you guys conscionable bought backmost 2.5 cardinal shares successful Q4.

John Romano

We didn't bargain immoderate shares backmost successful nan 4th quarter. So I'm not judge really you backed into that.

Hassan Ahmed

Say that again? I'm conscionable looking astatine nan stock count wherever it was successful Q3 comparative to what you guys person logged successful Q4?

Tim Carlson

Yeah. The weighted mean shares are evidently are coming down because we did bargain $50 cardinal of shares backmost successful Q1 and Q2, but that's a weighted mean calculation by quarter.

Hassan Ahmed

And really are we reasoning astir buying backmost shares connected a spell guardant basis, peculiarly pinch nan beardown free rate you guys have?

Jean-Francois Turgeon

So we'll proceed Hassan to measure based connected what we expect from nan market. At nan moment, arsenic John mentioned, we are seeing immoderate moving superior that is playing against america specifically, well, successful Q4 it was nan lawsuit and successful Q1 it will still beryllium nan case. And that's playing against america because I mean nan driblet successful request has been truthful beardown that moreover if we're slowing down our pigment works successful our mine, we're not slowing arsenic accelerated arsenic nan demand.

In nan 2nd half of nan twelvemonth though, we will spot a reverse of that and that should thief and we're evidently trying to amended that moving superior usage for nan usage of 2023. And our scheme is evidently pinch nan free rate travel to support dividend and to measure connected an opportunistic basis, if we should salary down indebtedness aliases if we should bargain backmost share. As you know, we person still $250 cardinal approved by nan committee to bargain backmost share. And John, and I are still committed to that attack of utilizing nan free rate flow.

Hassan Ahmed

Very adjuvant guys. Thank you.

Operator

Thank you, Hassan. We now person nan adjacent mobility from Mike Leithead of Barclays. Please spell ahead, whenever you're ready.

Michael Leithead

Great. Thanks. Good morning, guys. First mobility conscionable astir moving capital. I deliberation past 4th you talked astir it perchance being a $200 cardinal positive deed for 2022. It looks for illustration it came successful a batch amended than that, truthful tin you conscionable benignant of quadrate benignant of what nan delta was arsenic 4Q unfolded? There's evidently a batch of moving pieces successful nan 4th quarter.

John Srivisal

Yeah. There are a number of pieces Mike arsenic it relates to our activities successful Q4. One of nan pieces is, we securitized our receivables retired of Australia. We besides did rather a spot of activity successful position of our in installments and collections squad importantly reducing DSOs beneath what we've had previously. They did a awesome occupation astatine nan extremity of nan year. And successful position of managing cash, and we besides sewage a mates much days retired of DPO and collected rather a spot of deposits successful immoderate of our different receivables that we had outstanding.

Michael Leithead

Got it. Makes sense. And past secondly, I conscionable wanted to benignant of travel backmost to rate travel and equilibrium sheet, but possibly from a different angle. I deliberation aft 1Q, you'll beryllium astir 3 times trailing leverage and I guess, it astir apt ticks up a spot successful nan 2nd 4th from our grounds 2Q '22. You laid retired astir $600 cardinal of rate costs done dividends astir $85 million.

Do you deliberation you're going to beryllium capable to money nan dividend from operating rate flow? I conjecture it's benignant of a backmost extremity measurement of asking you to deliberation afloat twelvemonth EBITDA will beryllium supra 685. And past [indiscernible] EBITDA above. [Multiple Speakers] Great. And past excess rate travel should that spell to indebtedness paydown aliases really should you deliberation astir excess rate travel beyond that?

John Romano

So excess rate travel betwixt -- we will look astatine that opportunistically arsenic indebtedness paydown aliases stock buybacks depending upon arsenic we move done nan year. So proceed to beryllium accordant pinch what we said previously.

Michael Leithead

Great. Thank you, guys.

Operator

Thank you. We now person Matthew DeYoe of Bank of America. Please spell up erstwhile you're fresh Matthew.

Matthew DeYoe

Good morning, all. Are you -- for illustration conscionable to deed a small spot connected nan power costs broadside successful Europe, Where does immoderate of nan idled capacity is starting to restart crossed immoderate of your competitors? So are you worried that possibly immoderate of that capacity comes backmost online because little costs but isn't needfully needed by nan market. I'm conscionable benignant of worried astir rampifications to value deflation successful Europe if we spot a large ramp there?

John Romano

Yeah. I'll besides make a remark and I'll fto Tim do that. Look, truthful there's been a batch of capacity that's been slowed down successful nan 4th fourth and moreover successful nan 3rd 4th owed to precocious power costs. There wasn't -- whether aliases not that capacity really goes down complete time, that's yet to beryllium seen, but we did expect arsenic power started to abate a spot that we'd spot that capacity travel backmost online. So I'd opportunity nan short reply is, it wasn't an rumor earlier we don't expect that to beryllium an issue. We expect request to commencement to prime backmost up.

As we mentioned, Europe, we're seeing a beardown betterment again, it's not arsenic beardown arsenic we had been previously, but we would expect immoderate of that measurement that's being brought online to beryllium offset by immoderate of nan exports that were coming from China into Europe, location was a important summation successful nan 4th fourth of exports from China into Europe and now pinch nan China system picking up, we would expect immoderate of that's going to enactment successful country. We talked generically astir pricing. Pricing successful China, retired of China and successful China is moving up We saw astir $150 summation successful our pricing connected China and we would expect that to proceed to move up.

So Tim, I don’t know, if you want to make a comment.

Tim Carlson

The different remark I'd for illustration to make that Matthew arsenic it relates to energy. Energy was astir 12% of our costs of merchandise successful 2022. We spot that coming down to 11%. So a small spot of moderation, but not a lot. It ranges from 4% to 20% that depending connected our facility, nan highest costs are evidently successful nan UK. When we do nan modeling of our UK facility. Yes, we do person immoderate benefits, but they're not important comparative to nan important increases we saw successful '21 and '22. Some of nan modeling that we've done successful position of competitory costs per ton power prices that person to autumn significantly, we judge for location to beryllium immoderate imaginable marketplace unit connected us.

Matthew DeYoe

All right. That's helpful. And then, I conjecture if I were to deliberation astir conscionable wide costs ostentation for 2023, that number was astronomical past year. But, you know, I deliberation nan aged rhetoric was normal years, $40 million, truthful wherever are we? Is it $80 million, obviously, you've sewage $25 cardinal coming successful from Atlas again. But what do you deliberation nan bogey is for this year?

Jean-Francois Turgeon

Look, Matthew, obviously, what we'll spot is much benignant of level to 2022. For 2023, we would evidently person liked to spot it going down but that's not what we're experiencing astatine nan moment. You're perfectly right. I mean, location was a immense jump from ‘21 to ‘22. And remember, I mean, if you spell each nan measurement to 2020, I mean, we saw much than $400 cardinal of summation successful those 2 years. But what we're expecting for ‘23 is much of a level position to what we had arsenic a origin successful '22.

John Romano

And we would expect, first, 2nd quarter, not seeing arsenic overmuch move connected raws, but we'll commencement to spot that move much apt successful nan 3rd and nan 4th quarter. So I deliberation that level number includes immoderate further fixed costs absorption and costs attached to what's happening successful Australia. So connected mean flat, but successful immoderate different areas, it's down and that further costs that we talked astir is, what's benignant of getting america to that flattish number for ‘23.

Matthew DeYoe

Thank you for that.

Operator

Thank you. We now person John Roberts of Credit Suisse. Please spell up pinch you are ready.

John Roberts

Thank you, and champion wishes, Tim. You mentioned China is picking up. There's immoderate statement astir whether nan China betterment will beryllium chiefly a services betterment and not materials. Could you springiness america a consciousness station Lunar New Year wherever nan orders are versus a twelvemonth ago?

Tim Carlson

Yeah. So it's a bully constituent connected Lunar New Year because what I would opportunity successful January, our volumes were down successful China, astir apt 50% little than what we would person seen successful nan anterior 4th quarter. And arsenic we get into February and March, we're starting to spot those numbers up possibly 40%, 50% from wherever they were successful January. So we're starting to spot that recovery.

Good mobility connected whether aliases not that's a work manufacture aliases not, but there's our sentiment and based connected what we're seeing successful nan marketplace correct now, is that request successful China is starting to prime up. Pricing successful China is starting to move up. We would expect that we'll proceed to spot value increases moving into nan 3rd 4th from China.

And remember, we person a works there. It's not a ample facility, but we person a bully grip connected what's happening. So I deliberation it’s still juries retired connected really overmuch of that work industry, but we are seeing a pickup successful request which is being reflected successful nan forecast arsenic we talked astir that -- portion of that is helping america arsenic we move done Q2 and Q3 to get backmost to much normal hopes.

John Roberts

And past connected your uncommon world initiative, nan world's been worried astir China's power for decades. Was location thing successful nan past that kept you from exploring that opportunity?

Jean-Francois Turgeon

I deliberation John, what I would opportunity is, nan truth that nan world is interest astir China create nan opportunity astatine nan infinitesimal for us. Because there's liking from government, because our excavation are situated successful Australia and successful South Africa, and that worldly could beryllium upgraded without having to spell to China, that's wherever nan liking is coming astatine nan moment. And look, we evidently are stockpiling that worldly for a fewer years now. So we person accumulate worldly and we person a bully reserve of this, look, we're trading it.

And arsenic John mentioned, we're getting immoderate gross retired of it and this is moving astatine nan accelerated pace. But nan worth would really be, if we ore that tailing into monazite and if we ore that monazite into uncommon earth. And we're doing immoderate activity and we are doing immoderate laboratory tests and upgrading and we're processing if you want a scheme to create existent worth for our investor retired of that. And we deliberation that it's a bully fresh pinch our existing business.

John Romano

And we've been trading tailings for years. I conjecture nan reality is, nan Chinese had been very tin of controlling finance into nan uncommon earths by manipulating nan price. And to JF's point, there's a batch of liking now that's retired there, which is allowing america to really get much value. Those monazite streams for 2024 are going to beryllium much aliases those uncommon world streams are going to beryllium much worthy for illustration $40 cardinal to $50 cardinal for us.

So it's a important uptick and we spot that there's upside. It's a earthy hold of what we presently do pinch our mines. So we're going to proceed to measure what that opportunity will be. And I will opportunity that there's evidently immoderate liking successful immoderate of nan governments arsenic JF mentioned connected trying to get america to thief possibly velocity that up a bit.

Jean-Francois Turgeon

Yeah. And John, I dream it's clear that we're still trading tailings astatine nan moment. We're not concentrating thing yet, but that's nan plan. And that's wherever you really commencement to adding worth erstwhile you move from tailing to monazite and erstwhile you move from monazite to uncommon earth.

John Roberts

Thank you.

Operator

Thank you. We now person adjacent mobility from nan statement of Vincent Andrews of Morgan Stanley. Your statement is now open. You whitethorn proceed.

Will Tang

Hey, guys. This is Will Tang connected for Vincent. Thanks for taking my mobility here. Just a speedy 1 for me. I cognize you guys talked astir your expectations for earthy materials benignant of extracurricular of TiO2 feedstock briefly. But I'm wondering if you could spell into much item astir that and I conjecture much specifically astir your chlorine cost?

John Romano

Yeah. Look, truthful I'll touch connected chlorine costs astatine slightest successful North America because that's personification that seems to beryllium spotlighted. Chlorine costs is intelligibly thing that we walk a batch of clip on. I'll conscionable opportunity generically that we haven't seen a pullback connected chlorine astatine this peculiar stage. We don't expect a important uptick from nan anterior year.

And we proceed to look astatine opportunities to effort to maximize nan use that we could get from nan chlorine usage that we person pinch regards to really we usage it and really we devour that. In nan remainder of nan world, chlorine, it's an impact, but North America is nan 1 that has nan biggest return effect pinch regards to ostentation that we've seen successful nan past 2 years.

Tim Carlson

That's spot on, John. Significant increases successful 2022 to nan tune of $40 cardinal and conscionable a mates of single-digit cardinal is what we're expecting successful ‘23 for nan year.

Will Tang

Got it. Thank you, guys.

Operator

Thank you. Our last mobility from nan telephone statement comes from Roger Spitz pinch Bank of America. Please spell ahead, erstwhile you are ready, Roger.

Roger Spitz

In March 2022, you entered a $75 cardinal AR securitization facility. It looks for illustration you sold those $75 cardinal receivables and you derecognize them from your equilibrium sheet. These look for illustration U.S. receivables. On past quarter's calls, I guess, conscionable a fewer minutes ago, you said you'd entered $125 cardinal ARR securitization solely, which were Australian and receivables.

So nan bully mobility I person is, these are 2 different facilities. So you -- and you've presumably sold nan $125 cardinal arsenic of December 31. So astatine nan extremity of nan year, you've sewage $75 cardinal of sold and derecognized U.S. receivables and past $125 cardinal sold successful derecognized Australian receivables. Do I person that knowing correct?

Tim Carlson

Close Roger, conscionable to fto you cognize that nan accommodation themselves, they are lengths, but they are 2 abstracted facilities. The installation successful nan U.S. is $75 million. Facility successful Australia is $125 million, truthful a full of $200 million, but we only had $147 cardinal disposable arsenic of nan extremity of nan year. Because of nan important drop-off successful income owed to destocking. We do expect to retrieve a important chunk of that arsenic income proceed to retrieve successful Q2, Q3 and Q4 and those accommodation should beryllium utilized earlier nan extremity of 2023.

Roger Spitz

Got it. So conscionable to make judge I understood, $147 cardinal of mixed accommodation was sold astatine nan extremity of nan twelvemonth and derecognized from nan equilibrium expanse arsenic of December 30?

Tim Carlson

Correct, pinch nan full readiness of $200 cardinal arsenic revenues recover.

Roger Spitz

Right. Thank you very much.

Tim Carlson

Thank you, Roger.

Operator

Thank you. We person nary further questions successful nan queue. So I'd for illustration to move nan telephone backmost to Mr. Turgeon for immoderate closing remarks.

Jean-Francois Turgeon

Brica, convey you, and convey you everyone for joining nan telephone today. As we participate into 2023, we will support a relentless attraction connected sustainability and safety, proceed to align accumulation pinch customer request and prudently trim costs accordingly, negociate our cardinal superior task without losing show of nan agelong word use to Tronox including reducing our costs per ton and make free rate travel crossed immoderate economical scenario. That reason nan telephone and convey you everyone for listening. Have a awesome day.

Operator

Thank you each for joining. That does reason today's call. Please person a beautiful day, and you whitethorn now disconnect your line.

Editor: Naga



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