Aaron Rosenthal

Aaron Rosenthal asked for clarification on Tronox Holdings' definition of free cash flow (cash from ops plus CapEx) and the expected cash restructuring charges for 2026. He also inquired about the company's liquidity position, particularly after Q1 and into Q2, and whether additional sources of liquidity were being considered, given the perceived tightness. Finally, he asked about the expectation for renewing and extending a smaller facility (around $50-60 million) due for renewal in 2026.

Answer

SVP and CFO John Srivisal confirmed that free cash flow is defined as before dividends and other debt movements. He stated that the majority of Botlek restructuring charges were in 2025, with about $6 million remaining for 2026, and Fuzhou related charges expected to be around $15 million, resulting in over $50 million year-over-year cash improvement. Regarding liquidity, Srivisal asserted that $674 million at year-end is strong and sufficient, well above the comfortable operating level of $200-300 million for Q1, and no additional sources are being considered. He also confirmed the expectation to renew and extend smaller facilities in the U.K. and Saudi Arabia annually.

Aaron Rosenthal asked for clarification on Tronox's definition of free cash flow and the expected cash restructuring charges for the year. He also raised concerns about liquidity being very light after the Q1 cash burn and inquired about potential additional sources of liquidity, as well as the expectation for renewing smaller credit facilities in 2026.

Answer

CFO John Srivisal confirmed that free cash flow is defined as before dividend and other debt movements. He stated that the majority of Botlek restructuring charges were in 2025, with about $6 million remaining, and Fuzhou-related charges are expected to be about $15 million, resulting in over $50 million year-over-year cash improvement. Srivisal asserted that Tronox ended the year with $674 million in liquidity, which is considered strong and sufficient, noting they can operate with as low as $200 million and prefer to enter Q1 with over $300 million. He expressed confidence in generating significant free cash flow after Q1 and confirmed that smaller facilities in the U.K. and Saudi are normally renewed annually.

Aaron Rosenthal asked for context on the '2x normal' Q4-to-Q1 volume uplift in Europe and how Q2 growth compares. He also inquired about the duration of inventory coverage for Botlek's volumes and which plants would ultimately backfill the production.

Answer

CEO John Romano clarified the Q1 uplift was abnormally large and driven by share recapture post-duties, with Q2 showing continued but less dramatic sequential growth. CFO John Srivisal and Romano stated they can service customers immediately from pre-built inventory, with future volumes to be supplied primarily from their other facilities in Europe, Australia, and Saudi Arabia, which have available capacity to ramp up.

Aaron Rosenthal of JPMorgan Chase & Co. asked about the balance sheet, noting the revolver draw, and questioned if future cash shortfalls would be covered by more borrowings or new debt issuance.

Answer

EVP & CFO Phil Lister confirmed that no new debt issuance is planned for the second half of the year. He stated the company will focus on cash generation and manage within its credit rating, noting that cash flow over the last twelve months has covered the dividend.

Aaron Rosenthal of JPMorgan Chase & Co. sought to confirm details on the international rig drop, asked about the broader activity landscape in the Middle East, and requested quantification of near-term rig demand in the Haynesville.

Answer

CFO Carey Ford confirmed the international situation involves a single rig suspension in Saudi Arabia, which is part of a broader trend by the customer. Regarding the Haynesville, he stated that while bidding is active, he anticipates activating '1, 2, 3, 4 rigs in the next couple of months,' not the full fleet of 10 idle rigs in the region.

Aaron Rosenthal inquired about the contracting prospects for Noble's Tier 1 drillships and the factors influencing the wide dayrate range for 6th-generation rigs amid current market softness.

Answer

President and CEO Robert Eifler responded that there is an abundance of work being discussed for Tier 1 drillships, primarily with 2026 start dates across the 'golden triangle'. For 6th-gen rigs, he explained that dayrates are determined by specific technical needs, with a wider discount applied when competing against 7th-gen assets. He emphasized that asset quality will be the key differentiator during the current market 'air pocket'.