Steve WatsonThank you, Janet, and welcome to everyone participating on this conference call. In addition to Janet and Greg, with me today are several members of our management team: Rob Graham, Executive Vice President; Kelly Luttmer, Vice President, Global Tax Director; John St. Wrba, Vice President, Treasurer; Jim Hafer, Vice President, Controller; and Brian Christian, Vice President, Strategic Development I also want to give special recognition to the leaders of our exceptional operating management team, including Doug Weaver, Dr. Ulfert Fiant, Klemens Schluter, Joe Maas and Ben Corona. Our corporate and management operating teams are fully-integrated, providing for a continuous flow of information and data both ways, which assists us in making informed and timely decisions. Our operating financial results for the first quarter of 2012 were excellent, and continue to be driven by customer demand and manufacturing efficiency. We set new records for the first quarter in both production and sales volumes of our TiO2 products. Our TiO2 segment profit for the first quarter 2012 of 212.9 million set a new record and was more than double our segment profit for the first quarter of 2011. We expect the overall global supply and demand balance for TiO2 products that we have experienced for the last three years will continue during the foreseeable future, with intermittent periods of availability and shortage. There are significant constraints to adding major new TiO2 production capacity, especially for premium grades of TiO2 products produced through close-held, proprietary chloride technology. Major capacity additions, both brown field and green field, require considerable investments of capital and time, as well as an expectation of sustainable profit margins necessary to financially justify the investments. An additional impediment to significant TiO2 capacity expansion has been the shortage and increased cost of raw materials, in particular ore feed stock. An extended period of low profit margins did not foster investment in, and development of, ore supplies that are now needed to materially expand TiO2 capacity.
With the significant increases in the price of ore feed stock during 2011 and 2012, we believe most ore producers have reached profitability levels that financially justify expansion of additional ore supply, several of which are currently underway and expected to become available beginning late this year. We also believe that ore costs will stabilize and moderate as necessary, so not to be an impediment to profit margin expansion in the TiO2 industry, which would in turn hinder TiO2 capacity expansion. With the increased ore feed stock costs, additional significant increases in the selling price of TiO2 products will be necessary to produce the sustainable profit margins necessary to financially justify most major TiO2 production capacity increases.We continue to believe the growing worldwide demand for high-quality TiO2 products will exceed supply increases in the foreseeable future. We expect our 2012 sales volumes to continue at a higher rate, as compared to 2011, and that our 2012 sales volumes will exceed our 2012 production volumes. While the costs of our raw material are expected to be increased significantly in 2012, compared to 2011, we believe our annual segment profit will increase due to higher average selling prices and sales volumes for our TiO2 products. Additionally, given our expectation that the global supply of TiO2 products will remain tight in the foreseeable future, with intermittent periods of availability and shortage, we expect our profitability and cash flows to remain strong beyond 2012. Read the rest of this transcript for free on seekingalpha.com