John Romano: Yes. So, for 2024, we’ve still got about $20 million to spend. So, we’re going through some additional launches of S/4HANA in Asia-Pacific as early as July of this year. So, we’re still working through that process. And I don’t know John you maybe talk a little bit more some of the upsides as far as what we’re seeing an opportunity. But there are — we think about automated process control toys, which is Tronox’ operational information system. All those things are being utilized to extract more out of our assets. I think early on there was a fair amount of additional value that was coming from volume which we haven’t seen yet. So, we would start to see that. I’d say probably more towards the end of this year and early into next. But John?
John Srivisal: Yes. John that’s exactly right. I mean we still do believe in the benefits that we’re going to see from Neutron. We quoted it historically $150 to $200 per tonne. And a big portion of that — we did capture already from procurement savings although that was masked by the significant escalation we’ve had over the past couple of years. But from a volume perspective we said those are on hold. But frankly we think that some of those benefits will accelerate as we are bringing up our assets. So, we do expect to still be within that range. Obviously, we only have deployed as John mentioned in Asia-Pacific. So, we will need to — from a systems perspective, but we have deployed from some of the other operating enhancements at multiple sites. So, we do expect to see those benefits from a volume perspective.
Jennifer Guenther: And this is Jennifer. Just if I can add. We are seeing benefits at a site level from the deployment of some of the technologies like automated process control. So, for example we’re seeing reduced coke consumption in our chlorinators. When you look at a like-for-like comparison on the volumes produced, it’s just a bit masked because of the low run rates that we’re operating at. But for example this did have a positive effect on our GHG emissions. It reduced our intensity because we’re more efficient for the tonnes we’re producing. So, we are capturing benefits, not all of them necessarily on the P&L. We’re seeing them on the sustainability side of the business. But as we ramp our assets back up, we would expect to consume lower raw materials like coke in our chlorinators per ton of PO2 and this should translate to benefits on the P&L.
Jeff Zekauskas: So, the spending is essentially done or the $20 million more to go something relatively small, but as you ramp up, we should see the benefits. Is that the general–?
John Romano: Yes, that’s correct. And just to Jennifer’s point I mean the whole idea about that one automated process control on our chlorinators, we have 24 across the system. And last year I think we finalized the implementation of all of that across the entire system. So, again as we start to ramp up the assets we’ll start to get a lot more of that value as Jennifer noted.
Jeff Zekauskas: Maybe if I can sneak in one question. Can you talk about what’s going on with chlorine prices and what you expect for the year?
John Romano: So, what I can say is that our chlorine prices have continued to move in a positive direction on the downside. So, chlorine is very different depending upon the region. So — in Saudi Arabia, we make our own chlorine. In Australia, we have a lot of purpose-built plants. But in North America, we buy merchant chlorine and we’ve seen what I would say is a significant reduction in Q4 and in Q1 on chlorine prices, which is going to have a positive impact as well.
Q – Jeff Zekauskas: Okay. Great. Thank you so much.
Operator: Your next question comes from Mike Leithead with Barclays. Please proceed with your question.
Q – Mike Leithead: Thank you. Good morning, guys. First question, what are you expecting from a zircon pricing outlook?
John Romano: So, I think I mentioned in the previous — or in my prepared comments for the fourth quarter or the first quarter, we saw a rollover on pricing. So there was actually a slight bump up in price from Q1 — from Q4 to Q1, but that’s all mix. So in the first quarter, we’re seeing flat pricing and look a lot of it is going to depend on how the market continues to evolve. July of 2023, was a very low point, but that was the bottom and we’ve seen the market continue to improve. Q1 — our Q4 sales were up 82%. We forecasted in the prepared comments 15% to 30% additional increase in the first quarter, that big swing has a lot to do with whether a big bulk shipment is actually going to go this quarter or not. All of that growth is on the back of not much growth in the ceramic industry in China, which is about 50% of the market.
So we’re seeing the market recover. We believe that destocking has run its course. Customers are buying again, and we’re starting to see an uplift, even in China and the nonceramic applications, we started to see restocking occur. So we believe destocking has run its course there as well. So, all of that would indicate that as we move through the year, we should start to see positive movements in zircon pricing, but it’s a little bit too early to provide a clear forecast on that yet.
Q – Mike Leithead: Great. Thank you. And then again, I apologize if I missed it, but — what’s the latest update on Jazan? Or are you still expecting to get the full repayment in kind? And was the technical service agreement extended again? Or do they roll off?
John Romano: Yes. So, look we’re still working with Jazan. The debt is due in January of 2025. We continue to get slag in lieu of — and that slag is actually going towards the payment of the debt, and there’s not much change in our agreement, with them at this particular stage. So, still continuing to work with them. And the slag that we’re getting is largely going down to pay down debt.
Q – Mike Leithead: Okay. Thank you.
Operator: Your next question comes from Hassan Ahmed with Alembic Global. Please go ahead.
Q – Hassan Ahmed: Good morning, John and JF.
John Romano: Good morning.
Q – Hassan Ahmed: Quick question around the cost curve, the global cost curves as you see them right now. I mean look as I sort of sit there and think about the EBITDA margins that you guys just reported in Q4, call it 13 and change percent. Obviously, down from Q4 of 2022 levels of north of 17%, 17% plus in Q3 I mean, I’d like to thank you guys being as integrated as you are, obviously, and you talk about this as well enjoy sort of a margin premium relative to your competitors globally. So I’d like to think, that there’s a large chunk of the industry that is at breakeven to maybe even negative EBITDA margin, right? And then I sort of sit there and think about the guidance that you’ve given for 2024, of mid-teens EBITDA margins.
I mean does that get — if the industry moves in that direction, I mean are you sort of guiding to the industry beginning to make sort of positive EBITDA margins. I mean, I’m just trying to get a sense of where the industry is, are these sort of breakeven to negative margins sustainable for the industry? And maybe potentially are you being conservative, in giving the margin guidance that you guys have given?
John Romano: Thanks. Look the guidance that we gave for mid-teens was for Q1. And I think, we got a question a bit earlier about where do we see the business moving a lot of that margin — let’s just say price doesn’t move, which we’ve said we expected to, but if price didn’t move. Our margin is going to improve as our capacity increases. And by mid-year we would expect that our EBITDA margins will be back in the 20s. We ran 18 months — 18 quarters in the mid- to high 20s. So just put pricing aside running our assets, because of our vertical integration is actually going to do just exactly what you said, it’s going to get us to normalized EBITDA margins. On our competitors, I’m not going to speak to them, but they’re publicly — their information is publicly available.
I wouldn’t disagree with the comments you made. I do believe that, the Chinese are in that similar boat, with not making significant EBITDA margin anywhere. We believe the majority of them are losing money. So we believe our margins are going to improve and 2024 is going to be a much better year and ultimately, where we are as an industry is not a sustainable place to be. Negative EBITDA margins don’t — you can’t do that for very long, because people don’t have balance sheets to support that.
Hassan Ahmed: Fair enough. And as a follow-up, if I could revisit, the whole sort of European Commission antidumping side of things. I mean, is it fair to assume whatever direction the final ruling takes. I mean, is it fair to assume that it’s almost like 200,000 to 250,000 tons of sort of material that is up for grabs and that could potentially entirely go towards the Western producers?
John Romano: Yeah. Look, I guess up for grabs is a way to look at it. But if I’m a Chinese producer, I mean, the other option would be for them to raise their price. But once the duty is in place, I think that that is going to drive some different behavior for sure. And — it’s early days. Like I said, the formal investigation won’t end until the first quarter — end of the first quarter, and then it will typically be the end of the year, before the process is complete. Provisional duties could come sooner than that. So we’re just kind of — again, this was something that was led by a coalition of suppliers. So we don’t — it’s not like we have exact data on what’s happening, but we do have a pretty good feel on a pretty good idea of where we are in the process.
It’s just a bit early to determine what that duty is, and if it’s going to get implemented. But if it were to yes, I would definitely think that, there’s going to be some volume shift, and some pricing opportunity.
Hassan Ahmed: Perfect. Thank you so much.
Operator: Your next question comes from Vincent Andrews with Morgan Stanley. Please go ahead. Vincent Andrews, your line is open. Your next question comes from Roger Spitz with Bank of America. Please go ahead.
Roger Spitz: Thank you, and good morning. Two questions. The first one is for 2024 in addition to EBITDA CapEx what have you that you’ve identified when I refer to as other free cash flow items you identified a potential $50 million insurance recovery. Are there any other so-called other cash flow items for 2024 that we should think about whether restructuring or other items in your operating cash flow?
John Srivisal: No. Roger, we don’t have anything forecasted or expected at this point other than the insurance recovery that you mentioned.
