Venator Materials PLC
Q4 2020 Earnings Call Transcript

Published: 24 Feb 2021

[Operator:]

Good day, and welcome to the Venator Materials Fourth Quarter and Full Year 2020 Earnings Conference Call. All participants will be in a listen-only mode. After today's presentation there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Ms. Kate Robertson. Please go ahead ma'am.

[Kate Robertson:]

Thank you, Chuck, and good morning, everyone. I am Kate Robertson, Investor Relations for Venator Materials. Welcome to Venator's fourth quarter 2020 earnings call. Joining us on the call today are Simon Turner, President and CEO; and Kurt Ogden, Executive Vice President and CFO.

[Simon Turner:]

Well thanks, Kate and good morning, everyone. Welcome to our fourth quarter 2020 earnings call. Let's begin on slide 3. 2020 was an unparalleled year with many unique challenges due to the significant impact of the COVID pandemic. And in response, we took decisive measures to reduce cost and preserve cash. Our associates rose to the challenges we faced and I am thankful and proud to work with and represent them. During the year, Venator delivered $136 million of adjusted EBITDA and delivered more favorable cash flow than planned. Turning to slide 4 on our Titanium Dioxide segment. In the fourth quarter, our Titanium Dioxide sales volume increased 1% compared to the prior quarter and declined 2% compared to the prior year period. This represents an improving trend from the third quarter comparison and demonstrates continued recovery from the pandemic. Average TiO2 prices were stable year-over-year and sequentially in all regions and sectors further demonstrating the benefit of our customer-tailored approach. This is the eighth successive quarter where prices have been stable. Fourth quarter demand for functional TiO2 was strong across all sectors. From a regional standpoint, we saw further recovery in the Asia Pacific area and demand in Europe strengthened throughout the quarter despite the lockdown restrictions imposed. Although, demand in North America was strong, our sales volumes were lower than both the third quarter and prior year period due to the lingering impact of the two hurricanes which affected our joint venture facility in Louisiana.

[Kurt Ogden:]

Thanks Simon. Let's turn to Slide 7. In the fourth quarter, total adjusted EBITDA increased $2 million compared to the prior year period. The increase was primarily attributable to positive price/mix in our Performance Additives business. Benefits from our business improvement programs were offset by prior year benefit of $3 million relating to a change in plant utilization, which increased overhead absorption, as well as higher feedstock costs relating to our TiO2 business.

[Simon Turner:]

Thanks, Kurt. Turning to slide 9. On December 23rd, we announced that funds advised by SK Capital Partners, LP completed their transaction with Huntsman and purchased just under 40% of Venator's outstanding shares. In 2021, we announced four new appointments to Venator's Board of Directors including a new Chairman as well as the retirement of two directors giving Venator's Board a current total of eight members. We have received strong support from our Board as we work towards improving the performance of our business.

[Operator:]

Thank you. We would now begin the question-and-answer session. And the first question will come from David Begleiter with Deutsche Bank. Please go ahead.

[David Begleiter:]

Thank you. Good morning. Simon and Kurt, just on TiO2 pricing, there's been some price increases quite a bit in China. You got some price increase in Q1 in Europe. But why is North America lagging? And what are the prospects for a price increase in Q2 do you think?

[Simon Turner:]

Yes. Let's back up and look at those pricing dynamics you mentioned there David. We would confirm you the pricing as we said in the prepared remarks in China has been rising, off a lower base of course. We will see in Venator and I want to emphasize on all matters pricing we speak only for ourselves further price traction in the first quarter. And we expect to see price in throughout the rest of the year.

[David Begleiter:]

Very good. And just on Performance Additives, a very strong Q4. Anything unusual there, and how sustainable is that type of performance heading into 2021?

[Simon Turner:]

Yes. Look it was a very strong performance in 4Q. I mean, we -- I think we mentioned in the remarks, we saw some strong annual EBITDA progression in 2020 despite the pandemic. We expect to see continued progression in those businesses in 2021. We saw some good demand for our products. We've got a slightly more North American-centered footprint in that business. We saw some recovery frankly in our functional additives in auto, which was very encouraging. We saw some benefits from our announced improvement -- cost improvement programs, which we've spoken about in our color pigments. And we saw some pricing and mix benefits. So look I don't deny that we had all, sort of, like all systems go in the fourth quarter, it was a strong result. We will see progression on an annual basis. And what we can say about Performance Additives is the demand profile tends to be and the seasonality profile tends to be a more front-end of the year first half loaded type of profile. So I think that probably should give you something to work with about how we see the ongoing upward trajectory for that collection of businesses and it's been a pretty resilient performance.

[Kurt Ogden:]

David, I'll just add to that. I think that as we think about the fourth quarter, we have seen a recovery in demand for automotive coatings, specifically within our functional additives business. We think that's a trend that continues as we go into 2021. As we look into the color pigments business, we are also seeing the benefits of a lot of the restructuring that we have done in previous years, now manifest itself within that business. And so as we look at the demand trends, as well as capturing the restructuring benefits that have been done in previous periods, we see increased EBITDA growth here in 2021. So we're encouraged by what we're seeing in Performance Additives as well as what we're seeing in TiO2.

[David Begleiter:]

Sounds good. Thank you very much.

[Simon Turner:]

Thanks David.

[Operator:]

The next question will come from Hassan Ahmed with Alembic Global. Please go ahead.

[Hassan Ahmed:]

Morning Simon and Kurt.

[Simon Turner:]

Morning Hassan

[Kurt Ogden:]

Good morning.

[Hassan Ahmed:]

Just a question around volumes. You guys, obviously, mentioned that your volumes were up 1% sequentially. And, obviously, hearing some of your competitors speak, sequentially volumes were strong. And obviously you highlighted the hurricane impact. Just trying to get a sense, if we were to scrape away the hurricane impact, sequentially where would have that volume growth number then?

[Simon Turner:]

Yes. I mean, just to come to the central point of that question there Hassan around the hurricanes. We're not intending to break out the discrete answer to that question. But what I would like to say in response to the question is that, we moderated our assets in the middle part of the year in the third quarter. These assets don't just turn up on a dime. Of course, we had to be balancing our cash needs. And it was a pretty strong recovery in the fourth quarter at the market level for TiO2 I think and Performance Additives as we've had -- we've said. So look we did have low inventories as we came out of the back end of 3Q. We've really been focusing down on that working capital and cash. And the other thing to bear in mind I think Hassan is that we said a couple of times is for us, we don't think just about the functional TiO2 recovery in the fourth quarter. We've got to think a little bit about the specialty to TiO2. That is on a slower path. We're encouraged by what we see, but there's no doubt that the recovery in textiles and cosmetics and the like is going to be at a slower rate. So there were a range of factors other that -- over and above the hurricane. And I think that we would have been up and maybe more comparable to part to the peer group absent those factors yes.

[Hassan Ahmed:]

Understood, understood. Now changing gears. Just trying to get a sense, obviously pigment pricing is going up, but you guys as well as others in the industry have probably some longer-term contracts on the pigment side. So I'm trying to get a sense of as you look at your portfolio and look at some longer-term contracts you may have, would you be able to break out what percentage of your portfolio is under those longer-term contracts and that's on the pigment side? And a similar question on the ore side of things as well, because obviously you highlighted ore pricing going up. Again, could you give us a sense of what percentage of your sort of ore purchases are under long-term contracts as well?

[Simon Turner:]

Yes. So I think to start with the two parts of the question. We'll start with TiO2 pricing. I mean, if we just have a look at what's been happening these past two years, I made the point in the prepared remarks, we've seen eight consecutive quarters now of stable pricing, despite some pretty significant economic challenges that the -- so we invented to and I guess the industry itself has faced. During that period, a lot of discussion has been held with customers around contracts. Contracts are now more bespoke than ever in our business, again speaking for Venator. We do have a range of contracts covering sort of spot 3-month 6-month annual. All the way through this period though Hassan, we have taken great care to ensure that we don't limit within Venator our ability to capture upward price shift because we're so keen to restore margin relating mainly to raw materials which we'll come on to. So we've taken great care with these range of contracts not to limit ourselves. So I think that the way to think about Venator is that we see ourselves with freedom to act and negotiate with our customers and don't have sort of breaks or anchors in any way that will constrain our upward price negotiations and we expect to see those price increases throughout 2021 in fact. And turning to ores. Some of the dimensions of course, it's clear we do buy hundreds of -- in the hundreds of thousands of tons of ilmenite. We've bought significant amount of low-grade ilmenite. Now one of the other sides to the recovery which has been extremely strong in China and which probably started ahead of the places has been that ilmenite pricing and demand has been very strong. And so we have seen and we are seeing some ilmenite-based headwinds coming through into 2021 that frankly in the middle of last year we had not expected to see as that sort of headwind. That said, we have seen some offsets with the higher grade and more expensive raw materials. So that's the dimension -- that's the dynamic we see in our feedstocks at this time.

[Hassan Ahmed:]

Very helpful, Simon. Thank you so much.

[Simon Turner:]

Thanks, Hassan.

[Operator:]

The next question will come from Laurence Alexander with Jefferies. Please go ahead.

[Laurence Alexander:]

Could you help us just with the moving parts on the cash flow bridge for 2021? So how much of the restructuring costs you think will fall into this year? And how you're thinking about pension and other non-operating items?

[Kurt Ogden:]

Sure. Laurence why don't you go ahead -- why don't I go ahead and take that. I think that we have given specific guidance around CapEx. You've got that. And I think you can calibrate around interest and taxes. We also provided some guidance on working capital. We think that will move up as the underlying value moves up as we put through these price increase announcements. Cash restructuring is going to be a little bit higher here in 2021. Think about that in the neighborhood of $25 million-ish as we pay for the 2020 BIP program. And then for other cash uses, including pension we continue to look for ways that we can optimize that cash use. We do have some pretty meaningful valuations that only take place once every three years on some of the pension plans coming up this year. And we're hopeful that that will have a positive impact on the amount of cash use required. I think for right now Laurence, if you want to take it's a conservative view you ought to plan on something similar to what we had in 2020. And hopefully that will improve as we get through these valuations and discussions with pension trustees.

[Laurence Alexander:]

All right. Thank you.

[Operator:]

The next question will come from Steven Byrne with Bank of America Securities Incorporated. Please go ahead.

[Steven Byrne:]

Yes. Simon you were just saying a little bit earlier about TiO2 pricing being -- there being regional differences and that seems well founded. When we look at the spread though between Europe and China that price spread over the last few years has been in the $600 to $700 a ton range and now it's $400. Do you see potential for that to return back to that historical spread?

[Simon Turner:]

Yes. I mean can I just clarify the question Steve? When you say return do you mean $700 to $400 and then back to $700? Or is that...

[Steven Byrne:]

Yes that...

[Simon Turner:]

Yes. Look I don't see the potential for that near term for sure. I mean it's clear to me that if we stand back and we look at the overall TiO2 environment the environment we find ourselves in. This year I suspect that we will see a sort of mid-single-digit recovery in demand volumetric demand in TiO2 across the world year-on-year 2021 over 2020 and a pretty sort of strong recovery from what we saw last year. And that's well underway. We see it around the world. We see it frankly in all regions in most countries. And I think in the very near term that gives you an uplift of double-digit percentages here in the first quarter with more seasonality to come. And the Chinese exports were strong last year and I think they will pull back. We're already starting to see evidence of pullback and retrenchment of Chinese products that were coming into -- limited into Europe and North America going back into the Asian region because of the higher netbacks driven by pricing. And we have had customers who've been let down by some of these producers. And this is cemented in their minds why we have this tailored approach pricing and supply reliability. So that's at the front of their minds. And of course Chinese prices when you talk about that spread that encompasses local Chinese pricing. If one were to sort of like look at the pricing outside of China in the Asian region compared to other regions and that's spread, isn't $700 and it's more of the order of $300 to $400. And I -- if anything I see that spread with potential to tighten over this coming period because as we up-cycle we tend to see more convergence of pricing around the world.

[Steven Byrne:]

And then just on the demand side, when you look at the key end markets that you sell the TiO2 into can you walk us through each of those key end markets and characterize where is demand right now relative to pre-COVID levels? Which of those end market segments is driving that volume response that you're expecting?

[Simon Turner:]

Well, I think the volumetric segments in functional TiO2, if you take between coatings and plastics and that's a broad church and encompasses industrial architectural and other range of polyolefins, engineered polymers and the range of high-end plastics. I mean, I think, there's not really a difference between the two. And that covers some 80% of global TiO2. And what we are seeing there is a strong recovery and I would peg those sort of segments around the -- as we exit the first quarter around the 2019 sort of demand levels or close to. There's no question about it. Now, there are some specific sectors and that we've picked out for us, textile segment, sometimes smaller volume segments that we are definitely seeing, returning at a slower speed as sort of a second speed. And there, I don't think we'd probably get back to 2019 levels until later in the year, maybe the third quarter, somewhere in the second half. So, that's probably -- that's a high-level view of how the segmentary sort of picture is playing out right now.

[Stephen Byrne:]

Thank you.

[Simon Turner:]

Pleasure.

[Operator:]

The next question will come from Duffy Fischer with Barclays. Please go ahead.

[Duffy Fischer:]

Good morning fellows. First question is just around on the feedstock side. So ilmenite going up and rutile moderating a little bit is kind of a complete 180 from what's been happening in the raw material side of things over the last couple of years. There's not a lot of new rutile supply. So, is it that the industry has shifted to consuming more ilmenite in its mix? Or what's causing that? Is it long term and duration do you think? Or is this just kind of a temporary anomaly, where ilmenite's up and rutile's down?

[Simon Turner:]

Yes. I think, I see this as more of a sort of temporary phase, Duffy. And that's because, the disconnect in economic recovery that we've seen these past six months where China really sort of started motoring along before we saw that pick up elsewhere. And that has really driven some of the ilmenite dynamics within China and that's moved into TiO2 pricing within China. So, other offshore ilmenite producers have been able to sell into China at strong prices and understandably although we don't like it of course, they are agitating for higher ilmenite prices to us. And frankly, we have had and continue to have some extremely good contracts with these ilmenite supply. So that's the way to think about ilmenite. I think, as it relates to high-grade rutile and slags, it's been the case these past couple of years that those increases have outpaced TiO2 pricing and eaten into the margin if you will and frequently rutile is right up there. I think that, it is the highest priced feedstock. Producers like ourselves, always looking at ways to minimize that, be that through low grade or slag mixes and so forth. And that has had the effect of sort of like moderating that rate of increase for rutiles. But I recognize the dynamic you painted. It's certainly not the one we've seen really over this past decade.

[Duffy Fischer:]

Okay. And then maybe one for Kurt on cash. I'm just trying to tally up the differences on the cash calls 2020 versus 2021. CapEx looks like it's up $13 million. Working capital, probably consumes maybe $50 million more going from a positive to a negative. Restructuring, up $15 million maybe interest a little bit better. So can you net that for me if I'm looking at an EBITDA number, what's the pluses and minuses on a net basis 2020 versus 2021 to walk to free cash flow?

[Kurt Ogden:]

Well, there's a lot of moving pieces there, Duffy and I'm happy to circle up with you afterwards. I think that, because there is a fair amount of variability in some of those cash uses, we have been careful not to provide a quantitative guidance for the 2021 uses. But certainly, hopefully, we've given you enough of a steer, so that you have an understanding for the direction and on some of those items, where we do have clear line of ,sight we have given you some numerical items to consider.

[Simon Turner:]

Maybe just to add on that Duffy. I mean, clearly, we are extremely focused on our cash, cash uses and all matters cash. Some areas it's quite clear. The big numbers, it's certainly in pensions and CapEx, which are two of the big numbers there. I think there should be some sort of quite clear sort of pathway there. And some of this frankly depends on the success of how we go through the year with pricing and the like, because that's going to play heavily into the working capital, which is going to be -- which was a source of cash for us last year and that's the one that we've really got to focus in on. And that will ultimately determine the range. But of course that there will be a corresponding shift in the EBITDA too.

[Duffy Fischer:]

Fair enough. Thank you, guys.

[Simon Turner:]

Thanks, Duffy.

[Operator:]

The next question will come from Josh Spector with UBS. Please go ahead.

[Josh Spector:]

Hey, thanks for taking my question. I guess. if I could try one more time on free cash flow. I guess notably, there's no Pori expense in your bridge for 2021. I guess first, do you expect any spending on Pori this year? And how does that kind of phase in on your expectations now for the next few years? And as you kind of look at higher cost potentially and higher pricing, do you think free cash flow could be positive in 2021? What are the odds of that happening in your view?

[Kurt Ogden:]

Well, thanks for the question, Josh. We do continue to have some cash uses associated with Pori. They will be up a little bit relative to what they were in 2020, think about something in the zone of around $15 million or so compared to a 2020 number that was $8 million, where in 2020, we were able to defer some of the expenses that we have associated with Pori. As you can appreciate, we continue to explore a range of options in order to reduce that cash use there at Pori and so that is ongoing. But there will be some leakage there associated with Pori. As it relates to positive cash flow for the full year in 2021, I do think that that is going to be a pretty steep hill to climb. I think we need to see a pretty dramatic improvement in EBITDA, in order to offset some of the cash uses that we have been talking about. It's certainly our objective to see cash positive not just for the quarter but for a longer term, we believe that opens up optionality for the business. Certainly, it's going to drive an improvement in the valuation for shareholders and all stakeholders. So we are hyper-tuned and focused on it. I wouldn't dare to put odds here on 2021, Josh. But I think that it is going to be largely driven on the shape of the TiO2 cycle and how well and how quickly things continue to improve there.

[Josh Spector:]

Yes. Thanks, Kurt. Appreciate that. And I guess in your slide you say the color pigment sale is still on hold. I guess we've seen a tick-up in M&A elsewhere. Why isn't that progressing at this point? And why is it still on hold?

[Kurt Ogden:]

Yes. I mean, we continue to evaluate whether or not indicative bids are in our mind fairly valued for that business. Recognize as well that in Europe, there are still very restrictive COVID measures that prevent physical due diligence. I think that we are keeping an open mind around that process. We also want to make sure that we're maximizing value, as you have seen that business continues to improve. Hopefully that would be driving up any bids for that business. And we wanted to be able to demonstrate that a lot of these restructuring efforts that we've had ongoing will be improving EBITDA. So we continue to be -- have an open mind there and we'll continue to update you. But we look at it from a pretty pragmatic standpoint and how can we create the most value for shareholders. Is that a disposition? Is it continuing to enjoy what is a very attractive free cash flow yield out of that business? And so we'll continue to update you, as we move along.

[Josh Spector:]

Got it. Thanks.

[Operator:]

The next question will come from Steven Haynes with Morgan Stanley. Please go ahead.

[Steven Haynes:]

Hi. Thanks for taking my question. I just wanted to ask on, TiO2 margins, a bunch of some moving pieces, you've kind of outlined over the course of the call. So how do you think about, I guess, maybe the incremental margins on that business? And just any color you could provide there would be helpful.

[Simon Turner:]

Yes. I mean, I think that maybe a way to think about TiO2, big picture is we expect to get back to like the 2019 volumes overall this year with improved margins, as we get to the back end of this year. I mean, it's been pretty clear about the type of compression we've seen, through these raw -- primarily raw material effects these past two years. And the way I think about it, is getting back to that prior margin by the end of 2021 that should give a good sort of calibration point of that sort of expectation.

[Steven Haynes:]

Yes. That's helpful. And then on SG&A just between the, I guess, temporary costs that will be reversing and some of your new business improvement programs. Like, I guess, on a dollar basis, how should we be thinking about SG&A expense year-over-year?

[Simon Turner:]

Yes. Look, SG&A is part of the improvement program. And will come down. There were some add backs from the COVID temporary program last year. So -- and so I think we've made the point that you can expect to sort of the way that the delivery per quarter plays out is mainly settled on quarter two and three. I think we said in our prepared remarks there. But directionally, it's clear to me these past three to four years, even since the separation from the IPO, Venator has continued to attack and reduce its SG&A cost and that trend will continue both this year and indeed over the next two years. And in fact, in our view, the SG&A to sales ratio within Venator is very, very competitive against any peers.

[Steven Haynes:]

Yes. Thank you.

[Operator:]

The next question will come from John McNulty with BMO Capital Markets. Please go ahead.

[John McNulty:]

Yes. Thanks for taking my questions. So, I guess, the first one just on the, $27 million of COVID savings that you had last year do they all flow back in -- in terms of the cost in 2021? Or do you think there's a measure of them that you can realistically hold out? And how should we think about that?

[Kurt Ogden:]

Yes. John, so there are certain savings that we're going to be holding on to. And so for instance travel is not going to be as much, as what we had back in 2019. We'll be able to hold on to some of those savings, not all of it though, right? We hope that we get back to a more normalized business environment that allows for that type of activity. So -- but, the bulk of it is associated with furloughing associates, that took place really in the second and the third quarters. And so that will not be coming back. And that's why we are replacing it with these additional savings that we have through our 2020 business improvement program.

[John McNulty:]

Okay. But I guess if I look at your -- if I look at the slide six, where you have $57 million or so of savings in 2020 and then $65 million in 2021, so, whatever, an increase of about $8 million. It sounds like, it should be better than that, because you're not giving all of the $27 million tied to COVID restrictions and cuts back entirely. Am I thinking about that right?

[Kurt Ogden:]

There's a very small piece that will roll into the $45 million of replacement. So the thing about that $27 million rolling off.

[John McNulty:]

Okay. Appreciate that. And then, I guess, the other question would just be, given the volume recovery and it does sound like you're on track. Maybe this quarter, it's a little bit disrupted because of the freeze. But, in general, it seems like the volume recovery will put you back to kind of the 2019 levels. I guess at that point, how much excess capacity do you have? Or do you have a way to kind of lever up and get incremental volumes coming to kind of meet the needs of what looks to be a multi-year TiO2 cycle. So I guess how should we think about that?

[Simon Turner:]

Yes. And that's something that we are looking at quite closely, John, as you can imagine. We have taken some steps to give ourselves a little bit of extra capacity in some of our facilities. Even over these past 18 months we've been working steadily aware of that. We believe there is scope for a reasonable amount of uplift in our capacity base. We are, sort of, like, doing different things at different sites. It's going to be mainly around capacity creep. And which borders on in one or two cases some, sort of, like, maybe low-grade sort of brownfield. So, I think, we are not talking about in the ones and two kilotons here. I believe we will be looking ultimately at the multiple of tens of kilotons capacity and we are turning ourselves to that, because we expect to be able to profit from that over these coming years.

[John McNulty:]

Got it. Okay. I guess, that’s it. That’s what I was looking for. Thanks very much.

[Simon Turner:]

Thanks, John.

[Kurt Ogden:]

Thank you, John.

[Operator:]

The next question will come from PJ Juvekar with Citi. Please go ahead.

[Eric Petrie:]

Hi. Good morning. It's Eric Petrie on for P.J.

[Simon Turner:]

Hi, Eric.

[Eric Petrie:]

In Performance Additives you noted recovery in auto driving 7% year-over-year volume growth. How much of sales is into auto? And then, in addition, how has the construction end market performed, which is, I think, 40% or 45% of sales exposure?

[Simon Turner:]

Yes. Eric, Kurt is going to be just digging through to look at some of those stats on the first part of question. Maybe I'll start, while he's doing that, with the second part of the question. I mean, look, construction is a significant part -- construction-related activities is a significant part of our Performance Additives space. I mean, our timber treatment business in the United States, a lot of that goes into those type of applications. So, frankly, that's been going really well. In our iron and colors business, we have focused quite a lot of our marketing efforts in the coatings and plastics segment. But that notwithstanding, we're still pretty active in the construction segments. And, again, right across the piece, we've seen a significant uplift. And, frankly, construction is -- overall, is probably still the dominant subsector in our color pigments and timber franchise as a percent of the pie. And Kurt, hopefully, had a chance to look at that.

[Kurt Ogden:]

Yes. So, Eric, we can follow up with you a little bit more but when we think about products that are going into the automotive end markets from Performance Additives, it's really showing up through a couple of channels. We have some coatings that are going in there. We also have plastics exposure that feed into that automotive end market. Happy to follow up with you afterwards and try and narrow that down for a more specific automotive exposure, but relative to construction it is a minor note.

[Simon Turner:]

I think about it as a 5% to 10% type number there, Eric.

[Eric Petrie:]

I appreciate it. And then secondly on TiO2, I think your margins -- EBITDA margins are still below 2019 levels. Peers are back though. So do you attribute that? I know you had hurricane impact, but is that mainly related to the underperformance in the specialty TiO2 categories? And then how much of those sales are down? I guess if you want to provide full year 2020 or fourth quarter even just to get some sense of cadence to recovery by second half of this year?

[Simon Turner:]

Yes. I mean, look there's -- I'm presuming you mean all of that question relates to the fourth quarter, Eric, is that true?

[Eric Petrie:]

Yes. Yes.

[Simon Turner:]

Yes. I mean, look let's start with the specialty. I mean, we called out specialty about 18 months ago we alerted listeners and the community to what we were seeing in our specialty and specifically textiles applications segment. And that has gradually improving continues to gradually improve. But we -- I don't think we believe in 2020, we will -- on a full year full year basis -- sorry, 2021 full year basis get back to the 2019 levels on a full year basis. Depending on how all the trajectory of that recovery, I could see us being in a lot better position by the end of this year in terms of demand back to the 2021 level. So there is no doubt about it that to the extent that that specialty segment wasn't sort of punching its full weight in the average margin count that does diminish, because those are as you know specialty high-margin products. Regarding the rest of the base, specifically as it relates TiO2, clearly, we've had margin squeeze because of raw materials or ores notably high-grade ores over that period. And we've managed to in difficult circumstances and through the tailoring program hold on to these more stable prices, which we now see reversing. And we believe, we can recover margin through 2021. Again, as we exit the year in 2020 -- the back end of 2021, we would to see the overall TiO2 margin in stronger shape. Any differences between ourselves and peers, predominantly at that point would relate to regional footprint and scale assuming that the specialty markets are back up.

[Eric Petrie:]

Great. Thank you.

[Simon Turner:]

Pleasure.

[Kurt Ogden:]

Thanks, Eric.

[Operator:]

This concludes our question-and-answer session. I would like to turn the conference back over to Simon Turner for any closing remarks. Please go ahead sir.

[Simon Turner:]

Thank you, operator, and thank you for everyone for joining in the call today. Thank you for your questions. We hope you're all staying safe and combating the tricky challenge of the COVID situation. We look forward to being out there at a number of events over the coming weeks. If you've got any near-term questions reach out to Kate. Furthering that, we'd like to see you at these events and look forward to speaking with you more about the Venator business. Thank you very much.

[Kurt Ogden:]

Bye now.

[Operator:]

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.