John Romano: Yes. So I mean, we guided to a 7% to 10% increase in Q2. And I would say that’s — it depends on the year. We’ve had a lot of different second quarters over the course of the last 3 years with COVID and then the recovery from COVID. So I would say that’s not very abnormal, maybe a little bit on the higher side. So it’s a little bit early for us to determine exactly what’s going to happen in the third quarter, although we’re already kind of getting visibility on what that order book looks like. Typically, in some instances, you could see a third quarter being slightly lower, depending upon what year you’re in, where you are in a cycle. But in a normal market, you’d see inventory being built in the first quarter. And typically you’d consume that inventory in Q2 and Q3 and then you build inventory in Q4 as well.
So, I would expect it to be somewhat similar to the — we’re not expecting right now based on what we’re looking to see, a huge uptick in the third quarter volumes. But again, it’s a little bit too early. And again, I’m not giving any predictions on what’s going to happen on antidumping, but that could have an impact if duties are imposed, and I stress the word if.
Operator: And your next question will be from Duffy Fischer at Goldman Sachs.
Duffy Fischer: Can you walk through the major geographies? When you look at your Q2 guide, both on price and volume, can you give us some color on how that will vary between Europe, the U.S. and Asia?
John Romano: Yes, Duffy. So look, when we think about the first quarter, as I mentioned in the call, we saw growth in every region. And we saw, I’d say, disproportional growth in the areas where we had further reductions over the last 6 quarters. So Europe, Middle East, Africa, Asia Pacific was a bit higher on the growth side. Moving into Q2, we’re starting to see what we would normally project in the first quarter for our coating season build. So the Americas is starting to pick up. We’re seeing some green shoots in Brazil. But we’re seeing pretty consistent growth. But I’d say the difference between Q1 and Q2 is that we’re starting to see a little bit more growth in North America. Not to say we didn’t see growth in the first quarter, but we’re seeing what’s more indicative in an northern hemisphere coating season with volumes picking up in North America and still getting increases in Europe, Middle East, Africa and Asia Pacific as well.
But I’d say that we’re getting a bit more of a push in North America as well in the second quarter.
Duffy Fischer: Okay. And then if you look at your debt ratio, you’ve talked about obviously wanting to get that better. How should we think about how much of that repair comes from just EBITDA moving higher versus how much you actually want to pay down net debt or pay down gross debt from here?
John Romano: So maybe I’ll start with what our goal is, and it’s still to get — we talk about $2.7 billion to $2.8 billion depending upon gross or net debt. We still have a goal to get to $2 billion. And I’ll let John talk about.
John Srivisal: Yes. And I think if you look at the leverage, obviously it is relating to net debt, which obviously it’s either paying down debt or generating cash. I think as John mentioned in his comments, we will look to bolster liquidity through the end of this year and then hang on the market, pay down debt. But as we mentioned, we do expect positive free cash flow for the year. Q1 was a significant use. So we do expect a pretty significant amount of free cash flow in the last 3 quarters of the year, which will help that metric. And secondly, if you take a look at our guide of $160 million to $180 million, we will start producing much better EBITDA year-over-year, even as early as Q2, depending on where we land. But the second half of 2023 was a pretty easy goal post that we are — we will be able to beat through the second half of the year.
So we do expect that our net leverage ratio will go down pretty significantly through the rest of this year and going forward.
Duffy Fischer: But I guess that was kind of my question. What’s the baseline EBITDA you want to use when you look at that ratio? Would you want to use kind of the trough of the LTM as we sit today? Or is it just going to be the LTM floating as we go through time, which will have a higher EBITDA number behind it?
John Srivisal: Yes, definitely the higher level.
John Romano: Yes, the latter.
Operator: Next question will be from John Spector at UBS.
John Spector: I wanted to ask if you think your volumes benefited in the first quarter from competitor outages or not. And to the extent that they did or didn’t, is any of that a permanent shift in your view and share gains for Tronox that maybe you’ve locked down the contracts or do you view any of that as more transitory?
John Romano: Hey, Josh. So look, I guess, when I made the comment that we ramped up our assets in anticipation of what we saw as far as green shoots in the fourth quarter, where we saw demand starting to improve and we were able to respond to that because of — I believe a lot of that has to do with the global strength of our footprint or the strength of our global footprint, having assets on 6 continents were located closer to our customers. There’s a lot of issues with the Red Sea and the Panama Canal. So is there some volume that we were able to respond to because of how we’re positioned? I think the answer to that is yes. I’m not exactly sure if I would call that share gain. I would call that being able to respond to what we indicated as the early signs of a pickup.
And I wouldn’t expect that when we think about that moving forward, I made the reference that we’re continuing to see growth into the second quarter. So there were a lot of things that were playing into our demand. There was the growth in our volumes. So you had demand, you had — the supply chain basically had worked through all the inventory. So we’re getting customers just back to a normal order buying pattern. And there was a little bit of, I’d say, of our volume that did come from our global position and being able to respond to the demand in all the regions that we’re supplying in because, as I mentioned, we saw an uptick in every region that we sold into in the first quarter.
