Good day, ladies and gentlemen, and welcome to the Tronox Limited Second Quarter 2016 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host for today, Brennen Arndt, Vice President of Investor Relations. You may begin.

Thank you and welcome, everyone, to Tronox Limited's second quarter 2016 conference call and webcast. With me today are Tom Casey, Chairman and CEO; and Kathy Harper, Senior Vice President and CFO. Joining us for the Q&A session will be Jean-François Turgeon, President of Tronox TiO2; and Ed Flynn, President of Tronox Alkali. We will be using slides as we move through today's conference 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. 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 2015 Form 10-K and our quarterly report on Form 10-Q for the quarter ended March 31, 2016. 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, including EBITDA, adjusted EBITDA, free cash flow and adjusted earnings per diluted share. EBITDA represents net income before net interest expense, income tax and depreciation, depletion, and amortization expense. Adjusted EBITDA represents EBITDA as further adjusted for non-cash unusual and non-recurring items. Free cash flow represents cash flow provided by or used in operating activities less capital expenditures. Adjusted earnings per diluted share represents EPS adjusted for unusual or non-recurring items on a fully-diluted basis. A reconciliation is provided in our earnings release. I also want to note that the presentation format of our earnings release issued yesterday…

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

Morning, Tom. Thomas J. Casey - Chairman & Chief Executive Officer: Morning, Hassan.

Tom, obviously, you guys as well as a bunch of participants in the industry had announced price hikes for Q2 and Q3. Just wanted to get a sense – I know you've talked about sort of sequential percentage moves and the like, but could you just give a sense of what the price realizations actually look like in Q2, and early days in Q3, but where they're headed in Q3? I mean, is $75 to $80 a ton worth of realizations in Q2 kind of a fair guesstimate? Thomas J. Casey - Chairman & Chief Executive Officer: I'm sorry, I didn't hear the part about what was – is what a fair estimate?

$75 to $80 a ton, Q1 to Q2 in terms of incremental price. TiO2... Thomas J. Casey - Chairman & Chief Executive Officer: Higher. Higher than that.

Yeah. Higher than that. So I mean, ballpark what are we looking at for Q2, what are the early signs for Q3? Thomas J. Casey - Chairman & Chief Executive Officer: Look, we haven't announced exactly. But I would say, over – around or over, slightly over 5% Q2 over Q1 and Q3 over Q2 is going to be around the same. And we haven't announced yet for Q4, Tronox has obviously and yet – we have not yet, but as for Q2 and Q3, I would use those kind of numbers.

Got it. Now, moving on to the Alkali business. As I take a look at the EBITDA margins, Q2 2015 around 24%, Q1 2016 around 18.4%, and then Q2 2016 13.5%, right? So, clearly some volatility there. You talked about some sort of cost deflation. I would imagine that the cost curve sort of relative to the last few quarters flattened out a bit as this cost deflation occurred. Just wanted to get a sense of – you guys are obviously the lower-cost producers. You are at the bottom left of the cost curve. I mean, if sort of input cost remain where they are right now, what sort of sustainable EBITDA margin levels should we be thinking about as far as your Alkali business goes? Thomas J. Casey - Chairman & Chief Executive Officer: Okay. Let me – I want to reiterate the point I made in the main presentation, Hassan, about the Q2 had a substantial number of one-offs, non-recurring – the longwall mine move, that's a big deal, costs us probably $4.5 million. The transition off of the transition services agreement that FMC was providing us in IT to our own system involved some consulting costs, some people. That transition has now happened. Those people are now – consultants are now gone. There was some hardware there, too, but that's all obviously bought. When you prepare for labor negotiations in an environment where 650 of your employees are basically going to be covered by the negotiations, you have to build some contingencies. So, we hired some specific people in to handle the negotiations with us and to advise on strategy. We brought in supplies. We built contingency stocks. We did those kind of things. All of that labor costs – labor and associated costs that were done with respect to the negotiations are now done, obviously. We negotiated the contract successfully. All of those one-offs amounted to probably 4 point to 5 points of margin, and so that will immediately go back. So, when you think about quarterly margin, I would add that, the 5 points to that, that stuff all costs us.

So, call it, easily in the high-teens, maybe close to 20% sustainable EBITDA margin? Thomas J. Casey - Chairman & Chief Executive Officer: I think – yeah. I mean, look – I mean, Ed is sitting across the table from me and I keep mouthing 20%-plus and he keeps mouthing high-teens. So, let's split the difference and say, about 20%.

Understood. Very helpful, Tom. Thank you so much. Thomas J. Casey - Chairman & Chief Executive Officer: Okay, Hassan.

Thank you. And our next question comes from Edlain Rodriguez from UBS. Your line is open.

Thank you. Good morning, guys. Thomas J. Casey - Chairman & Chief Executive Officer: Good morning.

Quick question (37:20). I mean, when you look at TiO2, volumes have been much stronger than normal when we're looking at significant – much higher than GDP and so forth. One, are you seeing a lot of – I mean, I guess, I'm not sure if you can tell – are you seeing a lot of restocking going on? And how will that impact volumes in 2017? And could that put some pressure on price and (37:46) from going high? Thomas J. Casey - Chairman & Chief Executive Officer: I think that Q1 and Q4, which had demand growth rates in the 7%ish, 8% range probably had some restocking in it. But I think if you look at the paint and the plastics businesses, they're doing very well. They're selling lots of gallons. Housing, which is a significant market for them, is doing well. Stocks are up. Sales are up. So, I'm not claiming that there is a new normal of 5% or 7% growth rates as we saw a couple of quarters ago, but I also think that growth is strong, and I think it's going to stay strong through the year. We now believe that we are going to sell essentially every ton we can make in pigment as well as in Alkali. And as I mentioned in the quarter – in the second quarter, we were running our plants at mid-90% utilization rates and our inventory levels went down. So, we think that we'll continue to produce strongly in the third quarter and sell everything we make. We don't think we'll build inventories in the third quarter at all. We think in the fourth and first quarters that demand – as I said, demand usually softens on those quarters, but it's not going to be a significant impact on price, and we think going into 2017 demand stays strong and price continues to rise. We do not expect to see price increases at the level that we saw in 2010 that would be – we think those were caused by artificial forces of government stimulus programs and things like that. But we still are at price levels that are not producing adequate returns for us, and we think demand is strong across the world. As I said, we think China supply is actually going to shrink as a percentage of global sales over the next of couple of years. So, we think that the pigment business is inflected in the second quarter, is heading up and is very strong.

Okay. Thank you. And one quick one on zircon. I guess the prices have been moving up a little bit. I think yourself and others are trying to increase price by $60 a ton or so. Can you give us some status on that and also just overall supply and demand balance there that crude oil producers should (40:18) get that price increase? Thomas J. Casey - Chairman & Chief Executive Officer: We think that – we've seen price increase announcements. We have negotiated, I believe, all of our third quarter price delivery agreements, and as I mentioned, I thought that there was a decline in the – no, I didn't think. There was a decline in zircon prices in the second quarter. We didn't see that for the third quarter contract. So...

Okay. Thank you very much.

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

Thank you, and good morning. I know you don't report this way, but can you speak to whether the TiO2 pigment business itself was EBITDA positive in Q2 2016, and what about Q1 2016? Thomas J. Casey - Chairman & Chief Executive Officer: You're right, we don't speak to that. And the reason that we don't is we operate the business as the segment, because through the vertical integration of feedstocks into the pigment operation, in order to report the way you've just asked, we'd have to make some assumptions about feedstock costs. So, we just don't do that. You know what – we run our business as a segment. I want to know does the pigment segment, as a whole, make money. That's what JF and the team work towards as their goal. So, the answer is no, basically. Sorry.

Are you – I understand. Are you seeing, on your merchant slag and natural rutile sales, customers ordering well ahead of their run rate on their annual contractual commitments, as we've heard other mineral sands producers comment recently? Thomas J. Casey - Chairman & Chief Executive Officer: I think we've pretty much changed our model of merchants. So, we don't have very many merchant sales in the slag business. We have none in the synthetic rutile business. And we don't have any natural rutile sales into the pigment market. We have some into the welding market and other non-pigment market. So, we're running our slag production to feed ourselves. We had some slag in inventory that we sold in the second quarter, we might sell a little bit more as the year goes on depending on the price. But we're not a good – we're not the best source of the dynamics in the slag market anymore, because now we're holding a very disciplined position with respect to slag sales at current market prices, because we know we can consume it ourselves and we're happy to do that.

Okay. Lastly, any view of where your net leverage might end up at the end of this year in December? Thomas J. Casey - Chairman & Chief Executive Officer: I mean, it will be down. We picked up – I think we reported that we bought some bonds in the first quarter. We have the capacity to buy more if we want to. We can prepay with – on the term loan. So, I think that it will be – we said we'll be free cash flow positive in the year. But we will be down from today, but this will not be the year of big incremental reductions. The next few years we think are going to be significantly greater reductions in the debt than 2016.

Thank you very much. Thomas J. Casey - Chairman & Chief Executive Officer: Yeah. Thank you.

Thank you. And our next question comes from Karl Blunden from Goldman Sachs. Your line is now open. Derek Ching - Goldman Sachs & Co.: Hey. Good morning, guys. This is Derek Ching on for Karl. Thomas J. Casey - Chairman & Chief Executive Officer: Good morning, Derek. Derek Ching - Goldman Sachs & Co.: The first question I had was on – yes, good morning – was on TiO2. But for your volumes this quarter, you obviously saw a nice pickup in North America, Asia. But why didn't we see the same sequential pickup in Europe and LatAm? Thomas J. Casey - Chairman & Chief Executive Officer: Let me ask JF that. JF is here. JF? Jean-François Turgeon - Executive Vice President: Yeah. What happened is you know that in Europe we have our smaller pigment plant and we had a shutdown schedule in Q2, and it took a little bit longer than expected. So, we basically didn't had the material available, that's why. Derek Ching - Goldman Sachs & Co.: Got it. Okay. And then just switching over to the Alkali... Thomas J. Casey - Chairman & Chief Executive Officer: I'm sorry. Go ahead. Yeah. Go ahead. Derek Ching - Goldman Sachs & Co.: Yeah. Switching over to the Alkali business. I know you said you experienced some inflation on the OpEx side. So, what are the main drivers there and how should we think about whether that continues going forward? Thomas J. Casey - Chairman & Chief Executive Officer: Ed?

I think you're referring to, when we talked about the quarter-over-quarter maintenance issues, we had some issues related to one of our hoists that a job that started in the fourth quarter and then continued longer than we wanted, and that job was completed in the second quarter. There's a little of work that – tune up work that we need to do in this month and then that would be behind us. And then, we had some more quality issues only related to our Sesqui plant, which is a unique process. It's the only Sesqui process in North America and maybe one in China. And so, the magnesium levels were higher, didn't affect quality or output, but affected our efficiency. So, we've worked past that and that should be behind us for the rest of the year. Derek Ching - Goldman Sachs & Co.: That's very helpful. That's it for me. Thanks. Thomas J. Casey - Chairman & Chief Executive Officer: Okay.

Thank you. And our next question comes from Dustin Shapir from Oak Hill. Your line is open.

Hi. Thomas J. Casey - Chairman & Chief Executive Officer: Hi.

So, excluding the $9 million of non-recurring expenses for your soda ash EBITDA, EBITDA was still down in roughly around $13 million, pushed (46:25) back at around $4 million of that from the loss in revenue, what exactly explains that other $9 million and how much of that is going to reappear in the third quarter? Thomas J. Casey - Chairman & Chief Executive Officer: I'm sorry. Just to make sure I understand. You're calculating the difference, a year-ago number?

Yeah. 2Q – exactly, I'm calculating a $13 million – I'm backing out that $9 million of non... Thomas J. Casey - Chairman & Chief Executive Officer: Okay. Okay.

...non-recurring expense. There's the delta of $13 million and I'm assuming, okay, well, revenue is down by $4 million, let's assume 100% for – just make that assumption, there's another $9 million of additional expenses or cash cost this quarter. Thomas J. Casey - Chairman & Chief Executive Officer: Some of that was as – well, Ed, why don't you take the gentleman through that.

Yeah. I mean, we talked about the non-recurring $9 million. I just spoke about the unscheduled maintenance items.

Okay.

Okay? So, that's the piece of it. Price is a big piece of it, particularly export price quarter-over-quarter, right? So, 2015 to 2016. And then, the other – the final piece is just year-over-year cost changes, that all net out; payroll increases, favorable energy, inflation-adjusted items.

And how much of that is from higher freight cost?

There is some higher freight cost in our netback on our ANSAC. So, that would show up a little bit in our price – our netback price. So, our return on the export business.

Got it. Okay. So, of that $9 million, thinking about the third quarter, how much – I mean, it sounds like there are some (48:20). So, how much of that should be in the third quarter?

I would think the price will continue to be there in the third quarter. Right? We expect...

I'm just talking about cash, costs or expenses. Thomas J. Casey - Chairman & Chief Executive Officer: I'm looking at some data. The year-on-year cost changes and payroll inflation netted against some energy price increases is about $4 million.

Excellent. Very helpful. So, we should – thank you very much, sir. Thomas J. Casey - Chairman & Chief Executive Officer: There were some mix changes in there, but that can vary quarter-to-quarter. And the – I'm looking now. We have a new set of – you want to do that? Can you explain that? Look, I think a lot of this – I mean, there's a lot of mix, there's some volume we talked about. There's some price we talked about. There was some mix we talked about. There's couple of one – $9 million in one-offs as you pointed out. But I would say $4 million year-on-year cost changes were about payroll inflation, and that's some net – net of some benefit in energy. So, think of it that way maybe.

And was that payroll inflation, was that during the first quarter or was there step-change in the second quarter? Thomas J. Casey - Chairman & Chief Executive Officer: One of the things that we're seeing out there is that there's some significant hiring going on out at the Alkali business in Green River. I think we normally would hire about 40 or 45 people in that business just from attrition. There's about 1,000 employees in the business unit, there's about – normal averages were 40, 45ish, and we had some turnover as a result of retirements, and people – anytime there's a acquisition, there are some people who will move out just because they don't like the uncertainty leading up to the union negotiation. There was some retirements as people thought that pensions would be on the table. And so, those things tend every once in – when you have the combination of an acquisition and a renegotiated contract, retirements will spike up. And I think instead of 40 to 45, we probably had 80, 85 this year. So, some of that payroll is about those new people filling jobs and moving to Green River and all that sort of stuff. We expect that the attrition rate will tend back towards normal levels now that the acquisition is behind us, the labor contract renewal is behind us. And so, I would expect that some of that will come off.

Excellent. Thank you. Thomas J. Casey - Chairman & Chief Executive Officer: Yeah.

Thank you. And our next question comes from Owen Douglas from Robert W. Baird. Your line is open. Trelford Owen Douglas - Robert W. Baird & Co., Inc. (Broker): Hi. Good morning, guys. Wanted to ask a little bit about working capital second half of the year. What are your thoughts in terms of how that's going to play out? You mentioned in the fourth quarter, you guys are going to be prepared to help maintain kind of price discipline in the industry by potentially taking off inventory. Katherine Carolyn Harper - Chief Financial Officer & Senior Vice President: This is Kathy Harper. Good morning. The second half working capital, we're continuing to drive the discipline. As JF had mentioned or Tom had mentioned, we will continue to manage finished goods inventory on the pigment end. And so, we may see a bit more increase just on the finished goods pigment. Everything else, we're managing very closely. As a fully integrated business, we can drive feedstock and raw materials down. We can manage MRO and everything else. So, we do expect to continue to see some benefit net-net overall in inventory, but not finished goods for pigment because that's the piece we are already below normal seasonal levels. We've matched the production with demand. And so, we may see a slight increase just to give a little operating room for the operating guys who are running very tightly right now. But everything else we'll continue to manage very carefully. I mean, we closed the quarter, I think, with $560 million in inventory or something like that. And obviously, by year-end, you see the cyclicality in accounts receivable. And so, receivables spike up given the second and third quarters and will come back down as well. So, on the whole, we'll…

Thank you. And our next question comes from Tarek Hamid from JPMorgan. Your line is now open.

Good morning, folks. This is Nate (56:22) on for Tarek. Thomas J. Casey - Chairman & Chief Executive Officer: Good morning.

So, I just had a quick question on the 400,000 ton capacity reduction in China. Is that nameplate capacity? Thomas J. Casey - Chairman & Chief Executive Officer: That's a very good question. Jean-François Turgeon - Executive Vice President: Well, no. It's based on actual production out of China. And look, that 20%, it won't be net, because obviously there will be new projects going on. But there's a lot of plants that have been shut down and they will never reopen. So the forecast for the next five years, which is very different than what happened in the last five years, is that there will be no growth of production out of China. And I think that's the big difference versus what happened in 2011 when the price peaked. And at that time, there was a series of expansion announced in China, and they grew significantly. Thomas J. Casey - Chairman & Chief Executive Officer: In terms of data, in 2015, I think the nameplate capacity for all Chinese producers was about 2.5 million tons, maybe – about 2.5 million tons. Actual production in 2015 was about 1.75 million tons. So, there was a 750,000 ton difference between nameplate capacity and actual capacity in China. And as JF said, we think that Chinese nameplate capacity is coming down as the result of the smaller plants being closed by government pressure on environmental compliance on price. They couldn't afford to cover their cash costs. And now, this new electricity law is going to force more production. So, if 20% of actual production gets closed, which is what one of the big vendors talked about, then that's going to be another 350,000 tons on actual production. It will be more on nameplate production. So, it's a significant potential difference in production. And most of that, I think – well, I don't know about most, but obviously if they're reducing their total output, their presence in the global export market is reduced at the same time, which means that as the global market grows, China supply is less and less small – less and less significant, then it's going to be less impactful on global prices. But it's important when you think about China nameplate, as I said, 750,000 ton difference between nameplate and actual. That's a significant down utilization.

Okay. Great. Thanks. Jean-François Turgeon - Executive Vice President: Yeah. But I think, Tom, it's fair to say that even when pigment price peak in the $3,000, the Chinese were not able to use that nameplate capacity. So, I think it's a cultural difference that there is... Thomas J. Casey - Chairman & Chief Executive Officer: I never talk about cultural differences. Jean-François Turgeon - Executive Vice President: Okay. Fair enough. But they like to state high nameplate capacity.

Okay. Great. Thomas J. Casey - Chairman & Chief Executive Officer: Anyway...

Yeah. Well, thank you. I appreciate the commentary. So, it sounds like you said over the next five years you expect this to come out. Do you have any idea sort of how we should expect that pacing to kind of occur? Thomas J. Casey - Chairman & Chief Executive Officer: Well, I mean, it's happening now at the smaller end level. I mean, what is – the dynamic that's going on right now in that market, I think, is some of the bigger operators, Billions and Lomon and Blue Star and some of the – a couple of the others, were building expansions in their plants in 2013, 2014, 2015, and probably most of them that were going to come on have come on. And I think new expansions have probably slowed down because of the price in the market. Smaller vendors in China are going out of business. They're going out, because they couldn't afford to cover their cash costs at historical prices, because of environmental regulations being enforced. And they will continue to go out of business because of this new electricity law enforcement that I mentioned was talked about in the press. That law doesn't go into effect, I don't think, until October. So, we haven't even seen the effect of that. And as I quoted the article that said, one of the biggest producers in China thinks that that law will have the effect of reducing 20% of production capacity. If that's true, that's on top of what we're already seeing. If ilmenite prices, as we discussed, continue to rise and I think I said that ilmenite prices are already up in China, 50% from the bottom, and import – and trade data shows that imports of ilmenite into China are increasing, which also confirms that ilmenite availability in China is decreasing, that's also going to drive price, which will drive cost for these guys and then that will put more pressure on them. Some of them will go out of business, unable to handle the increased costs, and many of them will raise price in order to be able to absorb the increased ilmenite cost. So, we think that's now steady. I don't know that it's going to be a precipitous cliff-like change any month. I just think it's going to be a steady improvement in the market. It has been going on and it will continue to go on for a while.

All right. Thanks. And then, I guess, just on the ilmenite pricing, is there sort of a benchmark price where it really becomes problematic for them to operate that we should think about or is there... Thomas J. Casey - Chairman & Chief Executive Officer: It depends on what the pigment price is, right? I mean, any time – I mean, ilmenite is a significant cost component for their process. They are almost entirely sulfate producers, right? So, they need 2.5ish tons of ilmenite to make a ton of pigment. And if the price for that element goes up 50%, if it goes up from below $100 to $120ish now, and we think it's going to go higher than that for a good while longer, that's a lot of incremental cost when your prices are where the Chinese were setting their prices. So, we said already that China domestic pigment presence have already gone up by, I think, 10% to 20% just over the last six months. And we think they're going to continue to go up, because ilmenite prices are going to go up – continue to go up.

Thank you. Thomas J. Casey - Chairman & Chief Executive Officer: And supply is being reduced through all these closures. So, that will help us in the global market as well as in the domestic Chinese market.

Thank you. Thomas J. Casey - Chairman & Chief Executive Officer: We think. I'm sure...

Thank you. Thomas J. Casey - Chairman & Chief Executive Officer: I'm sorry. Go ahead.

Thank you. And we do have a follow-up question from Roger Spitz from Bank of America Merrill Lynch. Your line is now open.

Thank you for taking the follow-up. So, first, what is your current view of what Fairbreeze can contribute in EBITDA on a full run rate basis and which quarter or half year do you expect that would get to that full run rate production basis? Thomas J. Casey - Chairman & Chief Executive Officer: We think that – JF, make sure I'm getting this right, that there will be about 30,000 tons – 25,000 incremental tons of rutile that are available at maximum on an annual basis coming out of Fairbreeze. About 55,000 tons of zircon on an annual basis coming out of Fairbreeze. Now, we then will sell that into the market or consume it. We'll consume some of the natural rutile. We don't sell – as I said earlier, we don't sell that into the market, the pigment market. We sell some of it into the welding market. On zircon, we think that prices will remain where they are and demand will go up. I think I said that we expect zircon sales can be 5% up. So, it will be an incremental benefit to our EBITDA and revenue, because in both cases that's high-margin business – high-margin sales for us. But we think that, as I said, the first zircon out of Fairbreeze we sold in the second quarter and we will continue to increase the amount of those sales out of Fairbreeze that we get now going forward. It's commissioned. It's in service. It's producing pretty much at full rate. And we'll start to see benefit from that now moving forward into the future. It will probably take us a year, maybe, to ramp from where we are now all the way up. Katherine Carolyn Harper - Chief Financial Officer & Senior Vice President: And the…

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.