As of ~~October~~ 27~~, 2017,~~July 30, 2019, the registrant ~~has~~had outstanding ~~106,283,070~~106,558,572 ordinary shares, $0.001 par value per share.

CONDENSED CONSOLIDATED ~~AND COMBINED~~ BALANCE SHEETS

~~(Unaudited)~~

September 30,

December 31,
(In millions, except par value)

2017

2016
ASSETS
Current assets:




Cash and cash equivalents(a)

$
186

$
29
Accounts receivable (net of allowance for doubtful accounts of $4 each)(a)

411

247
Accounts receivable from affiliates

9

243
Inventories(a)

431

426
Prepaid expenses

11

11
Other current assets

73

59
Current assets of discontinued operations

—

84
Total current assets

1,121

1,099
Property, plant and equipment, net(a)

1,264

1,178
Intangible assets, net(a)

21

23
Investment in unconsolidated affiliates

77

85
Deferred income taxes

200

142
Notes receivable from affiliates

—

57
Other noncurrent assets

41

35
Noncurrent assets of discontinued operations

—

42
Total assets

$
2,724

$
2,661
LIABILITIES AND EQUITY
Current liabilities:




Accounts payable(a)

$
319

$
297
Accounts payable to affiliates

15

695
Accrued liabilities(a)

213

146
Current portion of debt(a)

4

10
Current liabilities of discontinued operations

—

27
Total current liabilities

551

1,175
Long-term debt

747

13
Long-term debt to affiliates

—

882
Deferred income taxes

9

12
Other noncurrent liabilities

328

324
Noncurrent payable to affiliates

73

—
Noncurrent liabilities of discontinued operations

—

78
Total liabilities

1,708

2,484
Commitments and contingencies (Notes 11 and 12)




Equity




Parent’s net investment and advances

—

588
Ordinary shares $0.001 par value, 200 shares authorized, 106 and nil issued and 106 and nil outstanding, respectively

—

—
Additional paid-in capital

1,318

—
Accumulated deficit

(1)

—
Accumulated other comprehensive loss

(312)

(423)
Total Venator Materials PLC shareholders' equity

1,005

165
Noncontrolling interest in subsidiaries

11

12
Total equity

1,016

177
Total liabilities and equity

$
2,724

$
2,661

(Unaudited)



(In millions, except par value)	June 30, 2019			December 31, 2018
ASSETS
Current assets:
Cash and cash equivalents^(a)	$	50		$	165
Accounts receivable (net of allowance for doubtful accounts of $5, each)^(a)	423			351
Inventories^(a)	508			538
Prepaid expenses	9			20
Other current assets	66			51
Total current assets	1,056			1,125
Property, plant and equipment, net^(a)	965			994
Operating lease right-of-use assets	41			—
Intangible assets, net^(a)	23			16
Investment in unconsolidated affiliates	87			83
Deferred income taxes	189			178
Other noncurrent assets	93			89
Total assets	$	2,454		$	2,485
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable^(a)	$	299		$	382
Accounts payable to affiliates	14			18
Accrued liabilities^(a)	116			135
Current operating lease liability	9			—
Current portion of debt^(a)	32			8
Total current liabilities	470			543
Long-term debt	738			740
Operating lease liability	34			—
Other noncurrent liabilities	292			313
Noncurrent payable to affiliates	34			34
Total liabilities	1,568			1,630
Commitments and contingencies (Notes 12 and 13)
Equity
Ordinary shares $0.001 par value, 200 shares authorized, each, 107 and 106 issued and outstanding, respectively	—			—
Additional paid-in capital	1,319			1,316
Retained deficit	(78		)	(96		)
Accumulated other comprehensive loss	(362		)	(373		)
Total Venator Materials PLC shareholders' equity	879			847
Noncontrolling interest in subsidiaries	7			8
Total equity	886			855
Total liabilities and equity	$	2,454		$	2,485


	~~(a)~~

^(a)

At ~~September~~June 30, ~~2017~~2019 and December 31, 2016, $6 and $4 of cash and cash equivalents, $7 and $6 of accounts receivable, (net), $1 each of inventories, $4 each of property, plant and equipment, (net), $18 and $20 of intangible assets, (net), $1 each of accounts payable, $3 and $4 of accrued liabilities, and $2 each of current portion of debt, respectively,2018, the following amounts from consolidated variable interest entities are included in the respective balance sheet captions ~~above.~~above: $3 and $5 of cash and cash equivalents; $4 and $5 of accounts receivable, net; $1 each of inventories; $5 each of property, plant and equipment, net; $13 and $14 of intangible assets, net; $1 each of accounts payable; $3 and $4 of accrued liabilities; and $2 each of current portion of debt. See ~~"Note 5.~~"Note 6. Variable Interest ~~Entities.~~Entities."

See notes to unaudited condensed consolidated financial statements.

Table of Contents

VENATOR MATERIALS PLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



	Three months ended June 30,						Six months ended June 30,
(Dollars in millions, except per share amounts)	2019			2018			2019			2018
Trade sales, services and fees, net	$	578		$	626		$	1,140		$	1,248
Cost of goods sold	511			193			997			647
Operating expenses:
Selling, general and administrative	45			56			93			110
Restructuring, impairment, and plant closing and transition costs	—			136			12			145
Other operating (income) expense, net	—			(10		)	7			(13		)
Total operating expenses	45			182			112			242
Operating income	22			251			31			359
Interest expense	(13		)	(14		)	(27		)	(27		)
Interest income	3			4			6			7
Other income	1			2			2			4
Income before income taxes	13			243			12			343
Income tax benefit (expense)	9			(45		)	8			(65		)
Net income	22			198			20			278
Net income attributable to noncontrolling interests	(1		)	(2		)	(2		)	(4		)
Net income attributable to Venator	$	21		$	196		$	18		$	274

Per Share Data:
Income attributable to Venator Materials PLC ordinary shareholders, basic	$	0.20		$	1.84		$	0.17		$	2.58
Income attributable to Venator Materials PLC ordinary shareholders, diluted	$	0.20		$	1.84		$	0.17		$	2.57

See notes to unaudited condensed consolidated financial statements.

Table of Contents

VENATOR MATERIALS PLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)



	Three months ended June 30,						Six months ended June 30,
(Dollars in millions)	2019			2018			2019			2018
Net income	$	22		$	198		$	20		$	278
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustment	(13		)	(115		)	(2		)	(58		)
Pension and other postretirement benefits adjustments	4			4			8			7
Hedging instruments	1			12			5			5
Total other comprehensive (loss) income, net of tax	(8		)	(99		)	11			(46		)
Comprehensive income	14			99			31			232
Comprehensive income attributable to noncontrolling interest	(1		)	(2		)	(2		)	(4		)
Comprehensive income attributable to Venator	$	13		$	97		$	29		$	228

See notes to unaudited condensed consolidated financial statements.

Table of Contents

VENATOR MATERIALS PLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)



	Total Venator Materials PLC Equity
	Ordinary Shares			Additional Paid-in Capital		Retained Deficit			Accumulated Other Comprehensive Loss			Noncontrolling Interest in Subsidiaries			Total
(In millions)	Shares	Amount		Additional Paid-in Capital		Retained Deficit			Accumulated Other Comprehensive Loss			Noncontrolling Interest in Subsidiaries			Total
Balance, January 1, 2019	106	$	—	$	1,316	$	(96	)	$	(373	)	$	8		$	855
Net (loss) income	—	—		—		(3		)	—			1			(2		)
Other comprehensive income, net of tax	—	—		—		—			19			—			19
Dividends paid to noncontrolling interests	—	—		—		—			—			(1		)	(1		)
Activity related to stock plans	1	—		1		—			—			—			1
Balance, March 31, 2019	107	$	—	$	1,317	$	(99	)	$	(354	)	$	8		$	872
Net income	—	—		—		21			—			1			22
Other comprehensive loss, net of tax	—	—		—		—			(8		)	—			(8		)
Dividends paid to noncontrolling interests	—	—		—		—			—			(2		)	(2		)
Activity related to stock plans	—	—		2		—			—			—			2
Balance, June 30, 2019	107	$	—	$	1,319	$	(78	)	$	(362	)	$	7		$	886



	Total Venator Materials PLC Equity
	Ordinary Shares			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss			Noncontrolling Interest in Subsidiaries			Total
(In millions)	Shares	Amount		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss			Noncontrolling Interest in Subsidiaries			Total
Balance, January 1, 2018	106	$	—	$	1,311	$	67	$	(283	)	$	10		$	1,105
Net income	—	—		—		78		—			2			80
Other comprehensive income, net of tax	—	—		—		—		53			—			53
Dividends paid to noncontrolling interests	—	—		—		—		—			(2		)	(2		)
Activity related to stock plans	—	—		1		—		—			—			1
Balance, March 31, 2018	106	$	—	$	1,312	$	145	$	(230	)	$	10		$	1,237
Net income	—	—		—		196		—			2			198
Other comprehensive loss, net of tax	—	—		—		—		(99		)	—			(99		)
Dividends paid to noncontrolling interests	—	—		—		—		—			(3		)	(3		)
Activity related to stock plans	—	—		1		—		—			—			1
Balance, June 30, 2018	106	$	—	$	1,313	$	341	$	(329	)	$	9		$	1,334

See notes to unaudited condensed consolidated ~~and combined~~ financial statements.

Table of Contents

VENATOR MATERIALS PLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED ~~AND COMBINED~~ STATEMENTS OF ~~OPERATIONS~~

CASH FLOWS

(Unaudited)

Three months ended

Nine months ended

September 30,

September 30,
(Dollars in millions, except per share amounts)

2017

2016

2017

2016
Trade sales, services and fees, net

$
582

$
532

$
1,681

$
1,648
Cost of goods sold

446

491

1,351

1,547
Operating expenses:

Selling, general and administrative (includes corporate allocations from Huntsman Corporation of $9, $27, $62 and $76, respectively)

51

55

159

168
Restructuring, impairment and plant closing costs

16

7

49

31
Other income, net

(6)

(22)

1

(33)
Total expenses

61

40

209

166
Operating income (loss)

75

1

121

(65)
Interest expense

(30)

(14)

(54)

(44)
Interest income

22

2

25

13
Other income

—

—

—

1
Income (loss) from continuing operations before income taxes

67

(11)

92

(95)
Income tax (expense) benefit

(14)

7

(26)

14
Income (loss) from continuing operations

53

(4)

66

(81)
Income from discontinued operations, net of tax

—

2

8

8
Net income (loss)

53

(2)

74

(73)
Net income attributable to noncontrolling interests

(2)

(3)

(8)

(8)
Net income (loss) attributable to Venator

$
51

$
(5)

$
66

$
(81)

Basic earnings (losses) per share:

Income (loss) from continuing operations attributable to Venator Materials PLC ordinary shareholders

$
0.48

$
(0.07)

$
0.55

$
(0.84)
Income from discontinued operations attributable to Venator Materials PLC ordinary shareholders

—

0.02

0.08

0.08
Net income (loss) attributable to Venator Materials PLC ordinary shareholders

$
0.48

$
(0.05)

$
0.63

$
(0.76)

Diluted earnings (losses) per share:

Income (loss) from continuing operations attributable to Venator Materials PLC ordinary shareholders

$
0.48

$
(0.07)

$
0.54

$
(0.84)
Income from discontinued operations attributable to Venator Materials PLC ordinary shareholders

—

0.02

0.08

0.08
Net income (loss) attributable to Venator Materials PLC ordinary shareholders

$
0.48

$
(0.05)

$
0.62

$
(0.76)



	Six months ended June 30,
(Dollars in millions)	2019			2018
Operating Activities:
Net income	$	20		$	278
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization	55			69
Deferred income taxes	(12		)	28
Noncash restructuring and impairment charges	(2		)	133
Other, net	8			2
Changes in operating assets and liabilities:
Accounts receivable	(77		)	(56		)
Inventories	30			(46		)
Prepaid expenses	10			9
Other current assets	(2		)	(14		)
Other noncurrent assets	—			(1		)
Accounts payable	(44		)	(17		)
Accrued liabilities	(18		)	(59		)
Other noncurrent liabilities	(18		)	(21		)
Net cash (used in) provided by operating activities	(50		)	305
Investing Activities:
Capital expenditures	(83		)	(167		)
Cash received from unconsolidated affiliates	20			14
Investment in unconsolidated affiliates	(24		)	(9		)
Cash received from notes receivable	6			—
Other, net	(1		)	—
Net cash used in investing activities	(82		)	(162		)
Financing Activities:
Net borrowings under ABL Facility	24			—
Repayment of third-party debt	(2		)	(9		)
Dividends paid to noncontrolling interests	(3		)	(5		)
Other, net	(2		)	—
Net cash provided by (used in) financing activities	17			(14		)
Effect of exchange rate changes on cash	—			(13		)
Net change in cash and cash equivalents	(115		)	116
Cash and cash equivalents at beginning of period	165			238
Cash and cash equivalents at end of period	$	50		$	354

Supplemental cash flow information:
Cash paid for interest	$	23		$	25
Cash paid for income taxes	3			20
Supplemental disclosure of noncash activities:
Capital expenditures included in accounts payable as of June 30, 2019 and 2018, respectively	$	26		$	49

See notes to unaudited condensed consolidated ~~and combined~~ financial statements.

Table of Contents

VENATOR MATERIALS PLC AND SUBSIDIARIES

~~CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)~~

~~(Unaudited)~~

Three months ended

Nine months ended

September 30,

September 30,
(Dollars in millions)

2017

2016

2017

2016
Net income (loss)

$
53

$
(2)

$
74

$
(73)
Other comprehensive income (loss), net of tax:

Foreign currency translation adjustment

(4)

(30)

75

(91)
Pension and other postretirement benefits adjustments

8

4

36

16
Other comprehensive income (loss), net of tax

4

(26)

111

(75)
Comprehensive income (loss)

57

(28)

185

(148)
Comprehensive income attributable to noncontrolling interest

(2)

(3)

(8)

(8)
Comprehensive income (loss) attributable to Venator

$
55

$
(31)

$
177

$
(156)

~~See notes to unaudited condensed consolidated and combined financial statements.~~

~~Table of Contents~~

~~VENATOR MATERIALS PLC AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF EQUITY~~

~~(Unaudited)~~

Total Venator Materials PLC Equity


Parent’s Net


Accumulated




Investment

Additional

Other

Noncontrolling

and

Ordinary

Paid-in

Accumulated

Comprehensive

Interest in

(Dollars in millions)

Advances

Shares

Capital

Deficit

Loss

Subsidiaries

Total
Balance, January 1, 2017

$
588

$
—

$
—

$
—

$
(423)

$
12

$
177
Net income (loss)

67

—

—

(1)

—

8

74
Net changes in other comprehensive income

—

—

—

—

111

—

111
Dividends paid to noncontrolling interests

—

—

—

—

—

(9)

(9)
Net changes in parent’s net investment and advances

663

—

—

—

—

—

663
Conversion of parent's net investment and advances to paid-in capital

(1,318)

—

1,318

—

—

—

—
Balance, September 30, 2017

$
—

$
—

$
1,318

$
(1)

$
(312)

$
11

$
1,016

Total Venator Materials PLC Equity


Parent’s Net


Accumulated




Investment

Additional

Other

Noncontrolling

and

Ordinary

Paid-in

Accumulated

Comprehensive

Interest in

(Dollars in millions)

Advances

Shares

Capital

Deficit

Loss

Subsidiaries

Total
Balance, January 1, 2016

$
1,112

$
—

$
—

$
—

$
(401)

$
17

$
728
Net (loss) income

(81)

—

—

—

—

8

(73)
Net changes in other comprehensive loss

—

—

—

—

(75)

—

(75)
Dividends paid to noncontrolling interests

—

—

—

—

—

(10)

(10)
Net changes in parent’s net investment and advances

(318)

—

—

—

—

(2)

(320)
Balance, September 30, 2016

$
713

$
—

$
—

$
—

$
(476)

$
13

$
250

~~See notes to unaudited condensed consolidated and combined financial statements.~~

~~Table of Contents~~

~~VENATOR MATERIALS PLC AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS~~

~~(Unaudited)~~

Nine months ended

September 30,
(Dollars in millions)

2017

2016
Operating Activities:




Net income (loss)

$
74

$
(73)
Income from discontinued operations, net of tax

(8)

(8)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:




Depreciation and amortization

95

84
Deferred income taxes

(2)

(17)
Noncash restructuring and impairment charges

7

9
Noncash interest

18

32
Noncash loss on foreign currency transactions

1

2
Gain on disposal of businesses/assets, net

—

(23)
Other, net

2

3
Changes in operating assets and liabilities:



Accounts receivable

(54)

(5)
Inventories

22

113
Prepaid expenses

(1)

(1)
Other current assets

(8)

2
Other noncurrent assets

6

(7)
Accounts payable

8

6
Accrued liabilities

40

(25)
Other noncurrent liabilities

(20)

(5)
Net cash provided by operating activities from continuing operations

180

87
Net cash provided by operating activities from discontinued operations

1

6
Net cash provided by operating activities

181

93
Investing Activities:




Capital expenditures

(97)

(76)
Insurance proceeds for recovery of property damage

50

—
Net repayments from (advances to) affiliates

121

(36)
Repayment of government grant

(5)

—
Cash received from unconsolidated affiliates

37

25
Investment in unconsolidated affiliates

(33)

(21)
Proceeds from sale of businesses/assets

—

9
Net cash provided by (used in) investing activities from continuing operations

73

(99)
Net cash used in investing activities from discontinued operations

(1)

(6)
Net cash provided by (used in) investing activities

72

(105)
Financing Activities:




Repayment of long-term debt

(5)

(1)
Net repayments on affiliate accounts payable

(86)

23
Final settlement of affilate balances at Separation

(732)

—
Dividends paid to noncontrolling interests

(9)

(10)
Proceeds from issuance of long-term debt

750

—
Debt issuance costs paid

(18)

—
Other financing activities

1

(2)
Net cash (used in) provided by financing activities

(99)

10
Effect of exchange rate changes on cash

2

—
Net change in cash and cash equivalents, including discontinued operations

156

(2)
Cash and cash equivalents at beginning of period, including discontinued operations

30

22
Cash and cash equivalents at end of period, including discontinued operations

$
186

$
20

Supplemental cash flow information:




Cash paid for interest

$
2

$
4
Cash paid for income taxes

11

6
Supplemental disclosure of noncash activities:

Capital expenditures included in accounts payable as of September 30, 2017 and 2016, respectively

$
19

$
17
Received settlements of notes receivable from affiliates

57

230
Settlement of long-term notes payable/notes receivable with affiliates

792

(1)

~~See notes to unaudited condensed consolidated and combined financial statements.~~

~~Table of Contents~~

~~VENATOR MATERIALS PLC AND SUBSIDIARIES~~

NOTES TO UNAUDITED CONDENSED CONSOLIDATED ~~AND COMBINED~~ FINANCIAL STATEMENTS

~~NOTE~~

Note 1. ~~GENERAL, DESCRIPTION OF BUSINESS, RECENT DEVELOPMENTS AND BASIS OF PRESENTATION~~

General,

~~Except when the context otherwise requires or where otherwise indicated, (1) all references to "Venator," the "Company," "we," "us"~~ Description of Business, Recent Developments and ~~"our" refer to~~ Basis of Presentation

Description of Business

Venator ~~Materials PLC~~became an independent publicly traded company following our IPO and ~~its subsidiaries, or, as the context requires, the historical Pigments and Additives business of Huntsman, (2) all references to "Huntsman" refer to~~separation from Huntsman Corporation ~~our controlling shareholder, and its subsidiaries, other than us, (3) all references to the "Titanium Dioxide" segment or business refer to the TiO~~₂ business of Venator, or, as the context requires, the historical Pigments and Additives segment of Huntsman and the related operations and assets, liabilities and obligations, (4) all references to the "Performance Additives" segment or business refer to the functional additives, color pigments, timber treatment and water treatment businesses of Venator, or, as the context requires, the Pigments and Additives segment of Huntsman and the related operations and assets, liabilities and obligations, (5) all references to "other businesses" refer to certain businesses that Huntsman retained in connection with the Separation and that are reported as discontinued operations in our condensed consolidated and combined financial statements, (6) all references to "Huntsman International" refer to Huntsman International LLC, a wholly-owned subsidiary of Huntsman, and the entity through which Huntsman operates all of its businesses, and (7) we refer to the internal reorganization prior to our initial public offering (our “IPO”), the separation transactions initiated to separate the Venator business from Huntsman’s other businesses, including the entry into and effectiveness of the separation agreement and ancillary agreements, and the Senior Credit Facilities (as defined below) and Senior Notes (as defined below), including the use of the net proceeds of the Senior Credit Facilities and the Senior Notes, which were used to repay intercompany debt we owed to Huntsman and to pay related fees and expenses, as the "Separation" and (8) the “Rockwood acquisition” refers to Huntsman’s acquisition of the performance and additives and TiO₂ ~~businesses of Rockwood Holdings, Inc. (“Rockwood”) completed on October 1, 2014.~~

~~Description of Business~~

August 2017. Venator operates in two segments: Titanium Dioxide and Performance Additives. The Titanium Dioxide segment primarily manufactures and sells ~~primarily~~ TiO₂, and operates eight TiO₂ manufacturing facilities across the ~~globe, predominantly in Europe.~~globe. The Performance Additives segment manufactures and sells functional additives, color pigments, timber treatment and water treatment chemicals. This segment operates ~~19 color pigments, functional additives, water treatment and timber treatment~~16 manufacturing and processing facilities ~~in Europe, North America, Asia and Australia.~~

~~Recent Developments~~

~~Initial Public Offering and Separation~~

On August 8, 2017, we completed our IPO of 26,105,000 of our outstanding 106,271,712 ordinary shares, par value $0.001 per share, which includes 3,405,000 ordinary shares issued upon the exercise in full by the underwriters of their option to purchase additional shares, at a public offering price of $20.00 per share. All of the ordinary shares were sold by Huntsman, and we did not receive any proceeds from the offering. The ordinary shares began trading August 3, 2017 on the New York Stock Exchange under the symbol “VNTR.” Following our IPO, Huntsman owns approximately 75% of Venator’s outstanding ordinary shares. ~~The material terms of our IPO are described in the Prospectus.~~

In connection with our IPO and the Separation, Venator and Huntsman entered into certain agreements that allocated between Venator and Huntsman the various assets, employees, liabilities and obligations that were previously part of Huntsman and that govern various interim and ongoing relationships between the parties.

~~On August 15, 2017, we registered 14,025,000 ordinary shares on Form S-8 which are reserved in connection with awards under our 2017 Stock Incentive Plan.~~

globally.

~~Table of Contents~~

~~Senior Credit Facilities and Senior Notes~~

On August 8, 2017, in connection with our IPO and the Separation, we entered into new financing arrangements and incurred new debt, including borrowings of $375 million under a new senior secured term loan facility with a maturity of seven years (the “Term Loan Facility”). In addition to the Term Loan Facility, we entered into a $300 million asset-based revolving lending facility with a maturity of five years (the “ABL Facility” and, together with the Term Loan Facility, the “Senior Credit Facilities”). On July 14, 2017, in connection with our IPO and the Separation, our subsidiaries Venator Finance S.à.r.l. and Venator Materials LLC (the “Issuers”), issued $375 million in aggregate principal amount of 5.75% of Senior Notes due 2025 (the “Senior Notes”). Promptly following consummation of the Separation, the proceeds of the Senior Notes were released from escrow and Venator used the net proceeds of the Senior Notes and borrowings under the Term Loan Facility to repay approximately $732 million of net intercompany debt owed to Huntsman and to pay related fees and expenses of approximately $18 million.

~~Pori Fire~~

We have recorded a loss of $31 million for the write-off of fixed assets and lost inventory in other operating income, net in our condensed consolidated and combined statements of operations for the nine months ending September 30, 2017. In addition, we recorded a loss of $18 million of costs for cleanup of the facility in other operating income, net through September 30, 2017. The site is insured for property damage as well as business interruption losses subject to retained deductibles of $15 million and 60 days, respectively, with a limit of $500 million. Due to prevailing strong market conditions, our TiO₂ selling prices continue to improve and our business is benefitting from the resulting improved profitability and cash flows. This also has the effect of increasing our total anticipated business interruption losses from the Pori site. We currently believe the combination of increased TiO₂ profitability and recently estimated reconstruction costs will result in losses and costs in excess of our $500 million insurance limit. We currently expect to contain these over-the-limit costs within $100 million to $150 million, and to account for them as capital expenditures. However, these are preliminary estimates based on a number of significant assumptions, and as a result uninsured costs could exceed current estimates. Factors that could materially impact our current estimates include our actual future TiO₂ profitability and related impact on our business interruption losses; the accuracy of our current property damage estimates; the actual costs and timing of our reconstruction efforts; the extent to which we rebuild the 40% of site capacity that produces commoditized products; our ability to secure government subsidies related to our reconstruction efforts; and a number of other significant market and facility-related assumptions. Please see “Part II. Item 1A. Risk Factors—Disruptions in production at our manufacturing facilities, including our Pori facility, may have a material adverse impact on our business, results of operations and/or financial condition.”

The fire at our Pori facility did not have a material impact on our 2017 third quarter operating results as losses incurred were offset by insurance proceeds. We received $141 million of non-refundable partial progress payments from our insurer through September 30, 2017 and we received an additional $112 million payment on October 9, 2017. During the first nine months of 2017, we recorded $128 million of income related to property damage and business interruption insurance recoveries in other operating income, net and cost of goods sold in our condensed consolidated and combined statements of operations to offset property damage and business interruption losses recorded during the period. We recorded $17 million as deferred income in accrued liabilities as of September 30, 2017 for insurance proceeds received for costs not yet incurred. The difference between payments received from our insurers of $141 million and the sum of income of $128 million and deferred income of $17 million is related to the foreign exchange movements of the U.S. Dollar against the Euro during the first nine months of the year.

Basis of Presentation

~~Venator’s~~

Our unaudited condensed consolidated ~~and combined~~ financial statements ~~have been~~were prepared in accordance with accounting principles generally accepted ~~accounting principles~~ in the United States of America ("GAAP" or "U.S. GAAP") and in

~~Table of Contents~~

management’s opinion reflect all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of results of operations, comprehensive income, ~~(loss),~~ financial position and cash flows for the periods presented. Results offor interim periods are not necessarily indicative of those to be expected for the full year. These unaudited condensed consolidated ~~and combined~~ financial statements should be read in conjunction with the audited consolidated and combined financial statements and notes to consolidated and combined financial statements included in the ~~Prospectus.~~

~~Prior~~Annual Report on Form 10‑K for the year ended December 31, 2018 for our Company.

In the notes to the Separation, Venator’s operations were included in Huntsman’s financial results in different legal forms, including but not limited to: (1) wholly-owned subsidiaries for which the Titanium Dioxide and Performance Additives businesses were the sole businesses; (2) legal entities which are comprised of other businesses and include the Titanium Dioxide and/or Performance Additives businesses; and (3) variable interest entities in which the Titanium Dioxide and Performance Additives businesses are the primary beneficiaries. The unaudited condensed consolidated ~~and combined~~ financial statements ~~include~~, all ~~revenues, costs,~~dollar and share amounts, except per share amounts, in tabulations are in millions unless otherwise indicated.

Recent Developments

On April 26, 2019, we acquired intangible assets related to the European paper laminates product line from Tronox Limited ("Tronox") for a purchase price of €8 million payable as follows: €1 million upon completion of the acquisition and the remaining €7 million in two installments over two years. A note payable for $8 million is included within accrued liabilities and ~~cash flows directly attributable to Venator. The~~other noncurrent liabilities on our unaudited condensed consolidated and combined financial statements also include allocations of direct and indirect corporate expenses through the date of the Separation, which are based upon an allocation method that in the opinion of management is reasonable. Because the historical condensed consolidated and combined financial information for the periods indicated reflect the combination of these legal entities under common control, the historical condensed consolidated and combined financial information includes the results of operations of other businesses that are not a part of our operations after the Separation. We report the results of those other businesses as discontinued operations. See “Note 3. Discontinued Operations” for further discussion of discontinued operations.

In addition, the unaudited condensed consolidated and combined financial statements have been prepared from Huntsman’s historical accounting records through the Separation and are presented on a stand-alone basis as if Venator’s operations had been conducted separately from Huntsman; however, prior to the Separation, Venator did not operate as a separate, stand-alone entity for the periods presented and, as such, the condensed consolidated and combined financial statements reflecting balances and activity prior to the Separation, may not be indicative of the financial position, results of operations and cash flows had Venator been a stand-alone company.

For purposes of these unaudited condensed consolidated and combined financial statements, all significant transactions with Huntsman International have been included in group equity. All intercompany transactions within the consolidated business have been eliminated.

Prior to the Separation, Huntsman’s executive, information technology, EHS and certain other corporate departments performed certain administrative and other services for Venator. Additionally, Huntsman performed certain site services for Venator. Expenses incurred by Huntsman and allocated to Venator were determined based on specific services provided or were allocated based on Venator’s total revenues, total assets, and total employees in proportion to those of Huntsman. Management believes that such expense allocations are reasonable. Corporate allocations include allocated selling, general, and administrative expenses of $9 million and $27 million for the three months ended Septemberbalance sheets at June 30, ~~2017 and 2016, respectively, and $62 million and $76 million for the nine months ended September 30, 2017 and 2016, respectively.~~

2019.

~~NOTE~~

Note 2. ~~RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS~~

Recently Issued Accounting Pronouncements

Accounting Pronouncements ~~Pending~~Adopted During the Period

Effective January 1, 2019, we adopted Accounting Standards Update ("ASU") No. 2016-02, Leases (Topic 842) using the modified retrospective approach which applies the provisions of the standard at the effective date without adjusting the comparative periods presented. The adoption of this ASU did not result in a cumulative effect adjustment to the opening balance of retained earnings. This ASU requires substantially all leases to be recognized on the balance sheet as right-of-use assets ("ROU assets") and lease obligations. Additional qualitative and quantitative disclosures are also required. Adoption of the new standard resulted in ~~Future Periods~~

the recording of an operating lease ROU asset of $47 million and a lease liability of $49 million. The adoption of this ASU did not have a material impact on our condensed consolidated statements of operations or cash flows. Our accounting for finance leases remained substantially unchanged.

We elected the following optional practical expedients allowed under the ASU: (i) we applied the package of practical expedients permitting entities not to reassess under the new standard our prior conclusions about lease identification, classification or initial direct costs for any leases existing prior to the effective date; (ii) we elected to account for lease and associated non-lease components as a single lease component for all asset classes with the exception of buildings and (iii) we do not recognize ROU assets and related lease obligations with lease terms of 12 months or less from the commencement date.

Table of Contents

In ~~May 2014,~~February 2018, the Financial Accounting Standards Board ~~(“FASB”~~("FASB") ~~issued Accounting Standard Update (“ASU”) No. 2014‑09,~~ ~~Revenue from Contracts with Customers (Topic 606)~~, outlining a single comprehensive model for entities to use in accounting for revenues arising from contracts with customers and supersedes most current revenue recognition guidance. In August 2015, the FASB issued ASU No. ~~2015‑14,~~ ~~Revenue from Contracts with Customers~~2018-02, Income Statement—Reporting Comprehensive Income (Topic ~~606): Deferral~~220). This standard provides an option to reclassify stranded tax effects within accumulated other comprehensive income (loss) to retained earnings due to the U.S. federal corporate income tax rate change in the Tax Cuts and Jobs Act of ~~the Effective Date, deferring the~~2017 (the "Tax Act"). This standard is effective ~~date of ASU No. 2014‑09~~ for ~~all entities by one year. Further, in March 2016, the FASB issued ASU No. 2016‑08,~~ ~~Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), clarifying the implementation guidance on principal versus agent considerations, in April 2016, the FASB issued ASU No. 2016‑10,~~ ~~Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations~~interim and ~~Licensing~~, clarifying the implementation guidance on identifying performance obligations in a contract and determining whether an entity’s promise to grant a license provides a customer with either a right to use the entity’s intellectual property (which is satisfied at a point in time) or a right to access the entity’s intellectual property (which is satisfied over time), in May 2016, the FASB issued ASU No. 2016‑12, ~~Revenue from Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients~~,

~~Table of Contents~~

~~providing clarifications and practical expedients for certain narrow aspects in Topic 606, and in December 2016, the FASB issued ASU 2016‑20,~~ ~~Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers. The amendments in these ASUs are effective for~~ annual reporting periods beginning after December 15, ~~2017, including interim periods within that reporting period.~~2018. The amendments in ASU No. 2014‑09, ASU No. 2016‑08, ASU No. 2016‑10, ASU No. 2016‑12 and ASU No. 2016‑20 should be applied retrospectively, and early application is permitted. We are substantially complete with our analysis to identify areas that will be impacted by the adoption of ~~the amendments in~~this ASU ~~No. 2014‑09, ASU No. 2016‑08, ASU No. 2016‑10, ASU No. 2016‑12 and ASU No. 2016‑20 on our financial statements. At this time, other than additional required disclosures, we do~~did not ~~expect the adoption of the amendments in these ASUs to~~ have a ~~significant~~material impact on our ~~financial statements. The standard will be adopted~~unaudited condensed consolidated statement of comprehensive income.

Accounting Pronouncements Pending Adoption in ~~our fiscal year 2018 and we have elected the modified retrospective approach as the transition method.~~

Future Periods

In ~~February~~June 2016, the FASB issued ASU No. ~~2016‑02,~~ ~~Leases~~2016-13, Financial Instruments - Credit Losses (Topic ~~842)~~. 326), Measurement of Credit Losses on Financial Instruments. The amendments in this ASU ~~will increase transparency and comparability among entities by recognizing lease assets and lease liabilities on~~replace the ~~balance sheet and disclosing key~~incurred loss impairment methodology with a methodology that reflects expected credit losses. This update is intended to provide financial statement users with more decision-useful information about ~~leasing arrangements.~~the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The amendments in this ASU will require lessees to recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early application of the amendments in this ASUnew standard is permitted for all entities. Reporting entities are required to recognize and measure leases under these amendments at the beginning of the earliest period presented using a modified retrospective approach. We are currently evaluating the impact of the adoption of the amendments in this ASU on our financial statements and believe, based on our preliminary assessment, that we will record significant additional right-of-use assets and lease obligations.

~~In August 2016, the FASB issued ASU No. 2016‑15,~~ ~~Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments~~. The amendments in this ASU clarify and include specific guidance to address diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is permitted, including adoption in an interim period. The amendments in this ASU should be applied using a retrospective transition method to each period presented. We do not expect the adoption of the amendments in this ASU to have a significant impact on our financial statements.

~~In October 2016, the FASB issued ASU No. 2016‑16,~~ ~~Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory~~. The amendments in this ASU require entities to recognize the current and deferred income taxes for an intra-entity transfer of an asset other than inventory when the transfer occurs, as opposed to deferring the recognition of the income tax consequences until the asset has been sold to an outside party. The amendments in this ASU are effective for annual reporting periods beginning after December 31, 2017, including interim reporting periods within those annual reporting periods. Early adoption is permitted for all entities as of the beginning of an annual reporting period for which financial statements (interim or annual) have not been issued or made available for issuance. The amendments in this ASU should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. We do not expect the adoption of the amendments in this ASU to have a significant impact on our financial statements.

~~In March 2017, the FASB issued ASU No. 2017‑07,~~ ~~Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost~~. The amendments in this ASU require that an employer report the service cost component of net periodic pension cost and net periodic postretirement benefit cost in the same line items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside of income from operations. The amendments in this ASU also allow only the service cost component to be eligible for capitalization when applicable (for example, as a cost of internally manufactured inventory or a self-constructed asset). The amendments in this ASU are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The amendments in this ASU should be applied retrospectively for the presentation of the service cost component and the other components of net periodic pension cost and net periodic postretirement benefit cost in the income statement and prospectively, on and after the effective date, for the capitalization of the service cost component of net periodic pension cost and net periodic postretirement benefit cost in assets. The amendments in this ASU will impact the presentation of our financial statements. Our current presentation of service cost components is consistent2019, with ~~the amendments in this ASU. Upon~~

~~Table of Contents~~

early adoption of the amendments in this ASU, we expect to present the other components within other nonoperating income, whereas we currently present these within cost of goods sold and selling, general and administrative expenses.

~~In August 2017, the FASB issued ASU No. 2017‑12,~~ ~~Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities~~. The amendments in this ASU better align an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships as well as the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements to increase the understandability of the results of an entity’s intended hedging strategies. The amendments in this ASU also include certain targeted improvements to ease the application of current guidance related to the assessment of hedge effectiveness. The amendments in this ASU are effectivepermitted for fiscal years beginning after December 15, 2018. We have completed our assessment and we do not anticipate this will have a material impact on our consolidated financial statements.

In August 2018, ~~including interim periods within those fiscal years. Early application is permitted in any interim period after~~ the issuance of this ASU. Transition requirements and elections should be applied to hedging relationships existing on the date of adoption. For cash flow and net investment hedges, an entity should apply a cumulative-effect adjustment related to eliminating the separate measurement of ineffectiveness, and the amended presentation and disclosure guidance is required only prospectively. We are currently evaluating the impact of the adoption of theFASB issued ASU No. 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20). The amendments in this ASU add, remove, and clarify disclosure requirements related to defined benefit pension and other postretirement plans. This ASU eliminates the requirement to disclose the amounts in accumulated other comprehensive income expected to be recognized as part of net periodic benefit cost over the next year. The ASU also removes the disclosure requirements for the effects of a one-percentage-point change on the assumed health care costs and the effect of this change in rates on service cost, interest cost and the benefit obligation for postretirement health care benefits. This standard is effective for fiscal years ending after December 15, 2020, and must be applied on a retrospective basis. Since the ASU is related to disclosure requirements only, this adoption will not have a material impact on our consolidated financial statements.

~~NOTE~~

Note 3. ~~DISCONTINUED OPERATIONS~~

~~The Titanium Dioxide, Performance Additives~~Leases

We have leases for warehouses, office space, land, office equipment, production equipment and ~~other businesses were~~automobiles. ROU assets and lease obligations are recognized at the lease commencement date based on the present value of lease payments over the lease term. Operating lease ROU assets and liabilities are included in ~~Huntsman's financial results~~operating lease right-of-use assets, current operating lease liabilities, and operating lease liabilities on our condensed consolidated balance sheet. Finance leases ROU assets are included in ~~different legal forms, including,~~property, plant and equipment, net, while finance lease liabilities are included in other non-current liabilities. As the implicit rate is not readily determinable in most of our lease arrangements, we use our incremental borrowing rate based on information available at the commencement date in order to determine the net present value of lease payments. We give consideration to our recent debt issuances as well as publicly available data for instruments with similar characteristics when calculating our incremental borrowing rates. We have lease agreements that contain lease and non-lease components.

We determine if an arrangement is a lease or contains a lease at inception. Certain leases contain renewal options that can extend the term of the lease for one year or more. Our leases have remaining lease terms of up to 93 years, some of which include options to extend the lease term for up to 20 years. Options are recognized as part of our ROU assets and lease liabilities when it is reasonably certain that we will extend that option. Sublease arrangements and leases with residual value guarantees, sale leaseback terms or material restrictive covenants, are immaterial. Lease payments include fixed and variable lease components. Variable components are derived from usage or market-based indices, such as the consumer price index. As of June 30, 2019, we do not have leases initiated but not ~~limited to: (1) wholly-owned subsidiaries~~yet commenced which are expected to commence during the remainder of 2019.

Table of Contents

The components of lease expense were as follows:



Lease Cost	Three months ended June 30, 2019		Six months ended June 30, 2019
Operating lease cost	$	3	$	7
Finance lease cost:
Amortization of right-of-use assets	1		1
Interest on lease liabilities	—		—
Short-term lease cost	—		1

Supplemental balance sheet information related to leases was as follows:



Leases	As of June 30, 2019
Assets
Operating Lease Right-of-Use Assets	$	41

Finance Lease Right-of-Use Assets, at cost	$	13
Accumulated Depreciation	(4		)
Finance Lease Right-of-Use Assets, net	$	9

Liabilities
Operating Lease Obligation
Current	$	9
Non-Current	34
Total Operating Lease Liabilities	$	43

Finance Lease Obligation
Current	$	1
Non-Current	8
Total Finance Lease Liabilities	$	9

Cash paid for ~~which~~amounts included in the ~~Titanium Dioxide and Performance Additives businesses~~present value of operating lease liabilities were as follows:



Cash Flow Information	Three months ended June 30, 2019		Six months ended June 30, 2019
Operating cash flows from operating leases	$	3	$	7
Operating cash flows from finance leases	1		1
Financing cash flows from finance leases	—		—



Lease Term and Discount Rate	As of June 30, 2019
Weighted average remaining lease term (years)
Operating leases	12.5
Finance leases	7.3
Weighted average discount rate
Operating leases	7.2	%
Financing leases	5.2	%

Table of Contents

Maturities of lease liabilities were as follows:



June 30, 2019	Operating Leases		Finance Leases		Total
2019 (remaining)	$	6	$	1	$	7
2020	10		2		12
2021	8		1		9
2022	6		1		7
2023	4		1		5
After 2023	38		4		42
Total lease payments	$	72	$	10	$	82
Less: Interest	29		1		30
Present value of lease liabilities	$	43	$	9	$	52

Disclosures related to periods prior to adoption of the ~~sole businesses; (2) legal entities that were comprised of other businesses and include~~New Lease Standard

The total expense recorded under operating lease agreements in the Titanium Dioxide and/or Performance Additives businesses; and (3) variable interest entities in which the Titanium Dioxide, Performance Additives and other businesses are the primary beneficiaries. Because the historical condensed consolidated and combined ~~financial information~~statements of operations was $16 million for the ~~periods indicated reflect~~year ended December 31, 2018. Future minimum lease payments under noncancelable operating leases as of December 31, 2018 were as follows:



December 31,	Operating Leases		Capital Leases
2019	$	13	$	1
2020	11		2
2021	9		1
2022	6		1
2023	4		1
Thereafter	40		7
Total	$	83	$	13
Less: Amounts representing interest			3
Present value of minimum lease payments			$	10
Less: Current portion of capital leases			1
Long-term portion of capital leases			$	9

Note 4. Revenue

We generate substantially all of our revenues through sales of inventory in the ~~combination~~open market and via long-term supply agreements. At contract inception, we assess the goods promised in our contracts and identify a performance obligation for each promise to transfer to the customer a good that is distinct. In substantially all cases, a contract has a single performance obligation to deliver a promised good to the customer. Revenue is recognized when the performance obligations under the terms of ~~these~~our contracts are satisfied. Generally, this occurs at the time of shipping, at which point the control of the goods transfers to the customer. Further, in determining whether control has transferred, we consider if there is a present right to payment and legal ~~entities under common control,~~title, along with risks and rewards of ownership having transferred to the ~~historical condensed consolidated~~customer. Revenue is measured as the amount of consideration we expect to receive in exchange for transferred goods. Sales, value added, and ~~combined financial information includes the results of operations of~~ other ~~Huntsman businesses~~taxes we collect concurrent with revenue-producing activities are excluded from revenue. Incidental items that are ~~not a part of our operations after~~immaterial in the Separation. The legal entity structure of Huntsman was reorganized during the fourth quarter of 2016 and the second quarter of 2017 such that the other businesses would not be included in Venator’s legal entity structure and as such, the discontinued operations presented below reflect financial resultscontext of the ~~other businesses through~~contract are recognized as expense. We have elected to account for all shipping and handling activities as fulfillment costs. We recognize these costs for shipping and handling when control over products have transferred to the ~~date~~customer as an expense in cost of ~~such reorganization.~~

goods sold. We have also elected to expense commissions when incurred as the amortization period of the commission asset that we would have otherwise recognized is less than one year.

Table of Contents

The following table ~~summarizes~~disaggregates our revenue by major geographical region for the ~~balance sheet data for discontinued operations:~~

three and six months ended June 30, 2019 and 2018:

December 31,
(Dollars in millions)

2016
ASSETS
Current assets:


Cash and cash equivalents

$
1
Accounts receivable (net of allowance for doubtful accounts of $1)

10
Accounts receivable from affiliates

61
Inventories

9
Prepaid expenses

1
Other current assets

2
Total current assets of discontinued operations

84
Property, plant and equipment, net

19
Intangible assets, net

2
Deferred income taxes

21
Noncurrent assets of discontinued operations

42
Total assets of discontinued operations

$
126
LIABILITIES
Current liabilities:


Accounts payable

$
7
Accounts payable to affiliates

2
Accrued liabilities

18
Total current liabilities of discontinued operations

27
Deferred income taxes

1
Other noncurrent liabilities

77
Noncurrent liabilities of discontinued operations

78
Total liabilities of discontinued operations

$
105



	Three Months Ended June 30, 2019						Six Months Ended June 30, 2019
	Titanium Dioxide		Performance Additives		Total		Titanium Dioxide		Performance Additives		Total
Europe	$	215	$	49	$	264	$	428	$	104	$	532
North America	88		65		153		165		122		287
Asia	92		22		114		184		43		227
Other	44		3		47		87		7		94
Total Revenues	$	439	$	139	$	578	$	864	$	276	$	1,140



	Three Months Ended June 30, 2018						Six Months Ended June 30, 2018
	Titanium Dioxide		Performance Additives		Total		Titanium Dioxide		Performance Additives		Total
Europe	$	229	$	59	$	288	$	470	$	117	$	587
North America	80		78		158		151		155		306
Asia	96		30		126		192		57		249
Other	50		4		54		98		8		106
Total Revenues	$	455	$	171	$	626	$	911	$	337	$	1,248

The following table ~~summarizes~~disaggregates our revenue by major product line for the ~~operations data~~three and six months ended June 30, 2019 and 2018:



	Three Months Ended June 30, 2019						Six Months Ended June 30, 2019
	Titanium Dioxide		Performance Additives		Total		Titanium Dioxide		Performance Additives		Total
TiO₂	$	439	$	—	$	439	$	864	$	—	$	864
Color Pigments	—		70		70		—		140		140
Functional Additives	—		33		33		—		65		65
Timber Treatment	—		31		31		—		60		60
Water Treatment	—		5		5		—		11		11
Total Revenues	$	439	$	139	$	578	$	864	$	276	$	1,140



	Three Months Ended June 30, 2018						Six Months Ended June 30, 2018
	Titanium Dioxide		Performance Additives		Total		Titanium Dioxide		Performance Additives		Total
TiO₂	$	455	$	—	$	455	$	911	$	—	$	911
Color Pigments	—		84		84		—		166		166
Functional Additives	—		39		39		—		80		80
Timber Treatment	—		41		41		—		78		78
Water Treatment	—		7		7		—		13		13
Total Revenues	$	455	$	171	$	626	$	911	$	337	$	1,248

The amount of consideration we receive and revenue we recognize is based upon the terms stated in the sales contract, which may contain variable consideration such as discounts or rebates. We also give our customers a limited right to return products that have been damaged, do not satisfy their specifications, or for ~~discontinued operations:~~

Three months ended

Nine months ended

September 30,

September 30,
(Dollars in millions)

2017

2016

2017

2016
Revenues:








Trade sales, services and fees, net

$
—

$
28

$
15

$
83
Related party sales

—

15

17

51
Total revenues

—

43

32

134
Cost of goods sold

—

36

26

110
Operating expenses:








Selling, general and administrative (includes corporate allocations of nil, $2, $1 and $5, respectively)

—

6

(7)

16
Restructuring, impairment and plant closing costs

—

—

1

—
Other (income) expense, net

—

(1)

1

(2)
Total expenses (income)

—

5

(5)

14
Income from discontinued operations before tax

—

2

11

10
Income tax expense

—

—

(3)

(2)
Net income from discontinued operations

$
—

$
2

$
8

$
8

other specific reasons. Payment terms on product sales to our customers typically range from 30 days to 90 days. Although certain exceptions exist where

Table of Contents

~~NOTE 4. INVENTORIES~~

standard payment terms are exceeded, these instances are infrequent and do not exceed one year. Discounts are allowed for some customers for early payment or if certain volume commitments are met. As our standard payment terms are less than one year, we have elected to not assess whether a contract has a significant financing component. In order to estimate the applicable variable consideration at the time of revenue recognition, we use historical and current trend information to estimate the amount of discounts, rebates, or returns to which customers are likely to be entitled. Historically, actual discount or rebate adjustments relative to those estimated and accrued at the point of which revenue is recognized have not materially differed.

Note 5. Inventories

Inventories are stated at the lower of cost or market, with cost determined using ~~the~~first-in, first-out and average cost ~~method.~~methods for different components of inventory. Inventories at ~~September~~June 30, ~~2017~~2019 and December 31, ~~2016~~2018 consisted of the following:


	September 30,		December 31,
(Dollars in millions)	2017		2016
					June 30, 2019		December 31, 2018
Raw materials and supplies	$	164	$	134	$	163	$	165
Work in process		42		46	62		56
Finished goods		225		246	283		317
Total	$	431	$	426	$	508	$	538

On August 8, 2017, we entered into the Senior Credit Facilities that provide for first lien senior secured financing of up to $675 million, consisting of:

~~the Term Loan Facility in an aggregate principal amount of $375 million, with a maturity of seven years; and~~

~~the ABL Facility in an aggregate principal amount of up to $300 million, with a maturity of five years.~~

the Term Loan Facility in an aggregate principal amount of $375 million, with a maturity of seven years; and

the ABL Facility in an aggregate principal amount of up to $300 million, with a maturity of five years.

The Term Loan Facility ~~will amortize~~amortizes in aggregate annual amounts equal to 1% of the original principal amount of the Term Loan Facility ~~payable quarterly commencing in~~and is paid quarterly.

On June 20, 2019 the ~~fourth quarter~~ABL facility was increased to an aggregate principal amount of ~~2017.~~

up to $350 million, with no change to the maturity dates.

Availability to borrow ~~under~~ the ~~$300~~$350 million of commitments under the ABL Facility is subject to a borrowing base calculation comprised of accounts receivable and inventory in ~~United States,~~the U.S., Canada, the ~~United Kingdom,~~U.K., Germany and accounts receivable in France and Spain, that fluctuate ~~from time to time~~ and may be further impacted by the lenders’ discretionary ability to impose reserves and availability blocks that might otherwise incrementally increase borrowing availability. As a result, the aggregate amount available for extensions of credit under the ABL Facility at any time is the lesser of ~~$300~~$350 million and the borrowing base calculated according to the formula described above minus the aggregate amount of extensions of credit outstanding under the ABL Facility at such time.

Borrowings under the Term Loan Facility bear interest at a rate equal to, at Venator’s option, either (a) a London Interbank Offering Rate ~~(“LIBOR”~~("LIBOR") based rate determined by reference to the costs of funds for Eurodollar deposits for the interest period relevant to such borrowing, adjusted for certain additional costs subject to an interest rate floor to be agreed or (b) a base rate determined by reference to the highest of (i) the rate of interest per annum determined from time to time by JPMorgan Chase Bank, N.A. as its prime rate in effect at its principal office in New York City, (ii) the federal funds rate plus 0.50% per annum and (iii) the one-month adjusted LIBOR plus 1.00% per annum, in each case plus an applicable margin to be agreed upon. Borrowings under the ABL Facility bear interest at a variable rate equal to an applicable margin based on the applicable quarterly average excess availability under the ABL Facility plus either a LIBOR or a base rate. The applicable margin percentage is calculated and established once every three calendar months

Table of Contents

and varies from 150 to 200 basis points for LIBOR loans depending on the quarterly average excess availability under the ABL Facility for the immediately preceding ~~three month~~three-month period.

Guarantees

All obligations under the Senior Credit Facilities are guaranteed by Venator and substantially all of ~~its~~our subsidiaries (the ~~“Guarantors”~~"Guarantors"), and are secured by substantially all of the assets of Venator and the Guarantors, in each case subject to certain exceptions. Lien priority as between the Term Loan Facility and the ABL Facility with respect to the collateral will be governed by an intercreditor agreement.

~~Table of Contents~~

Substantially all of our U.S. operations and certain of their foreign subsidiary holdings fully and unconditionally guaranteed Huntsman International’s outstanding notes. Upon the Separation, such operations and entities no longer guarantee Huntsman International’s outstanding notes. As of December 31, 2016, Huntsman International and its guarantors had third-party debt outstanding of $3,793 million. As of December 31, 2016, our U.S. operations and certain of our foreign subsidiaries had total assets, excluding intercompany amounts, of $502 million.

~~Cash Pooling Program~~

Prior to the Separation, Venator addressed cash flow needs by participating in a cash pooling program with Huntsman. Cash pooling transactions were recorded as either amounts receivable from affiliates or amounts payable to affiliates and are presented as "Net advances to affiliates" and "Net borrowings on affiliate accounts payable" in the investing and financing sections, respectively, in the condensed consolidated and combined statements of cash flows. Interest income was earned if an affiliate was a net lender to the cash pool and paid if an affiliate was a net borrower from the cash pool based on a variable interest rate determined historically by Huntsman. Venator exited the cash pooling program prior to the Separation and all receivables and payables generated through the cash pooling program were settled in connection with the Separation.

~~Notes Receivable and Payable of Venator to Huntsman~~

As of September 30, 2017 and December 31, 2016, Venator had notes receivable outstanding from affiliates of nil and $57 million, respectively, and notes payable outstanding to affiliates totaling nil and $882 million, respectively. The borrowers and lenders were subsidiaries of Huntsman International and the notes were unsecured. Substantially all Huntsman receivables or payables were eliminated in connection with the Separation, other than a payable to Huntsman for a liability pursuant to the Tax Matters Agreement dated August 7, 2017, by and among Venator Materials PLC and Huntsman Corporation (the “Tax Matters Agreement”) entered into at the time of the Separation which has been presented as “Noncurrent payable to affiliates” on our condensed consolidated and combined balance sheet. See “Note 9. Income Taxes” for further discussion.

~~A/R Programs~~

Certain of our entities participated in the accounts receivable securitization programs ("A/R Programs") sponsored by Huntsman International. Under the A/R Programs, such entities sold certain of their trade receivables to Huntsman International. Huntsman International granted an undivided interest in these receivables to a special purpose entity, which served as security for the issuance of debt of Huntsman International. On April 21, 2017, Huntsman International amended its accounts receivable securitization facilities, which among other things removed existing receivables sold into the program by Venator and at which time we discontinued our participation in the A/R Programs.

As of December 31, 2016, Huntsman International had $106 million of net receivables in their A/R Programs and reflected on their balance sheet associated with Venator. The entities’ allocated losses on the A/R Programs for the three months ended September 30, 2016 was $1 million, and for the nine months ended September 30, 2017 and 2016 were $1 million and $4 million, respectively. The allocation of losses on sale of accounts receivable is based upon the pro-rata portion of total receivables sold into the securitization program as well as other program and interest expenses associated with the A/R Programs.

~~Compliance with Covenants~~

We believe that we are in compliance with the covenants contained in the agreements governing our material financing arrangements, including our Senior Credit Facilities and our Senior Notes. Our material financing agreements are subject to affirmative and negative covenants which are customary for secured financings of this type and include financial covenants for interest coverage and total leverage ratios.

A failure to comply with a covenant could result in a default under a material financing arrangement unless we obtained an appropriate waiver or forbearance (as to which we can provide no assurance). A default under these material financing arrangements generally allows debt holders the option to declare the underlying debt obligations immediately due and payable. Furthermore, certain of our material financing arrangements contain cross-default and cross-acceleration provisions under which a failure to comply with the covenants in one material financing arrangement may result in an event of default under another material financing ~~arrangement. If in the future we fail to comply with the~~

~~Table of Contents~~

~~financial covenants of our material financing arrangements, we may not have access to the liquidity provided by these financing arrangements.~~

~~NOTE 8. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES~~

~~Venator~~

Note 9. Derivative Instruments and Hedging Activities

To reduce cash flow volatility from foreign currency fluctuations, we enter into forward and swap contracts to hedge portions of cash flows of certain foreign currency transactions. We do not use derivative financial instruments for trading or speculative purposes.

Cross-Currency Swaps

In December 2017, we entered into three cross-currency swap agreements to convert a portion of our intercompany fixed-rate, U.S. dollar denominated notes, including the semi-annual interest payments and the payment of remaining principal at maturity, to a fixed-rate, Euro denominated debt. The economic effect of the swap agreement was to eliminate the uncertainty of the cash flows in U.S. Dollars associated with the notes by fixing the principle amount at €169 million with a fixed annual rate of 3.43%. These hedges have been designated as cash flow hedges and the critical terms of the cross-currency swap agreements correspond to the underlying hedged item. These swaps mature in July 2022, which is our best estimate of the repayment date of these intercompany loans. The amount and timing of the semi-annual principle payments under the cross-currency swap also correspond with the terms of the intercompany loans. Gains and losses from these hedges offset the changes in the value of interest and principal payments as a result of changes in foreign exchange rates.

We formally assessed the hedging relationship at the inception of the hedge in order to determine whether the derivatives that are used in the hedging transactions are highly effective in offsetting cash flows of the hedged item and we will continue to assess the relationship on an ongoing basis. We use the hypothetical derivative method in conjunction with regression analysis to measure effectiveness of our cross-currency swap agreement.

The changes in the fair value of the swaps are deferred in other comprehensive income and subsequently recognized in other income in the unaudited condensed consolidated statement of operations when the hedged item impacts earnings. Cash flows related to our cross-currency swap that relate to our periodic interest settlement will be classified as operating activities and the cash flows that relates to principal balances will be designated as financing activities. The fair value of these hedges was $11 million and $6 millionat June 30, 2019 and December 31, 2018, respectively, and was recorded as other noncurrent assets on our unaudited condensed consolidated balance sheets. We estimate the fair values of our cross-currency swaps by taking into consideration valuations obtained from a third-party valuation service that utilizes an income-based industry standard valuation model for which all significant inputs are observable either directly or indirectly. These inputs include foreign currency exchange rates, credit default swap rates and cross-currency basis swap spreads. The cross-currency swap has been classified as Level 2 because the fair value is based upon observable market-based inputs or unobservable inputs that are corroborated by market data.

For the six months ended June 30, 2019 and 2018, the change in accumulated other comprehensive loss associated with these cash flow hedging activities was a gain of $5 million, each. As of June 30, 2019, accumulated other comprehensive loss of nil is expected to be reclassified to earnings during the next twelve months. The actual amount that will be reclassified to earnings over the next twelve months may vary from this amount due to changing market conditions.

We would be exposed to ~~market~~credit losses in the event of nonperformance by a counterparty to our derivative financial instruments. We continually monitor our position and the credit rating of our counterparties, and we do not anticipate nonperformance by the counterparties.

Table of Contents

Forward Currency Contracts Not Designated as Hedges

We transact business in various foreign currencies and we enter into currency forward contracts to offset the risks associated with foreign ~~exchange risk. Venator’s cash flows~~currency exposure. At June 30, 2019 and ~~earnings are subject to fluctuations due to exchange rate variation. Venator’s revenues~~December 31, 2018, we had $79 million and expenses are denominated in various foreign currencies. Venator enters into foreign currency derivative instruments to minimize the short-term impact of movements in foreign currency rates. Where practicable, Venator generally nets multicurrency cash balances among its subsidiaries to help reduce exposure to foreign currency exchange rates. Certain other exposures may be managed from time to time through financial market transactions, principally through the purchase of spot or forward foreign exchange contracts (generally with maturities of three months or less). Venator does not hedge its foreign currency exposures in a manner that would eliminate the effect of changes in exchange rates on its cash flows and earnings. At September 30, 2017, Venator had approximately $84$89 million, inrespectively, notional amount (in U.S. dollar equivalents) outstanding ~~with maturities of approximately one month.~~

Prior to the Separation, Huntsman International, or its subsidiaries, entered into foreign currency derivatives on Venator’s behalf. As of December 31, 2016, Huntsman International or its subsidiaries, on behalf of Venator, had approximately $88 million in ~~notional amount (in U.S. dollar equivalents) outstanding, respectively, in forward~~ foreign currency contracts with a term of approximately one month.

~~NOTE 9. INCOME TAXES~~

The contracts are valued using observable market rates (Level 2).

Note 10. Income Taxes

Venator uses the asset and liability method of accounting for income taxes. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial and tax reporting purposes. We evaluate deferred tax assets to determine whether it is more likely than not that they will be realized. Valuation allowances are reviewed on a tax jurisdiction basis to analyze whether there is sufficient positive or negative evidence to support a change in judgment about the realizability of the related deferred tax assets for each jurisdiction. These conclusions require significant judgment. In evaluating the objective evidence that historical results provide, we consider the cyclicality of Venator and cumulative income or losses during the applicable period. Cumulative losses incurred over the period limits our ability to consider other subjective evidence such as our projections for the future. Changes in expected future income in applicable tax jurisdictions could affect the realization of deferred tax assets in those jurisdictions.

We recorded income tax benefit of $9 million and income tax expense of ~~$14~~$45 million, respectively, for the three months ended June 30, 2019 and 2018, respectively, and income tax benefit of $7$8 million ~~for the three months ended September 30, 2017 and 2016, respectively,~~ and income tax expense of ~~$26 million and income tax benefit of $14~~$65 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and ~~2016,~~2018, respectively. Our tax expense is significantly affected by the mix of income and losses in tax jurisdictions in which we operate, as impacted by the presence of valuation allowances in certain tax jurisdictions.

For U.S. federal income tax purposes Huntsman ~~will recognize~~recognized a gain as a result of the ~~internal restructuring~~IPO and ~~IPO~~the separation to the extent the fair market value of the assets associated with our U.S. businesses exceeded the basis of such assets for U.S. federal income tax purposes at the time of the ~~Separation.~~separation. As a result of such gain recognized, the basis of the assets associated with our U.S. businesses ~~has~~was increased. This basis step up ~~gives~~gave rise to a deferred tax asset of ~~$77~~$36 million that we ~~have~~ recognized ~~during~~for the ~~quarter.~~

year ended December 31, 2017.

Pursuant to the Tax Matters Agreement dated August 7, 2017, entered into by and among Venator Materials PLC and Huntsman (the "Tax Matters Agreement") at the time of the ~~Separation,~~separation, we are required to make a future payment to Huntsman for any actual U.S. federal income tax savings we recognize as a result of any such basis increase for tax years through December 31, 2028. It is currently estimated (based on a value of our U.S. businesses derived from the IPO price of our ordinary shares and current tax rates) that the aggregate future payments required by this provision are expected to be approximately ~~$73~~$34 million. ~~We have recognized a noncurrent liability for~~As of June 30, 2019 and December 31, 2018, this ~~amount as of September 30, 2017.~~"Noncurrent payable to affiliates" was $34 million, each, on our unaudited condensed consolidated balance sheets. Moreover, any subsequent adjustment asserted by U.S. taxing authorities could increase the amount of gain recognized and the corresponding basis increase, and could result in a higher liability for us under the Tax Matters Agreement.

~~Table of Contents~~

Note 11. Earnings Per Share

~~NOTE 10. EARNINGS (LOSSES) PER SHARE~~

Basic earnings ~~(losses)~~ per share excludes dilution and is computed by dividing net income ~~(loss)~~ attributable to Venator ordinary shareholders by the weighted average number of shares outstanding during the period. Diluted earnings ~~(losses)~~ per share reflects all potential dilutive ordinary shares outstanding during the period and is computed by dividing net income ~~(loss)~~ available to Venator ordinary shareholders by the weighted average number of shares outstanding during the period increased by the number of additional shares that would have been outstanding as dilutive securities. ~~For the periods prior to our IPO, the average number~~

Table of ~~ordinary shares outstanding used to calculate basic and diluted earnings (losses) per share was based on the ordinary shares that were outstanding at the time of our IPO.~~

Contents

Basic and diluted earnings ~~(losses)~~ per share isare determined using the following information:

Three months ended

Nine months ended

September 30,

September 30,
(In millions)

2017

2016

2017

2016
Numerator:

Basic and diluted income (loss) from continuing operations:

Income (loss) from continuing operations attributable to Venator

$
51

$
(7)

$
58

$
(89)
Basic and diluted net income (loss):

Net income (loss) attributable to Venator

$
51

$
(5)

$
66

$
(81)
Denominator:

Weighted average shares outstanding

106.3

106.3

106.3

106.3
Dilutive share-based awards

0.3

—

0.3

—
Total weighted average shares outstanding, including dilutive shares

106.6

106.3

106.6

106.3



	Three months ended June 30,				Six months ended June 30,
	2019		2018		2019		2018
Numerator:
Net income attributable to Venator Materials PLC ordinary shareholders	$	21	$	196	$	18	$	274
Denominator:
Weighted average shares outstanding	106.6		106.4		106.5		106.4
Dilutive share-based awards	—		0.3		—		0.4
Total weighted average shares outstanding, including dilutive shares	106.6		106.7		106.5		106.8

For the three and six months ended June 30, 2019, the number of anti-dilutive employee share-based awards excluded from the computation of diluted earnings per share was 2 million, each. For the three and six months ended June 30, 2018, the number of anti-dilutive employee share-based awards excluded from the computation of dilutive earnings per share was nil, each.

~~NOTE 11. COMMITMENTS AND CONTINGENCIES~~

Note 12. Commitments and Contingencies

Legal Proceedings

~~Antitrust Matters~~

Shareholder Litigation

On February 8, 2019 we, certain of our executive officers, Huntsman and certain banks who acted as underwriters in connection with our IPO and secondary offering were named as defendants in a ~~defendant in consolidated~~proposed class action civil ~~antitrust suits~~suit filed ~~on February 9 and 12, 2010~~ in the ~~U.S.~~ District Court for the State of Texas, Dallas County (the "Dallas District ~~of Maryland alleging that we, our co-defendants and other alleged co-conspirators conspired to fix prices of TiO~~₂ ~~sold in the U.S. The other defendants named in this matter were E. I. du Pont de Nemours and Company ("DuPont"~~Court"), ~~Kronos~~by an alleged purchaser of our ordinary shares in connection with our IPO on August 3, 2017 and ~~National Titanium Dioxide Company, Ltd. ("Cristal") (formerly Millennium). On August 28, 2012,~~our secondary offering on December 1, 2017. The plaintiff, Macomb County Employees’ Retirement System, alleges that inaccurate and misleading statements were made regarding the ~~court certified a class consisting of all U.S. customers who purchased TiO~~₂ ~~directly~~impact to our operations, and prospects for restoration thereof, resulting from the ~~defendants (the "Direct Purchasers") since February 1, 2003. On December 13, 2013, we and all~~fire that occurred at our Pori, Finland manufacturing facility, among other ~~defendants settled~~allegations. Additional complaints making substantially the ~~Direct Purchasers litigation and the court approved the settlement. We paid the settlement in an amount immaterial to our condensed consolidated and combined financial statements.~~

~~On November 22, 2013, we~~same allegations were ~~named as a defendant in a civil antitrust suit~~ filed in the ~~U.S.~~Dallas District Court ~~for~~by the ~~District~~Firemen's Retirement System of ~~Minnesota brought~~St. Louis on March 4, 2019 and by ~~a Direct Purchaser who opted out~~Oscar Gonzalez on March 13, 2019, with the third case naming two of ~~the Direct Purchasers class litigation (the "Opt-Out Litigation"). On April 21, 2014, the court severed the claims against us from the other defendants sued and ordered~~ our directors as additional defendants. A fourth case ~~transferred to~~was filed in the U.S. District Court for the Southern District of Texas. Subsequently, Kronos, another defendant, was also severed from the Minnesota case and claims against it were transferred and consolidated for trial with our case in the Southern District of Texas. On February 26, 2016, we reached an agreement to settle the Opt-Out Litigation and subsequently paid the settlement in an amount immaterial to our condensed consolidated and combined financial statements.

~~We were also named as a defendant in a class action civil antitrust suit filed on March 15, 2013 in the U.S. District Court for the Northern District of California~~New York by the ~~purchasers~~City of ~~products made from TiO~~₂ ~~(the "Indirect Purchasers")~~Miami General Employees' & Sanitation Employees' Retirement Trust on July 31, 2019, making ~~essentially~~substantially the same allegations, adding claims under sections 10(b) and 20(a) of the U.S. Exchange Act, and naming all of our directors as ~~did~~additional defendants.

The plaintiffs in these cases seek to determine that the ~~Direct Purchasers.~~ proceedings should be certified as class actions and to obtain alleged compensatory damages, costs, rescission and equitable relief. The cases filed in the Dallas District Court have been consolidated into a single action.

On ~~October 14, 2014, plaintiffs~~May 8, 2019, we filed ~~their Second Amended Class Action Complaint narrowing~~a “special appearance” in the ~~class of plaintiffs to those merchants~~Dallas District Court action contesting the court’s jurisdiction over the Company and ~~consumers of architectural coatings containing TiO~~₂~~. On August 11, 2015, the court granted our~~a motion to ~~dismiss the Indirect Purchasers litigation with leave~~transfer venue to ~~amend the complaint. A Third Amended Class Action Complaint was filed~~Montgomery County, Texas and on September 29, 2015 further limiting the class to consumers of architectural paints. Plaintiffs have raised state antitrust claims under the laws of 15 states, consumer protection claims under the laws of nine states, and unjust enrichment

~~Table of Contents~~

~~claims under the laws of 16 states. On November 4, 2015,~~June 7, 2019 we and ~~our co-defendants~~certain defendants filed ~~another motion~~motions to dismiss. On ~~June 13, 2016,~~July 9, 2019, a hearing was held on the ~~court substantially denied~~motions, but no ruling has been made following the ~~motion~~hearing.

We may be required to ~~dismiss except~~indemnify our executive officers and directors, Huntsman, and the banks who acted as underwriters in our IPO and secondary offerings, for losses incurred by them in connection with these matters pursuant to ~~consumer protection claims in one state. The parties~~our agreements with such parties. Because of the early stage of this litigation, we are unable to reasonably estimate any possible loss or range of loss and we have not accrued for a loss contingency with regard to these matters.

Tronox Litigation

Table of Contents

On April 26, 2019, we acquired intangible assets related to the European paper laminates product line from Tronox. A separate agreement with Tronox entered into on July 14, 2018 requires that Tronox promptly pay us a ~~settlement, subject~~“break fee” of $75 million upon the consummation of Tronox’s merger with The National Titanium Dioxide Company Limited (“Cristal”) once the sale of the European paper laminates business to ~~court approval,~~us was consummated, if the sale of Cristal’s Ashtabula manufacturing complex to us was not completed. The deadline for such payment was May 13, 2019. On April 26, 2019, Tronox publicly stated that it believes it is not obligated to pay the break fee.

On May 14, 2019, we commenced a lawsuit in the Delaware Superior Court against Tronox arising from Tronox's breach of its obligation to pay the break fee. We are seeking a judgment for $75 million, plus pre- and post-judgment interest, and reasonable attorneys' fees and costs. On June 17, 2019, Tronox filed an ~~amount immaterial~~answer denying that it is obligated to pay the break fee and asserting affirmative defenses and counterclaims of approximately $400 million, alleging that we failed to negotiate the purchase of the Ashtabula complex in good faith. Because of the early stage of this litigation, we are unable to reasonably estimate any possible gain, loss or range of gain or loss and we have not made any accrual with regard to this matter.

Neste Engineering Services Matter

We are party to an arbitration proceeding initiated by Neste Engineering Services Oy (“NES”) on December 19, 2018 for payment of invoices allegedly due of approximately €14 million in connection with the delivery of services by NES to the Company in respect of the Pori site rebuild project. These invoices were accrued in full on our unaudited condensed consolidated balance sheet as of June 30, 2019 and ~~combined financial statements.~~

~~On August 23, 2016, we were named as a defendant in a fourth civil antitrust suit~~December 31, 2018. We are contesting the validity of these invoices and filed ~~in the U.S. District Court~~counterclaims against NES on March 8, 2019. The timetable for the ~~Northern District~~arbitration has not yet been set. On July 2, 2019, NES separately instigated a lawsuit in Finland for €1.6 million of ~~California by an Indirect Purchaser, Home Depot. Home Depot is an Indirect Purchaser primarily through paints it purchases from various manufacturers. We settled this matter for an amount immaterial~~unpaid invoices, which we also intend to ~~our condensed consolidated and combined financial statements and the court dismissed the case on May 31, 2017.~~

These Indirect Purchasers seek injunctive relief, treble damages or the maximum damages allowed by state law, costs of suit and attorneys' fees. We are not aware of any illegal conduct by us or any of our employees.

contest.

Other Proceedings

We are a party to various other proceedings instituted by private plaintiffs, governmental authorities and others arising under provisions of applicable laws, including various environmental, products liability and other laws. Except as otherwise disclosed in these unaudited condensed consolidated ~~and combined~~ financial statements, we do not believe that the outcome of any of these matters will have a material effect on our financial condition, results of operations or liquidity.

~~NOTE 12. ENVIRONMENTAL, HEALTH AND SAFETY MATTERS~~

Note 13. Environmental, Health and Safety Matters

Environmental, Health and Safety Capital Expenditures

We may incur future costs for capital improvements and general compliance under EHS laws, including costs to acquire, maintain and repair pollution control equipment. For the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and ~~2016,~~2018, our capital expenditures for EHS matters totaled $5$8 million and $7$3 million, respectively. Because capital expenditures for these matters are subject to evolving regulatory requirements and depend, in part, on the timing, promulgation and enforcement of specific requirements, our capital expenditures for EHS matters have varied significantly from year to year and we cannot provide assurance that our recent expenditures are indicative of future amounts we may spend related to EHS and other applicable laws.

Environmental Reserves

We accrue liabilities relating to anticipated environmental cleanup obligations, site reclamation and closure costs, and known penalties. Liabilities are recorded when potential liabilities are either known or considered probable and can be reasonably estimated. Our liability estimates are calculated using present value techniques as appropriate and are based upon requirements placed upon us by regulators, available facts, existing technology, and past experience. The environmental liabilities do not include amounts recorded as asset retirement obligations. As of ~~September~~June 30, ~~2017~~2019 and December 31, ~~2016,~~2018, we had environmental reserves of $10 million and $12 million, ~~each. We may incur losses for environmental remediation.~~

respectively.

Table of Contents

Environmental Matters

We have incurred, and we may in the future incur, liability to investigate and clean up waste or contamination at our current or former facilities or facilities operated by third parties at which we may have disposed of waste or other materials. Similarly, we may incur costs for the cleanup of waste that was disposed of prior to the purchase of our businesses. Under some circumstances, the scope of our liability may extend to damages to natural resources.

In the EU, the Environmental Liability Directive (Directive 2004/35/EC) has established a framework based on the "polluter pays" principle for the prevention and remediation of environmental damage, which establishes measures to prevent and remedy environmental damage. The directive defines "environmental damage" as damage to protected species and natural habitats, damage to water and damage to soil. Operators carrying out dangerous activities listed in the Directive are strictly liable for remediation, even if they are not at fault or negligent.

Under EU Directive 2010/75/EU on industrial emissions, permitted facility operators may be liable for significant pollution of soil and groundwater over the lifetime of the activity concerned. We are in the process of plant closures at facilities in the EU and liability to investigate and clean up waste or contamination may arise during the surrender of operators' permits at these locations under the directive and associated legislation such as the Water Framework Directive (Directive 2000/60/EC) and the Groundwater Directive (Directive 2006/118/EC).

Under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA") and similar state laws, a current or former owner or operator of real property in the U.S. may be liable for remediation costs regardless of whether the release or disposal of hazardous substances was in compliance with law at the time it occurred, and a current owner or operator may be liable regardless of whether it owned or operated the facility at the time of the release. Outside the U.S., analogous contaminated property laws, such as those in effect in France, can hold past owners and/or operators liable for remediation at former facilities. We have not been notified by third parties of claims against us for cleanup liabilities at former facilities or third-party sites, including, but not limited to, sites listed under CERCLA.

~~Table of Contents~~

Under the Resource Conservation and Recovery Act in the U.S. and similar state laws, we may be required to remediate contamination originating from our properties as a condition to our hazardous waste permit. Some of our manufacturing sites have an extended history of industrial chemical manufacturing and use, including on-site waste ~~disposal.~~disposal and we have made accruals for related remediation activity. We are aware of soil, groundwater or surface contamination from past operations at some of our sites and have made accruals for related remediation activity, and we may find contamination at other sites in the future. Similar laws exist in a number of locations in which we currently operate, or previously operated, manufacturing ~~facilities, such as France~~facilities.

Pori Remediation

In connection with our previously announced intention to close our TiO₂manufacturing facility in Pori, Finland, we expect to incur environmental costs related to the cleanup of the facility upon its eventual closure, including remediation and ~~Italy.~~

~~NOTE 13. OTHER COMPREHENSIVE INCOME (LOSS)~~

closure costs. While we do not currently have enough information to be able to estimate the range of potential costs for the closure of this facility, these costs could be material to our unaudited condensed consolidated financial statements.

Note 14. Other Comprehensive Income

Other comprehensive income ~~(loss)~~ consisted of the following:

Pension and other

Other






Foreign

postretirement

comprehensive

Amounts

currency

benefits

income of

attributable to

Amounts

translation

adjustments,

unconsolidated

noncontrolling

attributable to
(Dollars in millions)

adjustment(a)

net of tax(b)

affiliates

Total

interests

Venator
Beginning balance, January 1, 2017

$
(112)

$
(306)

$
(5)

$
(423)

$
—

$
(423)
Adjustments related to other entities under common control

5

24

—

29

—

29
Tax expense

—

(3)

—

(3)

—

(3)
Other comprehensive income before reclassifications

68

3

—

71

—

71
Tax benefit

2

1

—

3

—

3
Amounts reclassified from accumulated other comprehensive loss, gross(c)

—

11

—

11

—

11
Tax expense

—

—

—

—

—

—
Net current-period other comprehensive income

75

36

—

111

—

111
Ending balance, September 30, 2017

$
(37)

$
(270)

$
(5)

$
(312)

$
—

$
(312)

Pension and other

Other






Foreign

postretirement

comprehensive

Amounts

currency

benefits

income of

attributable to

Amounts

translation

adjustments,

unconsolidated

noncontrolling

attributable to
(Dollars in millions)

adjustment(d)

net of tax(e)

affiliates

Total

interests

Venator
Beginning balance, January 1, 2016

$
(144)

$
(252)

$
(5)

$
(401)

$
—

$
(401)
Adjustments related to other entities under common control

2

1

—

3

—

3
Tax expense

—

—

—

—

—

—
Other comprehensive (loss) income before reclassifications

(92)

7

—

(85)

—

(85)
Tax expense

(1)

(1)

—

(2)

—

(2)
Amounts reclassified from accumulated other comprehensive loss, gross(c)

—

8

—

8

—

8
Tax benefit

—

1

—

1

—

1
Net current-period other comprehensive (loss) income

(91)

16

—

(75)

—

(75)
Ending balance, September 30, 2016

$
(235)

$
(236)

$
(5)

$
(476)

$
—

$
(476)

Table of Contents



	Foreign currency translation adjustment^(a)			Pension and other postretirement benefits adjustments net of tax^(b)			Other comprehensive loss of unconsolidated affiliates			Hedging Instruments		Total			Amounts attributable to noncontrolling interests		Amounts attributable to Venator
Beginning balance, January 1, 2019	$	(96	)	$	(278	)	$	(5	)	$	6	$	(373	)	$	—	$	(373	)
Other comprehensive (loss) income before reclassifications, gross	(2		)	—			—			5		3			—		3
Tax benefit	—			—			—			—		—			—		—
Amounts reclassified from accumulated other comprehensive loss, gross^(c)	—			8			—			—		8			—		8
Tax expense	—			—			—			—		—			—		—
Net current-period other comprehensive (loss) income	(2		)	8			—			5		11			—		11
Ending balance, June 30, 2019	$	(98	)	$	(270	)	$	(5	)	$	11	$	(362	)	$	—	$	(362	)



	Foreign currency translation adjustment^(d)			Pension and other postretirement benefits adjustments net of tax^(e)			Other comprehensive loss of unconsolidated affiliates			Hedging Instruments			Total			Amounts attributable to noncontrolling interests		Amounts attributable to Venator
Beginning balance, January 1, 2018	$	(6	)	$	(267	)	$	(5	)	$	(5	)	$	(283	)	$	—	$	(283	)
Other comprehensive (loss) income before reclassifications, gross	(58		)	—			—			5			(53		)	—		(53		)
Tax benefit	—			—			—			—			—			—		—
Amounts reclassified from accumulated other comprehensive loss, gross^(c)	—			7			—			—			7			—		7
Tax expense	—			—			—			—			—			—		—
Net current-period other (loss) comprehensive income	(58		)	7			—			5			(46		)	—		(46		)
Ending balance, June 30, 2018	$	(64	)	$	(260	)	$	(5	)	$	—		$	(329	)	$	—	$	(329	)


	~~(a)~~


^(a)	Amounts are net of tax of ~~$2 million and~~ nil as of ~~September~~June 30, ~~2017~~2019 and January 1, ~~2017, respectively.~~ 2019, each.


^(b)		Amounts are net of tax of ~~$54 million and $56~~$50 million as of ~~September~~June 30, ~~2017~~2019 and January 1, ~~2017, respectively.~~ 2019, each.


^(c)		See table below for details about the amounts reclassified from accumulated other comprehensive loss.


^(d)		~~Amounts include a tax benefit of $1 million and nil as of September 30, 2016 and January 1, 2016, respectively.~~

~~(e)~~

Amounts are net of tax of ~~$60 million at September~~nil as of June 30, ~~2016~~2018 and January 1, ~~2016,~~2018, each.

^(e)

Amounts are net of tax of $52 million as of June 30, 2018 and January 1, 2018, each.

Table of Contents

Three months ended

Nine months ended


September 30,

September 30,

Affected line item in the statement
(Dollars in millions)

2017

2016

2017

2016

where net income is presented
Details about Accumulated Other Comprehensive Loss Components(a):

Amortization of pension and other postretirement benefits:










Actuarial loss

$
5

$
3

$
13

$
8

(b)
Prior service credit

(1)

—

(2)

—

(b)
Total amortization

4

3

11

8

Total before tax
Income tax benefit

—

—

—

1

Income tax (expense) benefit
Total reclassifications for the period

$
4

$
3

$
11

$
9

Net of tax



	Three months ended June 30,				Six months ended June 30,				Affected line item in the statement where net income is presented
	2019		2018		2019		2018
Details about Accumulated Other Comprehensive Loss Components^(a):
Amortization of pension and other postretirement benefits:
Actuarial loss	$	4	$	4	$	8	$	7	Other income
Prior service credit	—		—		—		—		Other income
Total amortization	4		4		8		7		Total before tax
Income tax expense	—		—		—		—		Income tax expense
Total reclassifications for the period	$	4	$	4	$	8	$	7	Net of tax


	~~(a)~~


^(a)	Pension and other postretirement benefit amounts in parentheses indicate credits on our unaudited condensed consolidated statements of operations.

~~(b)~~

~~These accumulated other comprehensive loss components are included in the computation of net periodic pension costs.~~

~~NOTE 14. OPERATING SEGMENT INFORMATION~~

Note 15. Operating Segment Information

We derive our revenues, earnings and cash flows from the manufacture and sale of ~~a wide variety of commodity chemical products.~~TiO₂, functional additives, color pigments, timber treatment and water treatment chemicals. We have reported our operations through our two segments, Titanium Dioxide and Performance Additives, and organized our business and derived our operating segments around differences in product lines. We have historically conducted other business within components of legal entities we operated in conjunction with Huntsman businesses, and such businesses are included within the corporate and other line item below.

The major product groups of each reportable operating segment are as follows:


~~Segment~~		~~Product Group~~
~~Titanium Dioxide~~ Segment		~~titanium dioxide~~ Product Group
Titanium Dioxide		titanium dioxide
Performance Additives		functional additives, color pigments, timber treatment and water treatment chemicals

Table of Contents

Sales between segments are generally recognized at external market prices and are eliminated in consolidation. Adjusted EBITDA is presented as a measure of the financial performance of our global business units and for reporting the results of our operating segments. The revenues and adjusted EBITDA for each of the two reportable operating segments are as follows:

Three months ended

Nine months ended

September 30,

September 30,
(Dollars in millions)

2017

2016

2017

2016
Revenues:








Titanium Dioxide

$
431

$
392

$
1,217

$
1,197
Performance Additives

151

140

464

451
Total

$
582

$
532

$
1,681

$
1,648
Segment adjusted EBITDA(1)








Titanium Dioxide

$
127

$
22

$
268

$
28
Performance Additives

15

16

57

56

142

38

325

84
Corporate and other

(8)

(17)

(48)

(46)
Total

$
134

$
21

$
277

$
38
Reconciliation of adjusted EBITDA to net income (loss):








Interest expense

(30)

(14)

(54)

(44)
Interest income

22

2

25

13
Income tax (expense) benefit - continuing operations

(14)

7

(26)

14
Depreciation and amortization

(35)

(30)

(95)

(84)
Net income attributable to noncontrolling interests

2

3

8

8
Other adjustments:








Business acquisition and integration expenses

(4)

(3)

(2)

(11)
Gain on disposition of businesses/assets

—

23

—

23
Net income of discontinued operations, net of tax

—

2

8

8
Certain legal settlements and related expenses

—

—

(1)

(1)
Amortization of pension and postretirement actuarial losses

(5)

(3)

(13)

(8)
Net plant incident (costs) credits

(1)

(3)

(4)

2
Restructuring, impairment and plant closing costs

(16)

(7)

(49)

(31)
Net income (loss)

$
53

$
(2)

$
74

$
(73)



	Three months ended June 30,						Six months ended June 30,
	2019			2018			2019			2018
Revenues:
Titanium Dioxide	$	439		$	455		$	864		$	911
Performance Additives	139			171			276			337
Total	$	578		$	626		$	1,140		$	1,248
Adjusted EBITDA⁽¹⁾
Titanium Dioxide	$	55		$	147		$	116		$	290
Performance Additives	16			23			31			47
	71			170			147			337
Corporate and other	(10		)	(13		)	(26		)	(23		)
Total	61			157			121			314
Reconciliation of adjusted EBITDA to net income:
Interest expense	(13		)	(14		)	(27		)	(27		)
Interest income	3			4			6			7
Income tax benefit (expense)	9			(45		)	8			(65		)
Depreciation and amortization	(29		)	(35		)	(55		)	(69		)
Net income attributable to noncontrolling interests	1			2			2			4
Other adjustments:
Business acquisition and integration adjustments (expenses)	1			(2		)	(1		)	(4		)
Separation expense, net	—			—			—			(1		)
Loss on disposition of business/assets	—			(2		)	—			(2		)
Certain legal settlements and related expenses	(1		)	—			(1		)	—
Amortization of pension and postretirement actuarial losses	(4		)	(4		)	(8		)	(7		)
Net plant incident (costs) credits	(6		)	273			(13		)	273
Restructuring, impairment and plant closing and transition costs	—			(136		)	(12		)	(145		)
Net income	$	22		$	198		$	20		$	278


	~~(1)~~

⁽¹⁾

Adjusted EBITDA is defined as net ~~income (loss)~~income/loss of Venator before interest expense, interest income, income tax ~~from continuing operations,~~expense/benefit, depreciation and amortization and net income attributable to noncontrolling interests, as well as eliminating the following ~~adjustments from net income (loss):~~adjustments: (a) business acquisition and integration ~~expenses;~~expenses/adjustments; (b) separation expense/gain, net; (c) loss/gain on disposition of ~~businesses/assets (c) net income of discontinued operations, net of income tax;~~business/assets; (d) certain legal settlements and related ~~expenses;~~expenses/gains; (e) amortization of pension and postretirement actuarial ~~losses;~~losses/gains; (f) net plant incident ~~credits (costs);~~costs/credits; and (g) restructuring, impairment, and plant closing ~~costs.~~

and transition costs/credits.

~~NOTE 15. RELATED PARTY TRANSACTIONS~~

~~Venator is party to a variety of transactions and agreements with Huntsman, their former parent and controlling shareholder.~~

~~Corporate Cost Allocations~~

Table of Contents

~~September 30, 2017 and 2016, respectively, and $62 million and $76 million for the nine months ended September 30, 2017 and 2016, respectively.~~

~~Material Agreements between Venator and Huntsman~~

On August 11, 2017, Venator entered into a separation agreement with Huntsman to effect the Separation and to provide a framework for the relationship with Huntsman. This agreement governs the relationship between Venator and Huntsman subsequent to the completion of the Separation and provides for the allocation between Venator and Huntsman of assets, liabilities and obligations attributable to periods prior to the Separation. Because these agreements were entered into in the context of a related party transaction, the terms may not be comparable to terms that would be obtained in a transaction between unaffiliated parties.

~~Other Transactions~~

See descriptions of our financing arrangements with Huntsman before and after the Separation in “Note 7. Debt” and “Note 8. Derivative Instruments and Hedging Activities.” See description of our arrangement with Huntsman as part of the separation in “Note 9. Income Taxes.”

~~Table of Contents~~

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations ~~(“MD&A”)~~ should be read in conjunction with our unaudited condensed consolidated ~~and combined~~ financial statements and the related notes included in Item 1 ~~hereto as well as~~hereto.

This section contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed in any forward-looking statement because of various factors, including those described in the ~~risk factors contained in “Part~~section titled "Note Regarding Forward-Looking Statements" and "Part II. Item 1A. Risk Factors.”

~~Except when the context otherwise requires or where otherwise indicated, (1) all references to "Venator,~~" the "Company," "we," "us" and "our" refer to Venator Materials PLC and its subsidiaries, or, as the context requires, the historical Pigments and Additives business of Huntsman, (2) all references to "Huntsman" refer to Huntsman Corporation, our controlling shareholder, and its subsidiaries, other than us, (3) all references to the "Titanium Dioxide" segment or business refer to the TiO₂ business of Venator, or, as the context requires, the historical Pigments and Additives segment of Huntsman and the related operations and assets, liabilities and obligations, (4) all references to the "Performance Additives" segment or business refer to the functional additives, color pigments, timber treatment and water treatment businesses of Venator, or, as the context requires, the Pigments and Additives segment of Huntsman and the related operations and assets, liabilities and obligations, (5) all references to "other businesses" refer to certain businesses that Huntsman retained in connection with the Separation and that are reported as discontinued operations in our condensed consolidated and combined financial statements, (6) all references to "Huntsman International" refer to Huntsman International LLC, a wholly-owned subsidiary of Huntsman, and the entity through which Huntsman operates all of its businesses, and (7) we refer to the internal reorganization prior to our initial public offering (our “IPO”), the separation transactions initiated to separate the Venator business from Huntsman’s other businesses, including the entry into and effectiveness of the separation agreement and ancillary agreements, and the Senior Credit Facilities (defined below) and Senior Notes (defined below), including the use of the net proceeds of the Senior Credit Facilities and the Senior Notes, which were used to repay intercompany debt we owed to Huntsman and to pay related fees and expenses, as the "Separation" ~~and (8) the “Rockwood acquisition” refers to Huntsman’s acquisition of the performance and additives and TiO~~₂ ~~businesses of Rockwood Holdings, Inc. (“Rockwood”) completed on October 1, 2014.~~

This MD&A contains forward-looking statements concerning trends or events potentially affecting our business or future performance, including, without limitation, statements relating to our plans, strategies, objectives, expectations and intentions. The words "aim," "anticipate," "believe," "budget," "continue," "could," "effort," "estimate," "expect," "forecast," "goal," "guidance," "intend," "likely," "may," "might," "objective," "outlook," "plan," "potential," "predict," "project," "seek," "should," "target, "will" or "would" and similar expressions identify forward-looking statements. We do not undertake to update, revise or correct any of the forward-looking information unless required to do so under the federal securities laws. When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements contained in this Quarterly Report. See "Note Regarding Forward-Looking Statements" and "Risk Factors."

~~BASIS OF PRESENTATION~~

Prior to the Separation, Venator’s operations were included in Huntsman’s financial results in different legal forms, including but not limited to: (1) wholly-owned subsidiaries for which the Titanium Dioxide and Performance Additives businesses were the sole businesses; (2) legal entities which are comprised of other businesses and include the Titanium Dioxide and/or Performance Additives businesses; and (3) variable interest entities in which the Titanium Dioxide and Performance Additives businesses are the primary beneficiaries. The unaudited condensed consolidated and combined financial statements include all revenues, costs, assets, liabilities and cash flows directly attributable to Venator. The unaudited condensed consolidated and combined financial statements also include allocations of direct and indirect corporate expenses through the date of the Separation, which are based upon an allocation method that in the opinion of management is reasonable. Because the historical condensed consolidated and combined financial information for the periods indicated reflect the combination of these legal entities under common control, the historical condensed consolidated and consolidated financial information includes the results of operations of other Huntsman businesses are not a part of our operations after the Separation. We report the results of those other businesses as discontinued operations in “Note 3. Discontinued Operations.”

~~Table of Contents~~

Executive Summary

~~statements reflecting balances and activity prior to the Separation, may not be indicative of the financial position, results of operations and cash flows had Venator been a stand-alone company.~~

~~EXECUTIVE SUMMARY~~

We are a leading global manufacturer and marketer of chemical products that improve the quality of life for downstream consumers and promote a sustainable future. Our products comprise a broad range of innovative chemicals and formulations that bring color and vibrancy to buildings, protect and extend product life, and reduce energy consumption. We market our products globally to a diversified group of industrial customers through two segments: Titanium Dioxide, which consists of our TiO₂ business, and Performance Additives, which consists of our functional additives, color pigments, timber treatment and water treatment businesses. We are a leading global producer in many of our key product lines, including TiO₂, color pigments and functional additives, a leading North American producer of timber treatment products and a leading European producer of water treatment products.

~~RECENT DEVELOPMENTS~~

~~Initial Public Offering~~

Recent Trends and ~~Separation~~

~~On August 8, 2017, we completed~~Outlook

We expect near-term business trends in our ~~IPO~~Titanium Dioxide segment to be driven by: (i) a soft economic environment, primarily in China and Europe, including the effects of ~~26,105,000~~China-US trade negotiations and potential impacts from Brexit; (ii) stable sequential pricing trends with regional differences reflecting specific supply and demand balances; (iii) raw material increases; (v) volume trends to reflect historical seasonal patterns; (vi) increased sales of new TiO₂ product grades; (vii) stable demand for specialty TiO₂ and (viii) additional benefit through lower costs and operational improvement actions as part of our ~~outstanding 106,271,712 ordinary shares, par value $0.001 per share (the “ordinary shares”) which includes 3,405,000 ordinary shares issued upon~~2019 Business Improvement Program. In the ~~exercise~~Performance Additives segment, we expect near-term business trends to be driven by: (i) volume trends reflecting historical seasonal patterns; (ii) a soft economic environment, primarily in ~~full by~~China and Europe, including the ~~underwriters~~effects of their option to purchase additional shares, at a public offering price of $20.00 per share. All of the ordinary shares were sold by Huntsman, and we did not receive any proceeds from the offering. The ordinary shares began trading August 3, 2017 on the New York Stock Exchange under the symbol “VNTR.” Following our IPO, Huntsman owns approximately 75% of Venator’s outstanding ordinary shares. ~~The material terms of our IPO are described in the Prospectus.~~

~~In connection with our IPO~~China-US trade negotiations and the ~~Separation, Venator~~potential impacts from Brexit; (iii) raw material costs inflation; and Huntsman entered into certain agreements that allocated between Venator and Huntsman the various assets, employees, liabilities and obligations that were previously part of Huntsman and that govern various interim and ongoing relationships between the parties.

~~On August 15, 2017, we registered 14,025,000 ordinary shares on Form S-8 which are reserved in connection with awards under our 2017 Stock Incentive Plan.~~

~~Senior Credit Facilities and Senior Notes~~

On August 8, 2017, in connection with the IPO and the Separation, we entered into new financing arrangements and incurred new debt, including borrowings of $375 million under a new senior secured term loan facility with a maturity of seven years (the “Term Loan Facility”). In addition to the Term Loan Facility, we entered into a $300 million asset-based revolving lending facility with a maturity of five years (the “ABL Facility” and, together with the Term Loan Facility, the “Senior Credit Facilities”). On July 14, 2017, in connection with the IPO and the Separation, our subsidiaries Venator Finance S.à.r.l. and Venator Materials LLC (the “Issuers”), issued $375 million in aggregate principal amount of 5.75% of Senior Notes due 2025 (the “Senior Notes”). Promptly following consummation of the Separation, the proceeds of the Senior Notes were released from escrow and Venator used the net proceeds of the Senior Notes and borrowings under the Term Loan Facility to repay approximately $732 million of net intercompany debt owed to Huntsman and to pay related fees and expenses of approximately $18 million.

~~Pori Fire~~

~~On January 30, 2017, our TiO~~₂ ~~manufacturing facility in Pori, Finland experienced fire damage and we continue to repair the facility. Prior to the fire, 60% of the site capacity produced specialty products which, on~~(iv) stable average contributed greater than 75% of the site EBITDA from January 1, 2015 through January 30, 2017. The Pori facility had a nameplate capacity of up to 130,000 metric tons per year, which represented approximately 17% of our total TiO₂ ~~capacity and approximately 2% of total global TiO~~₂ ~~demand. We are currently operating at 20% of total prior capacity~~

selling prices.

~~Table of Contents~~

~~but producing only specialty products, and we currently intend to restore manufacturing of the balance of these more profitable specialty products by~~In the fourth quarter of ~~2018. The remaining 40% of site capacity is more commoditized~~2018, we commenced our 2019 Business Improvement Program and ~~we will determine if and when to rebuild this commoditized capacity depending on market conditions, costs and projected long term returns relative to our other investment opportunities.~~

~~We have recorded a loss of $31 million for~~are underway with the write-off of fixed assets and lost inventory in other operating income, net in our condensed consolidated and combined statements of operations for the nine months ending September 30, 2017. In addition, we recorded a loss of $18implementation, having realized $7 million of ~~costs for cleanup~~savings through the second quarter of the facility in other operating income, net through September 30, 2017. The site is insured for property damage as well as business interruption losses subject to retained deductibles of $15 million and 60 days, respectively, with a limit of $500 million. Due to prevailing strong market conditions, our TiO₂ ~~selling prices~~2019. We continue to ~~improve~~expect that this cost and our business is benefitting from the resulting improved profitability and cash flows. This also has the effect of increasing our total anticipated business interruption losses from the Pori site. We currently believe the combination of increased TiO₂ ~~profitability and recently estimated reconstruction costs~~operational improvement program will result in losses and costs in excess of our $500 million insurance limit. We currently expect to contain these over-the-limit costs within $100 million to $150 million, and to account for them as capital expenditures. However, these are preliminary estimates based on a number of significant assumptions, and as a result uninsured costs could exceed current estimates. Factors that could materially impact our current estimates include our actual future TiO₂ profitability and related impact on our business interruption losses; the accuracy of our current property damage estimates; the actual costs and timing of our reconstruction efforts; the extent to which we rebuild the 40% of site capacity that produces commoditized products; our ability to secure government subsidies related to our reconstruction efforts; and a number of other significant market and facility-related assumptions. Please see “Part II. Item 1A. Risk Factors— Disruptions in production at our manufacturing facilities, including our Pori facility, may have a material adverse impact on our business, results of operations and/or financial condition.”

~~The fire at our Pori facility did not have a material impact on our 2017 third quarter operating results as losses incurred were offset by insurance proceeds. We received $141~~provide approximately $40 million of non-refundable partial progress payments from our insurer through September 30, 2017 and we received an additional $112 million payment on October 9, 2017. During the first nine months of 2017, we recorded $128 million of income relatedannual adjusted EBITDA benefit compared to property damage and business interruption insurance recoveries in other operating income, net and cost of goods sold in our condensed consolidated and combined statements of operations to offset property damage and business interruption losses recorded during the period. We recorded $17 million as deferred income in accrued liabilities as of September 30, 2017 for insurance proceeds received for costs not yet incurred. The difference between payments received from our insurers of $141 million and the sum of income of $128 million and deferred income of $17 million is related to the foreign exchange movements of the U.S. Dollar against the Euro during the first nine months of the year.

~~RECENT TRENDS AND OUTLOOK~~

year-end 2018. We expect the ~~following factors~~program will be fully implemented in 2020, ending the year at the full run-rate level.

In 2019, we expect to ~~impact~~spend approximately $130 million on capital expenditures, which includes spending to transfer our ~~operating results~~specialty technology from our Pori, Finland site to other sites in ~~the near term:~~

our manufacturing network and excludes other Pori-related cash items.

~~Favorable environment for TiO~~₂ ~~price increases in the fourth quarter of 2017~~

~~Seasonally lower sales volumes in the fourth quarter of 2017~~

~~We have established a process to receive timely advance insurance payments for the continued reconstruction of the Pori facility as well as for business interruption losses, subject to policy limits~~

~~Modest increases in raw material costs in the near term~~

We expect ~~that~~ our corporate and other costs will be approximately ~~$50~~$55 million per year, consisting of $40 million of recurring selling, general and administrative costs to operate our business as a standalone public company, which is lower than expenses historically allocated to us from Huntsman, and approximately $10 million of costs that were previously embedded in ~~the Huntsman Pigments and Additives division.~~

We continue to implement business improvements in our Titanium Dioxide and Performance Additives businesses, which we expect to be completed by the end of 2018 and continue to provide contributions to Adjusted EBITDA. Of the $60 million we previously estimated for annualized savings, we have already realized approximately $15 million of savings through the third quarter of 2017 as a result of these programs. If successfully implemented, we

2019.

Table of Contents

~~expect the general cost reductions and optimization~~

Results of our manufacturing network to result in additional increases to our adjusted EBITDA of approximately $45 million per year by the first quarter of 2019, with additional projected increases to adjusted EBITDA from volume growth (primarily via the launch of new products).

~~In 2017, we expect to spend approximately $90 million on capital expenditures, net of reimbursements and excluding reconstruction of our Pori, Finland facility.~~

~~We expect our adjusted long-term effective tax rate will be approximately 15% to 20%.~~

~~RESULTS OF OPERATIONS~~

Operations

The following table sets forth our consolidated results of operations for the three and six months ended ~~September~~June 30, ~~2017~~2019 and ~~2016 and the nine months ended September 30, 2017 and 2016.~~

2018:

Three Months Ended

Nine Months Ended

September 30,

September 30,

(Dollars in millions)

2017

2016

% Change

2017

2016

% Change

Revenues

$
582

$
532

9
%
$
1,681

$
1,648

2
%
Cost of goods sold

446

491

(9)
%

1,351

1,547

(13)
%
Operating expenses

45

33

36
%

160

135

19
%
Restructuring, impairment and plant closing costs

16

7

129
%

49

31

58
%
Operating income (loss)

75

1

7,400
%

121

(65)

NM

Interest expense, net

(8)

(12)

(33)
%

(29)

(31)

(6)
%
Other income

—

—

NM

—

1

(100)
%
Income (loss) from continuing operations before income taxes

67

(11)

NM

92

(95)

NM

Income tax (expense) benefit

(14)

7

NM

(26)

14

NM

Income (loss) from continuing operations

53

(4)

NM

66

(81)

NM

Income from discontinued operations

—

2

(100)
%

8

8

-
%
Net income (loss)

53

(2)

NM

74

(73)

NM

Reconciliation of net income (loss) to adjusted EBITDA:













Interest expense, net

8

12

(33)
%

29

31

(6)
%
Income tax expense (benefit) - continuing operations

14

(7)

NM

26

(14)

NM

Depreciation and amortization

35

30

17
%

95

84

13
%
Net income attributable to noncontrolling interests

(2)

(3)

(33)
%

(8)

(8)

—
%
Other adjustments:





Business acquisition and integration expenses

4

3



2

11



Gain on disposition of businesses/assets

—

(23)

—

(23)

Net income of discontinued operations, net of tax

—

(2)

(8)

(8)

Certain legal settlements and related expenses

—

—

1

1



Amortization of pension and postretirement actuarial losses

5

3



13

8



Net plant incident (credits) costs

1

3



4

(2)



Restructuring, impairment and plant closing costs

16

7



49

31



Adjusted EBITDA(1)

$
134

$
21

538
%
$
277

$
38

629
%

Net cash (used in) provided by operating activities



$
181

$
93

95
%
Net cash provided by investing activities



72

(105)

NM

Net cash used in financing activities







(99)

10

NM

Capital expenditures







(97)

(76)

28
%



	Three Months Ended								Six Months Ended
	June 30,								June 30,
(Dollars in millions)	2019			2018			% Change		2019			2018			% Change
Revenues	$	578		$	626		(8	%)	$	1,140		$	1,248		(9	%)
Cost of goods sold	511			193			165	%	997			647			54	%
Operating expenses⁽⁴⁾	45			46			(2	%)	100			97			3	%
Restructuring, impairment and plant closing and transition costs	—			136			(100	%)	12			145			(92	%)
Operating income	22			251			(91	%)	31			359			(91	%)
Interest expense, net	(10		)	(10		)	—	%	(21		)	(20		)	(5	%)
Other income	1			2			(50	%)	2			4			(50	%)
Income before income taxes	13			243			(95	%)	12			343			(97	%)
Income tax benefit (expense)	9			(45		)	NM		8			(65		)	NM
Net income	22			198			(89	%)	20			278			(93	%)
Reconciliation of net income to adjusted EBITDA:
Interest expense, net	10			10			—	%	21			20			5	%
Income tax (benefit) expense	(9		)	45			NM		(8		)	65			NM
Depreciation and amortization	29			35			(17	%)	55			69			(20	%)
Net income attributable to noncontrolling interests	(1		)	(2		)	50	%	(2		)	(4		)	50	%
Other adjustments:
Business acquisition and integration (adjustments) expenses	(1		)	2					1			4
Separation expense, net	—			—					—			1
Loss on disposition of business/assets	—			2					—			2
Certain legal settlements and related expenses	1			—					1			—
Amortization of pension and postretirement actuarial losses	4			4					8			7
Net plant incident costs (credits)	6			(273		)			13			(273		)
Restructuring, impairment and plant closing and transition costs	—			136					12			145
Adjusted EBITDA⁽¹⁾	$	61		$	157				$	121		$	314

Net cash (used in) provided by operating activities									$	(50	)	$	305		NM
Net cash used in investing activities									(82		)	(162		)	(49	%)
Net cash provided by (used in) financing activities									17			(14		)	NM
Capital expenditures									(83		)	(167		)	(50	%)

Table of Contents

Three Months Ended

Three Months Ended

September 30, 2017

September 30, 2016
(Dollars in millions)

Gross

Tax(3)

Net

Gross

Tax(3)

Net
Reconciliation of net income (loss) to adjusted net income (loss):

Net income (loss)

$
53

$
(2)
Net income attributable to noncontrolling interests

(2)

(3)
Other adjustments:

Business acquisition and integration expenses

$
4

$
(1)

3

$
3

$
—

3
Gain on disposition of businesses/assets

—

—

—

(23)

6

(17)
Net income of discontinued operations

—

—

—

(2)

—

(2)
Amortization of pension and postretirement actuarial losses

5

—

5

3

—

3
Net plant incident (credits) costs

1

—

1

3

(1)

2
Restructuring, impairment and plant closing costs

16

(1)

15

7

(1)

6
Adjusted net income (loss)(2)

$
26

$
(2)

$
75

$
(9)

$
4

$
(10)

Weighted-average shares-basic

106.3

106.3
Weighted-average shares-diluted

106.6

106.3

Net income (loss) attributable to Venator Materials PLC ordinary shareholders:

Basic

0.48

(0.05)
Diluted

0.48

(0.05)

Other non-GAAP measures:

Adjusted net income (loss) per share:(2)

Basic

$
0.71

$
(0.09)
Diluted

0.70

(0.09)



	Three Months Ended			Three Months Ended
(Dollars in millions, except per share amounts)	June 30, 2019			June 30, 2018
Reconciliation of net income to adjusted net income attributable to Venator Materials PLC ordinary shareholders:
Net income	$	22		$	198
Net income attributable to noncontrolling interests	(1		)	(2		)
Other adjustments:
Business acquisition and integration (adjustments) expenses	(1		)	2
Loss on disposition of business/assets	—			2
Certain legal settlements and related expenses	1			—
Amortization of pension and postretirement actuarial losses	4			4
Net plant incident costs (credits)	6			(273		)
Restructuring, impairment and plant closing and transition costs	—			136
Income tax adjustments⁽³⁾	(17		)	24
Adjusted net income attributable to Venator Materials PLC ordinary shareholders⁽²⁾	$	14		$	91

Weighted-average shares-basic	106.6			106.4
Weighted-average shares-diluted	106.6			106.7

Net income attributable to Venator Materials PLC ordinary shareholders per share:
Basic	$	0.20		$	1.84
Diluted	$	0.20		$	1.84

Other non-GAAP measures:
Adjusted net income per share⁽²⁾:
Basic	$	0.13		$	0.86
Diluted	$	0.13		$	0.85

Table of Contents

Nine Months Ended

Nine Months Ended

September 30, 2017

September 30, 2016
(Dollars in millions)

Gross

Tax(3)

Net

Gross

Tax(3)

Net
Reconciliation of net income (loss) to adjusted net income (loss):

Net income (loss)

$
74

$
(73)
Net income attributable to noncontrolling interests

(8)

(8)
Other adjustments:

Business acquisition and integration expenses

$
2

$
(1)

1

$
11

$
(5)

6
Gain on disposition of businesses/assets

—

—

—

(23)

6

(17)
Net income of discontinued operations

(11)

3

(8)

(10)

2

(8)
Certain legal settlements and related expenses

1

—

1

1

—

1
Amortization of pension and postretirement actuarial losses

13

—

13

8

1

9
Net plant incident (credits) costs

4

(1)

3

(2)

—

(2)
Restructuring, impairment and plant closing costs

49

(4)

45

31

(6)

25
Adjusted net income (loss)(2)

$
58

$
(3)

$
121

$
16

$
(2)

$
(67)

Weighted-average shares-basic

106.3

106.3
Weighted-average shares-diluted

106.6

106.3

Net income (loss) attributable to Venator Materials PLC ordinary shareholders:

Basic

$
0.63

$
(0.76)
Diluted

0.62

(0.76)

Other non-GAAP measures:

Adjusted net income (loss) per share:

Basic

$
1.14

$
(0.63)
Diluted

1.14

(0.63)



	Six Months Ended			Six Months Ended
(Dollars in millions, except per share amounts)	June 30, 2019			June 30, 2018
Reconciliation of net income to adjusted net income attributable to Venator Materials PLC ordinary shareholders:
Net income	$	20		$	278
Net income attributable to noncontrolling interests	(2		)	(4		)
Other adjustments:
Business acquisition and integration expenses	1			4
Separation expense, net	—			1
Loss on disposition of business/assets	—			2
Certain legal settlements and related expenses	1			—
Amortization of pension and postretirement actuarial losses	8			7
Net plant incident costs (credits)	13			(273		)
Restructuring, impairment and plant closing and transition costs	12			145
Income tax adjustments⁽³⁾	(25		)	23
Adjusted net income attributable to Venator Materials PLC ordinary shareholders⁽²⁾	$	28		$	183

Weighted-average shares-basic	106.5			106.4
Weighted-average shares-diluted	106.5			106.8

Net income attributable to Venator Materials PLC ordinary shareholders per share:
Basic	$	0.17		$	2.58
Diluted	$	0.17		$	2.57

Other non-GAAP measures:
Adjusted net income per share⁽²⁾:
Basic	$	0.26		$	1.72
Diluted	$	0.26		$	1.71

NM—Not meaningful


⁽¹⁾		Our management uses adjusted EBITDA to assess financial performance. Adjusted EBITDA is defined as net ~~income (loss)~~income/loss before interest income/expense, net, income tax ~~from continuing operations,~~expense/benefit, depreciation and amortization, and net income attributable to noncontrolling interests, as well as eliminating the following adjustments: (a) business acquisition and integration ~~expenses;~~expenses/adjustments; (b) separation expense/gain, net; (c) loss/gain on disposition of ~~businesses/assets (c) net income of discontinued operations, net of income tax;~~business/assets; (d) certain legal settlements and related ~~expenses;~~expenses/gains; (e) amortization of pension and postretirement actuarial ~~losses;~~losses/gains; (f) net plant incident ~~(credits) costs;~~costs/credits; and (g) restructuring, impairment, and plant closing ~~costs.~~and transition costs/credits. We believe that net income ~~(loss)~~ is the performance measure calculated and presented in accordance with generally accepted accounting principles in the United States (“("U.S. ~~GAAP”~~GAAP" or ~~“GAAP”~~"GAAP") that is most directly comparable to adjusted ~~EBITDA~~. EBITDA.

We believe adjusted EBITDA is useful to investors in assessing our ongoing financial performance and provides improved comparability between periods through the exclusion of certain items that management believes are not indicative of our operational profitability and that may obscure underlying business results and trends. However, this measure should not be considered in isolation or viewed as a substitute for net income or other measures of performance determined in accordance with U.S. GAAP. Moreover, adjusted EBITDA as used herein is not necessarily comparable to other similarly titled measures of other companies due to potential inconsistencies in the methods of calculation. Our management believes this measure is useful to compare general operating performance from period to period and to make certain related management decisions. Adjusted EBITDA is also used by

Table of Contents

securities analysts, lenders and others in their evaluation of different companies because it excludes certain items that can vary widely across different industries or among companies within the same industry. For example, interest expense can be highly dependent on a company’s capital structure, debt levels and credit ratings. Therefore, the impact of interest expense on earnings can vary significantly among companies. In addition, the tax positions of companies can vary because of their differing abilities to take advantage of tax benefits and because of the tax policies of the various jurisdictions in which they operate. As a result, effective tax rates and tax expense can vary considerably among companies. Finally, companies employ productive assets of different ages and utilize different

~~Table of Contents~~

methods of acquiring and depreciating such assets. This can result in considerable variability in the relative costs of productive assets and the depreciation and amortization expense among companies.

Nevertheless, our management recognizes that there are limitations associated with the use of adjusted EBITDA in the evaluation of us as compared to net income. Our management compensates for the limitations of using adjusted EBITDA by using this measure to supplement U.S. GAAP results to provide a more complete understanding of the factors and trends affecting the business rather than U.S. GAAP results alone.

In addition to the limitations noted above, adjusted EBITDA excludes items that may be recurring in nature and should not be disregarded in the evaluation of performance. However, we believe it is useful to exclude such items to provide a supplemental analysis of current results and trends compared to other periods because certain excluded items can vary significantly depending on specific underlying transactions or events, and the variability of such items may not relate specifically to ongoing operating results or trends and certain excluded items, while potentially recurring in future periods, may not be indicative of future results. ~~For example, while EBITDA from discontinued operations is a recurring item, it is not indicative of ongoing operating results and trends or future results.~~


⁽²⁾		Adjusted net income attributable to Venator Materials PLC ordinary shareholders is computed by eliminating the after-tax amounts related to the following from net income attributable to Venator Materials PLC ordinary shareholders: (a) business acquisition and integration ~~expenses;~~expenses/adjustments; (b) separation expense/gain, net; (c) loss/gain on disposition of ~~businesses/~~business/assets; ~~(c) net income of discontinued operations;~~ (d) certain legal settlements and related ~~expenses;~~expenses/gains; (e) amortization of pension and postretirement actuarial ~~losses;~~losses/gains; (f) net plant incident costs/credits; and (g) restructuring, impairment, and plant closing ~~costs.~~and transition costs/credits. Basic adjusted net income per share excludes dilution and is computed by dividing adjusted net income by the weighted average number of shares outstanding during the period. Adjusted diluted net income per share reflects all potential dilutive ordinary shares outstanding during the period increased by the number of additional shares that would have been outstanding as dilutive securities.

Adjusted net income (loss) and adjusted net income (loss) per share amounts are presented solely as supplemental information. These measures exclude similar noncash items as Adjusted EBITDA in order to assist our investors in comparing our performance from period to period and as such, bear similar risks as Adjusted EBITDA as documented in footnote (1) above. For that reason, adjusted net income and the related per share amounts, should not be considered in isolation and should be considered only to supplement analysis of U.S. GAAP results.


⁽³⁾	Prior to the ~~periods prior to our IPO,~~second quarter of 2019, the average number of ordinary shares outstanding used to calculate basic and diluted adjusted net income per share was based on the ordinary shares that were outstanding at the time of our IPO. Adjusted net income and adjusted net income per share amounts are presented solely as supplemental information.

~~(3)~~

~~The~~ income tax impacts, if any, of each adjusting item ~~represent~~represented a ratable allocation of the total difference between the unadjusted tax expense and the total adjusted tax expense, computed without consideration of any adjusting items using a with and without approach. ~~We do not adjust for changes in tax valuation allowances because we do not believe it provides more meaningful information than is provided under GAAP.~~

Beginning in the three- and six-month periods ended June 30, 2019, income tax expense is adjusted by the amount of additional tax expense or benefit that we would accrue if we used non-GAAP results instead of GAAP results in the calculation of our tax liability, taking into consideration our tax structure. We use a normalized effective tax rate of 35%, which reflects the weighted average tax rate applicable under the various jurisdictions in which we operate. This non-GAAP tax rate eliminates the effects of non-recurring and period specific items which are often attributable to restructuring and acquisition decisions and can vary in size and frequency. This rate is subject to change over time for various reasons, including changes in the geographic business mix, valuation allowances, and changes in statutory tax rates.

We eliminate the effect of significant changes to income tax valuation allowances from our presentation of adjusted net income to allow investors to better compare our ongoing financial performance from period to period. We do not adjust for insignificant changes in tax valuation allowances because we do not believe it provides more meaningful

Table of Contents

information than is provided under GAAP. We believe that our revised approach enables a clearer understanding of the long term impact of our tax structure on post tax earnings.


⁽⁴⁾	As presented within Item 2, operating expenses includes selling, general and administrative expenses and other operating expense (income), net.

Three Months Ended ~~September~~June 30, ~~2017~~2019 Compared to the Three Months Ended ~~September~~June 30, ~~2016~~

2018

For the three months ended ~~September~~June 30, ~~2017,~~2019, net income was ~~$53~~$22 million on revenues of ~~$582~~$578 million, compared with a net ~~loss~~income of $2$198 million on revenues of ~~$532~~$626 million for the same period in ~~2016.~~2018. The ~~increase~~decrease of ~~$55~~$176 million in net income was the result of the following items:

Revenues for the three months ended June 30, 2019 decreased by $48 million, or 8%, as compared with the same period in 2018. The decrease was due to a $16 million decrease in revenue in our Titanium Dioxide segment and a $32 million decrease in revenue in our Performance Additives segment. See "—Segment Analysis" below.

Cost of goods sold for the three month period ended June 30, 2019 increased by $318 million from the same period in the prior year primarily as a result of the recognition of $325 million of insurance proceeds which was a credit to cost of goods sold in 2018.

Our operating expenses for the three months ended June 30, 2019 decreased by $1 million, or 2%, as compared with the same period in 2018, primarily related to a $11 million decrease in selling, general and administrative expense offset by a $10 million decrease in other operating income. The decrease in selling, general and administrative expense is primarily as the result of reductions in personnel costs while the decrease in other operating income can be attributed to the sale of carbon credits in 2018.

	·
•		Revenues for the three months ended September 30, 2017 increased by $50 million, or 9%, as compared with the same period in 2016. The increase was due to a $39 million increase in revenue in our Titanium Dioxide segment primarily related to increases in average selling prices, and an $11 million increase in revenue in our Performance Additives segment due to increases in selling price and volumes. See “—Segment Analysis” below.

Our operating expenses for the three months ended September 30, 2017 increased by $12 million, or 36%, as compared with the same period in 2016, primarily related to a $23 million increase due to a 2016 gain from disposal of businesses/assets and a $6 million increase due to an insurance recovery gain in 2016 relating to losses incurred at our Uerdingen, Germany plant partially offset by a $9 million reduction in costs at our Corporate segment as our Corporate costs to operate as a stand-alone business are lower than those typically allocated to us from Huntsman and $2 million of savings from our business improvement program.

Restructuring, impairment and plant closing and transition costs for the three months ended ~~September~~June 30, ~~2017 increased~~2019 decreased to ~~$16 million~~nil from $7$136 million for the same period in 2018 primarily as a result of ~~2016.~~the closure of a portion of our Augusta, Georgia plant in the second quarter of 2018. For more information concerning restructuring and plant closing activities, see ~~"Note 6.~~"Note 7. Restructuring, Impairment, and Plant Closing ~~Costs"~~and Transition Costs" of the notes to ~~our~~unaudited condensed consolidated ~~and combined~~ financial ~~statements.~~

statements.

~~Table of Contents~~

	·
•		Our income tax ~~expense~~benefit for the three months ended ~~September~~June 30, ~~2017 increased~~2019 was $9 million compared to ~~$14 million from a $7 million~~ income tax ~~benefit~~expense of $45 million for the same period in ~~2016.~~2018. Our income ~~tax expense is~~taxes are significantly affected by the mix of income and losses in the tax jurisdictions in which we operate, as impacted by the presence of valuation allowances in certain tax jurisdictions. For further information concerning taxes, see ~~"Note 9.~~"Note 10. Income ~~Taxes"~~Taxes" of the notes to ~~our~~unaudited condensed consolidated ~~and combined~~ financial ~~statements.~~ statements.

Segment Analysis

~~Three Months Ended September 30, 2017 Compared to the Three Months Ended September 30, 2016~~

Percent

Three Months Ended

Change

September 30,

Favorable

(Dollars in millions)

2017

2016

(Unfavorable)

Revenues







Titanium Dioxide

$
431

$
392

10
%
Performance Additives

151

140

8
%
Total

$
582

$
532

9
%
Segment adjusted EBITDA







Titanium Dioxide

$
127

$
22

477
%
Performance Additives

15

16

(6)
%

142

38

274
%
Corporate and other

(8)

(17)

53
%
Total

$
134

$
21

538
%

Three Months Ended September 30, 2017 vs. 2016

Average Selling

Price(1)

Foreign

Currency

Local

Translation

Mix &

Sales


Currency

Impact

Other

Volumes(2)

Period-Over-Period Increase (Decrease)









Titanium Dioxide

22
%
2
%
(2)
%
(12)
%
Performance Additives

2
%
1
%
(1)
%
5
%



	Three Months Ended						Percent Change Favorable (Unfavorable)
	June 30,
(Dollars in millions)	2019			2018
Revenues
Titanium Dioxide	$	439		$	455		(4	%)
Performance Additives	139			171			(19	%)
Total	$	578		$	626		(8	%)
Adjusted EBITDA
Titanium Dioxide	$	55		$	147		(63	%)
Performance Additives	16			23			(30	%)
	71			170			(58	%)
Corporate and other	(10		)	(13		)	23	%
Total	$	61		$	157		(61	%)

Table of Contents



	Three Months Ended June 30, 2019 vs. 2018
	Average Selling Price⁽¹⁾
	Local Currency		Foreign Currency Translation Impact		Mix & Other		Sales Volumes⁽²⁾
Period-Over-Period Increase (Decrease)
Titanium Dioxide	(9	%)	(4	%)	—	%	9	%
Performance Additives	(1	%)	(3	%)	1	%	(16	%)


	~~(1)~~


⁽¹⁾	Excludes revenues from tolling arrangements, by-products and raw materials.


⁽²⁾		Excludes sales volumes of by-products and raw materials.

Titanium Dioxide

The ~~$39 million, or 10%, increase in revenues in our~~ Titanium Dioxide segment ~~for~~generated revenues of $439 million in the three months ended ~~September~~June 30, ~~2017 compared to the same period~~2019, a decrease of 2016 was due to a 24% increase in average selling prices, partially offset by a 12% decrease in sales volumes and a 2% decrease due to product mix. The improvements in selling price consisted primarily of a 22% increase as a result of continued improvements in business conditions for TiO₂ allowing for increased prices, and a 2% improvement primarily from favorable exchange rates against the Euro. Sales volumes decreased primarily as a result of the fire at our Pori, Finland manufacturing facility, however, sales volumes, excluding the impact of the Pori fire, increased by$16 million, or 4%, compared to the same period in ~~2016.~~

~~Segment adjusted~~2018. The decrease was primarily due to a 9% decline in the average TiO₂ selling price and a 4% unfavorable impact from foreign currency translation partially offset by a 9% increase in sales volumes. The decrease in the average selling price was primarily attributable to lower European prices and softer business conditions in Asia Pacific. Sales volumes of functional and specialty TiO₂ products increased globally and broadly across end-use applications due to higher availability of certain products and increased sales of new products.

Adjusted EBITDA ~~of our~~for the Titanium Dioxide segment ~~increased by $105~~was $55 million for the three months ended ~~September~~June 30, ~~2017~~2019, a decrease of $92 million compared to the same period in ~~2016~~2018, or a decrease of $69 million after excluding $23 million of lost earnings attributable to our Pori, Finland TiO₂ manufacturing facility, which were reimbursed through insurance proceeds in 2018. The decrease was primarily as a result of ~~an increase in revenue largely~~lower TiO₂ margins due to ~~an increase~~a lower average TiO₂ selling price, higher raw material costs, and $6 million from the sale of carbon credits in the prior year period, partially offset by higher sales volumes and a $3 million benefit from our 2019 Business Improvement Program.

Performance Additives

The Performance Additives segment generated $139 million of revenues in the three months ended June 30, 2019, a decline of $32 million, or 19%, compared to the same period in 2018. The decline was primarily due to a 16% decrease in sales volumes, a 3% unfavorable impact of foreign currency translation and a 1% decrease in average selling price and was partially offset by a 1% increase from mix and other. The decline in ~~volumes (excluding the impact of the Pori fire),~~volume was attributable to lower construction activity in North America and Europe, lower demand for certain products used in automotive, electronics and plastics applications and a ~~$13 million reduction in costs primarily~~discontinuation of sales of a product to a Timber Treatment customer. The average selling price declined due to the composition of sales within our ~~business improvement program.~~

~~Performance Additives~~

~~The increase~~functional additives and color pigments businesses.

Adjusted EBITDA in ~~revenues in our~~the Performance Additives segment was $16 million, a decrease of ~~$11~~$7 million ~~or 8%,~~ for the three months ended ~~September~~June 30, ~~2017~~2019 compared to the same period ~~of 2016 was~~in 2018, primarily due to lower sales volumes and a ~~3% increase in~~lower average selling price, ~~and a~~

~~Table of Contents~~

~~5% increase in volume,~~ partially offset by lower costs and a ~~1% decrease due to changes in product mix. The improvement in prices was primarily in our Functional Additives product line.~~

~~Segment adjusted EBITDA in our Performance Additives segment was $15 million for the three month period ended September 30, 2017 compared to $16 million for the same period in 2016. The~~ $1 million ~~decrease is a result of higher sales volumes and higher selling prices offset by a $2 million decrease as a result of the release of an environmental reserve at~~benefit from our ~~Heinhausen, Germany plant in the third quarter of 2016 and other cost increases.~~

2019 Business Improvement Program.

Corporate and ~~other~~

Other

Corporate and other ~~primarily consists of corporate selling, general and administrative~~represents expenses which are not allocated to our segments. Losses from Corporate and other ~~are $9~~were $10 million, or ~~53%,~~$3 million lower ~~than~~in the three months ended June 30, 2019 compared to the same period in ~~the prior year as our costs to operate~~2018, primarily as a ~~standalone company are lower than those costs historically allocated to us from Huntsman.~~

~~Nine~~result of the timing of corporate costs.

Table of Contents

Six Months Ended ~~September~~June 30, ~~2017~~2019 Compared to the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2016~~

2018

For the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2019, net income was ~~$74~~$20 million on revenues of ~~$1,681~~$1,140 million, compared with a net ~~loss~~income of ~~$73~~$278 million on revenues of ~~$1,648~~$1,248 million for the same period in ~~2016.~~2018. The ~~increase~~decrease of ~~$147~~$108 million in net income was the result of the following items:

	·
•		Revenues for the ~~nine~~six months ended ~~September~~June 30, ~~2017 increased~~2019 decreased by ~~$33~~$108 million, or 2%9%, as compared with the same period in ~~2016.~~2018. The ~~increase~~decrease was due to a ~~$20~~$47 million, or ~~2%, increase~~5% decline in revenue in our Titanium Dioxide segment primarily ~~due~~related to ~~increases in~~lower average TiO₂ selling ~~price,~~prices, and a ~~$13~~$61 million, or ~~3%, increase~~18% decline in revenue in our Performance Additives segment, primarily due to ~~increases in selling price and~~lower sales volumes. See "—“—Segment ~~Analysis"~~Analysis” below.

Cost of goods sold for the six month period ended June 30, 2019 increased by $350 million from the same period in the prior year primarily as a result of the recognition of $325 million of insurance proceeds which was a credit to cost of goods sold in 2018.

Our operating expenses for the six months ended June 30, 2019 increased by $3 million, or 3%, as compared with the same period in 2018, primarily related to $13 million of carbon credits sold in 2018 and the negative affects foreign exchange rates, offset by reductions in personnel costs.

	·
•		Our operating expenses for the nine months ended September 30, 2017 increased by $25 million, or 19%, as compared to the same period in 2016, primarily related to a $23 million increase due to a 2016 gain from disposal of businesses/assets and a $6 million decrease due to an insurance recovery gain in 2016 relating to losses incurred at our Uerdingen plant partially offset by $6 million of savings from our restructuring programs.

Restructuring, impairment and plant closing and transition costs for the ~~nine~~six months ended ~~September~~June 30, ~~2017 increased~~2019 decreased to ~~$49~~$12 million from ~~$31~~$145 million for the same period in ~~2016.~~2018 primarily as a result of the closure of a portion of our Augusta, Georgia plant in the second quarter of 2018 and the closure of our plant in Pori, Finland beginning in the third quarter of 2018. For more information concerning restructuring activities, see ~~"Note 6.~~"Note 7. Restructuring, Impairment, and Plant Closing ~~Costs"~~and Transition Costs" of the notes to ~~our~~unaudited condensed consolidated ~~and combined~~ financial ~~statements.~~

statements.

	·
•		Our ~~income tax expense for the nine months ended September 30, 2017 increased to $26 million from a $14 million~~ income tax benefit for the six months ended June 30, 2019 was $8 million compared to income tax expense of $65 million for the same period in ~~2016.~~2018. Our income tax expense is significantly affected by the mix of income and losses in the tax jurisdictions in which we ~~operate,~~operated, as impacted by the presence of valuation allowances in certain tax jurisdictions. For further information concerning taxes, see ~~"Note 9.~~"Note 10. Income ~~Taxes"~~Taxes" of the notes to ~~our~~unaudited condensed consolidated ~~and combined~~ financial ~~statements.~~ statements.

Segment Analysis



	Six Months Ended						Percent Change Favorable (Unfavorable)
	June 30,
(Dollars in millions)	2019			2018
Revenues
Titanium Dioxide	$	864		$	911		(5	%)
Performance Additives	276			337			(18	%)
Total	$	1,140		$	1,248		(9	%)
Segment adjusted EBITDA
Titanium Dioxide	$	116		$	290		(60	%)
Performance Additives	31			47			(34	%)
	147			337			(56	%)
Corporate and other	(26		)	(23		)	(13	%)
Total	$	121		$	314		(61	%)

Table of Contents

~~Segment Analysis~~

~~Nine Months Ended September 30, 2017 Compared to the Nine Months Ended September 30, 2016~~

Percent

Nine Months Ended

Change

September 30,

Favorable

(Dollars in millions)

2017

2016

(Unfavorable)

Revenues







Titanium Dioxide

$
1,217

$
1,197

2
%
Performance Additives

464

451

3
%
Total

$
1,681

$
1,648

2
%
Segment adjusted EBITDA







Titanium Dioxide

$
268

$
28

857
%
Performance Additives

57

56

2
%

325

84

287
%
Corporate and other

(48)

(46)

(4)
%
Total

$
277

$
38

629
%

Nine Months Ended September 30, 2017 vs. 2016

Average Selling

Price(1)

Foreign

Currency

Local

Translation

Mix &

Sales


Currency

Impact

Other

Volumes(2)

Period-Over-Period Increase (Decrease)









Titanium Dioxide

17
%
(1)
%
(1)
%
(13)
%
Performance Additives

1
%
(1)
%
—
%
2
%



	Six Months Ended June 30, 2019 vs. 2018
	Average Selling Price⁽¹⁾
	Local Currency		Foreign Currency Translation Impact		Mix & Other		Sales Volumes⁽²⁾
Period-Over-Period Increase (Decrease)
Titanium Dioxide	(7	%)	(4	%)	—	%	6	%
Performance Additives	(1	%)	(3	%)	1	%	(15	%)


	~~(1)~~


⁽¹⁾	Excludes revenues from tolling arrangements, by-products and raw materials.


⁽²⁾		Excludes sales volumes of by-products and raw materials.

Titanium Dioxide

The ~~$20 million, or 2%, increase in revenues in our~~ Titanium Dioxide segment ~~for~~generated revenues of $864 million in the ~~nine~~six months ended ~~September~~June 30, ~~2017 compared to the same period~~2019, a decrease of 2016 was primarily due to a 16% increase in average selling prices partially offset by a 13% decrease in sales volumes and a 1% decrease due to product mix. The improvements in selling prices were primarily as a result of continued improvement in business conditions for TiO₂ ~~allowing for an increase in prices. Sales volumes decreased primarily as a result of the fire at our Pori, Finland manufacturing facility.~~

~~Segment adjusted EBITDA of our Titanium Dioxide segment increased by $240~~$47 million, ~~for the nine months ended September 30, 2017~~or 5%, compared to the same period in ~~2016~~2018. The decline was primarily asdue to a ~~result~~7% decrease in the average TiO₂ selling price and a 4% unfavorable impact of anforeign exchange rates, partially offset by a 6% increase in ~~revenue largely due to an increase~~sales volumes. The decrease in the average selling price was primarily attributable to lower European prices and ~~increase~~softer business conditions in Asia Pacific. Sales volumes ~~(excluding the impact~~ of ~~the fire at a Pori plant),~~functional and ~~a $31 million reduction in costs, primarily~~specialty TiO₂ increased globally due to higher availability of certain products and increased sales of new products.

Adjusted EBITDA for our ~~business improvement program.~~

~~Performance Additives~~

~~The increase in revenues in our Performance Additives~~Titanium Dioxide segment ~~of $13~~decreased $174 million ~~or 3%,~~ for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 compared to the same period in ~~2016~~2018, or a decrease of $143 million after excluding $41 million of lost earnings attributable to our Pori, Finland TiO₂ manufacturing facility, which were reimbursed through insurance proceeds in 2018. The decrease was primarily as a result of lower TiO₂ margins, due to a $2lower average TiO₂ selling price, higher raw material costs and $13 million ~~increase~~of carbon credits sold in the six months ended June 30, 2018, partially offset by higher sales volumes and a $5 million benefit from our 2019 Business Improvement Program.

Performance Additives

The Performance Additives segment generated $276 million of revenue in the six months ended June 30, 2019, which is $61 million, or 18%, lower compared to the same period in 2018 resulting from a 15% decrease in volumes, a 3% unfavorable impact of foreign exchange rates and a 1% decrease in the average selling price, partially offset by a 1% increase due to mix and other. Sales volumes reflect lower construction activity in North America and Europe, lower demand for certain products used in automotive, electronics and plastics applications, the impact of plant shutdowns as part of prior restructuring actions and a ~~2% increase in volume.~~discontinuation of sales of a product to a Timber Treatment customer. The ~~improvement in prices was primarily in~~average selling price declined due to the composition of sales within our ~~Functional Additives product line.~~

~~Segment adjusted~~functional additives and color pigments businesses.

Adjusted EBITDA in our Performance Additives segment ~~increased~~decreased by $1$16 million, or 2%34%, for the six months ended June 30, 2019 compared to the same period in 2018, primarily due ~~to increases in revenues from higher~~lower sales volumes and a lower average selling ~~pricing. The increases in revenue was~~price, partially offset by lower selling, general and administrative costs and a ~~decrease~~$2 million benefit from our Business Improvement Program.

Corporate and Other

Corporate and other represents expenses which are not allocated to our segments. Losses from Corporate and other were $26 million, or $3 million higher for the six months ended June 30, 2019 than the same period in ~~EBITDA~~2018 primarily as a result the timing of ~~increased~~corporate costs and the ~~release~~unfavorable impact of ~~an environmental reserve relating to our former Heinhausen, Germany plant~~foreign currency translation arising from weakness in the ~~third quarter of 2016.~~

~~Corporate and other~~

~~Segment adjusted EBITDA for Corporate and other was materially consistent year over year.~~

Euro versus the U.S. dollar.

Table of Contents

~~LIQUIDITY AND CAPITAL RESOURCES~~

~~On August 8, 2017, in connection with the IPO~~

Liquidity and ~~the Separation, we entered into new financing arrangements~~Capital Resources

We had cash and ~~incurred new debt, including $375~~cash equivalents of$50 millionand $165 million as of ~~Senior Notes issued by our subsidiaries, Venator Finance S.à.r.l.~~June 30, 2019 and Venator Materials LLC, and borrowings of $375 million the Term Loan Facility. We used the net proceeds of the Senior Notes and the Term Loan Facility to repay intercompany debt owed to Huntsman and to pay related fees and expenses. Substantially all Huntsman receivables or payables were eliminated in connection with the Separation, other than a payable to Huntsman for a liability pursuant to the Tax Matters Agreement entered into at the time of the Separation which has been presented as “Noncurrent payable to affiliate” on our condensed consolidated and combined balance sheet. See “Note 9. Income Taxes” for further discussion.

In addition to the Senior Notes and the Term Loan Facility, we entered into a $300 million asset-based revolving lending facility with a maturity of five years, referred to herein as the ABL Facility and, together with the Term Loan Facility, the Senior Credit Facilities. Availability to borrow under the ABL Facility is subject to a borrowing base calculation comprising both accounts receivable and inventory in the United States, Canada, the United Kingdom and Germany and only accounts receivable in France and Spain. Thus, the base calculation may fluctuate from time to time and may be further impacted by the lenders' discretionary ability to impose reserves and availability blocks that might otherwise incrementally increase borrowing availability. Assuming all proposed borrowers currently participate in the facility, the borrowing base calculation is in excess of $268 million. To participate in the facility, each borrower is required to deliver certain documentation and security agreements to the satisfaction of the administrative agent, some of which are not fully satisfied, reducing the borrowing base calculation to $234 million.

December 31, 2018, respectively. We expect to have adequate liquidity to meet our obligations over the next 12 months. Additionally, we believe our future obligations, including needs for capital expenditures, will be met by available cash generated from operations and borrowings.

On August 8, 2017, in connection with our IPO and the separation, we entered into new financing arrangements and incurred new debt, including $375 million of Senior Notes issued by our subsidiaries Venator Finance S.à.r.l. and Venator Materials LLC, as Issuers, and borrowings of $375 million under the ~~ABL~~Term Loan Facility.

~~Items Impacting Short-Term and Long-Term Liquidity~~

~~Our liquidity can be significantly impacted by various factors. The following matters had, or are expected~~ A payable to ~~have,~~Huntsman for a ~~significant impact~~liability pursuant to the Tax Matters Agreement has been presented as "Noncurrent payable to affiliates" on our ~~liquidity:~~

Cash invested in our accounts receivable and inventory, net of accounts payable, decreased by approximately $138 million for the nine months ended September 30, 2017 as reflected in our condensed consolidated and combined statements of cash flows. We expect volatility in our working capital components to continue after the Separation due to seasonal changes in working capital throughout the year.

During 2017, we expect to spend approximately $90 million on capital expenditures, net of reimbursements, approximately $49 million of which has been spent as of September 30, 2017. Our future expenditures include certain EHS maintenance and upgrades; repair of our Pori manufacturing facility that was damaged by fire on January 30, 2017; periodic maintenance and repairs applicable to major units of manufacturing facilities; expansions of our existing facilities or construction of new facilities; and certain cost reduction projects. We expect to fund this spending with cash provided by operations.

During the nine months ended September 30, 2017, we made contributions to our pension and postretirement benefit plans of $19 million. During the remainder of 2017, we expect to contribute an additional amount of approximately $7 million to these plans.

We are involved in a number of cost reduction programs for which we have established restructuring accruals. As of September 30, 2017, we had $41 million of accrued restructuring costs of which $37 million is classified as current. We expect to incur additional restructuring and plant closing costs of approximately $6 million, including $3 million for non-cash charges, and pay approximately $5 million through the remainder of 2017. For further discussion of these plans and the costs involved, see "Note 6. Restructuring, Impairment and Plant Closing Costs" to our condensed consolidated and combined financial statements.

unaudited condensed consolidated balance sheets.

~~Table of Contents~~

Further, although the business improvement program is expected to be completed by the end of 2018, we expect to incur additional restructuring charges well beyond the end of 2018. We expect the business improvement program to provide additional contributions to adjusted EBITDA beginning in 2017.

~~On January 30, 2017, our TiO~~₂ manufacturing facility in Pori, Finland experienced fire damage and we continue to repair the facility. Prior to the fire, 60% of the site capacity produced specialty products which, on average, contributed greater than 75% of the site EBITDA from January 1, 2015 through January 30, 2017. ~~The Pori facility had a nameplate capacity of 130,000 metric tons per year, which represented approximately 17% of our total TiO~~₂ ~~nameplate capacity and approximately 2% of total global TiO~~₂ ~~demand.~~ We are currently operating at 20% of total prior capacity but producing only specialty products, and we currently intend to restore manufacturing of the balance of these more profitable specialty products by the fourth quarter of 2018. The remaining 40% of site capacity is more commoditized and we will determine if and when to rebuild this commoditized capacity depending on market conditions, costs and projected long term returns relative to our other investment opportunities. The site is insured for property damage as well as business interruption losses. According to our insurance policies, the respective retention levels (deductibles) for physical damage and business interruption are $15 million and 60 days, respectively, with a limit of $500 million, which we expect our claims associated with the fire to exceed, in light of increased business interruption claims arising from increased TiO₂ profitability and recently estimated reconstruction costs. We expect to account for these overages as capital expenditures and currently expect to fund this additional capital spending with cash provided by operations. As of September 30, 2017, we have received $141 million from our insurer as partial progress payments towards the overall pending claim. On October 9, 2017 we received another partial progress payment in the amount of $112 million from our insurer.

We have established a process with our insurer to receive timely advance payments for the reconstruction of the facility as well as business interruption losses, subject to policy limits. We have agreed with our insurer to have periodic meetings to review relevant site activities and interim claims as well as regular progress payments.

In connection with the IPO and the Separation, we entered into new financing arrangements and incurred new debt, including the issuance of $375 million in aggregate principal amount of 5.75% of Senior Notes due 2025 and borrowings of $375 million under the Term Loan Facility. In addition to the Term Loan Facility, we entered into a $300 million ABL Facility. We used the net proceeds of the Senior Notes and the Term Loan Facility to repay approximately $732 million of intercompany debt owed to Huntsman and to pay related fees and expenses of approximately $18 million.

~~As of September 30, 2017 and December 31, 2016, we had $4 million and $10 million, respectively, classified as current portion of debt.~~

As of September 30, 2017 and December 31, 2016, we had approximately $141 million and $26 million, respectively, of cash and cash equivalents held by our non-U.S. subsidiaries, including our variable interest entities. We intend to use cash held in our non-U.S. subsidiaries to fund our local operations. Nevertheless, we could repatriate this cash or future operating cash from earnings as dividends to our parent company. If non-U.S. cash were repatriated as dividends, under current tax law, we have the ability to repatriate the cash without incurring incremental income tax. Cash held by certain foreign subsidiaries, including our variable interest entities, may also be subject to legal restrictions, including those arising from the interests of our partners, which could limit the amounts available for repatriation.

~~Cash Flows for the Nine Months Ended September 30, 2017 Compared to the Nine Months Ended September 30, 2016~~

Net cash provided by operating activities from continuing operations was $180 million for the nine months ended September 30, 2017 while net cash provided by operating activities from continuing operations was $87 million for the nine months ended September 30, 2016. The increase in net cash provided by operating activities from continuing operations for the nine months ended September 30, 2017 compared with the same period of 2016 was primarily attributable to the $147 million increase in net income as described in “—Results of Operations” above offset by an $85 million unfavorable variance in operating assets and liabilities for 2017 as compared with 2016.

~~Table of Contents~~

Net cash provided by investing activities from continuing operations was $73 million for the nine months ended September 30, 2017, compared to net cash used in investing activities from continuing operations of $99 million for the nine months ended September 30, 2016. The increase in net cash provided by investing activities from continuing operations for the nine months ended September 30, 2017 compared with the same period of 2016 was primarily attributable to an increase in net repayments from to affiliates of $157 million year over year.

Net cash used in financing activities from continuing operations was $99 million for the nine months ended September 30, 2017, compared to net cash provided by financing activities from continuing operations of $10 million for the nine months ended September 30, 2016. The increase in net cash used in financing activities from continuing operations for the nine months ended September 30, 2017 compared with the same period of 2016 was primarily attributable to $732 million final settlement of affiliate balances at Separation and an increase in net repayments on affiliates accounts payable of $109 million from 2016 to 2017 offset by proceeds from the issuance of the Senior Notes and ~~Senior Credit facilities in 2017.~~

~~Changes in Financial Condition~~

~~The following information summarizes our working capital as of September 30, 2017 and December 31, 2016:~~

September 30,

December 31,

Increase

Percent

(Dollars in millions)

2017

2016

(Decrease)

Change

Cash and cash equivalents

$
186

$
29

$
157

541
%
Accounts receivable, net

411

247

164

66
%
Accounts receivable from affiliates

9

243

(234)

(96)
%
Inventories

431

426

5

1
%
Prepaid expenses

11

11

-

-
%
Other current assets

73

59

14

24
%
    Total current assets from continuing operations

1,121

1,015

106

10
%
Accounts payable

319

297

22

7
%
Accounts payable to affiliates

15

695

(680)

(98)
%
Accrued liabilities

213

146

67

46
%
Current portion of debt

4

10

(6)

(60)
%
    Total current liabilities from continuing operations

551

1,148

(597)

(52)
%
    Working capital (deficit)

$
570

$
(133)

$
703

(529)
%

~~Our working capital increased by $703 million as a result of~~ the ~~net impact of the following significant changes:~~

Cash and cash equivalents increased by $157 million primarily due to inflows of $180 million from operating activities of continuing operations and $73 million of cash inflows from investing activities of continuing operations offset by outflows of $99 million from financing activities of continuing operations.

~~Accounts receivable increased by $164 million primarily due to higher revenues in the three months ended September 30, 2017 compared to the three months ended December 31, 2016.~~

Accrued liabilities increased by $67 million primarily due to deferred income recorded in connection with the partial progress payment received from our insurer related to the fire at our Pori, Finland manufacturing facility.

Accounts receivable from and accounts payable to affiliates represent financing arrangements with affiliates of Huntsman. For further information, see “Note 7. Debt—Cash Pooling Program” to our condensed consolidated and combined financial statements.

~~FINANCING ARRANGEMENTS~~

~~Senior Notes~~

~~On July 14, 2017, the Issuers~~Term Loan Facility, we entered into ~~an indenture in connection with~~ the ~~issuance of~~ABL Facility. On June 20, 2019 the ~~Senior Notes.~~

~~Table of Contents~~

~~The Senior Notes are general unsecured senior obligations of the Issuers and are guaranteed on a general unsecured senior basis by Venator and certain of Venator’s subsidiaries.~~

~~The indenture related~~ABL facility was increased to the Senior Notes imposes certain limitations on the ability of Venator and certain of its subsidiaries to, among other things, incur additional indebtedness secured by any principal properties, incur indebtedness of non-guarantor subsidiaries, enter into sale and leaseback transactions with respect to any principal properties and consolidate or merge with or into any other person or lease, sell or transfer all or substantially all of its properties and assets.

The Senior Notes bear interest of 5.75% per year payable semi-annually and will mature on July 15, 2025. The Issuers may redeem the Senior Notes in whole or in part at any time prior to July 15, 2020 at a price equal to 100% of the principal amount t~~hereof plus accrued and unpaid interest, if any, and~~ an ~~early redemption premium, calculated on an agreed percentage of the outstanding principal amount, providing compensation on a portion of foregone future interest payables. The Senior~~ Notes will be redeemable in whole or in part at any time on or after July 15, 2020 at the redemption prices set forth in the indenture, plus accrued and unpaid interest, if any, up to, but not including, the redemption date. In addition, at any time prior to July 15, 2020, the Issuers may redeem up to 40% of the aggregate principal amount of ~~the Senior Notes~~up to $350 million, with an amount not greater than the net cash proceeds of certain equity offerings or contributions to Venator’s equity at 105.75% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but not including, the redemption date. Upon the occurrence of certainno change of control events (other than the Separation), holders of the Venator Notes will have the right to require that the Issuers purchase all or a portion of such holder’s Senior Notes in cash at a purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the ~~date of repurchase.~~

~~Senior Credit Facilities~~

~~On August 8, 2017, we entered into the Senior Credit Facilities that provide for first lien senior secured financing of up to $675 million, consisting of:~~

~~the Term Loan Facility in an aggregate principal amount of $375 million, with a maturity of seven years; and~~

~~the ABL Facility in an aggregate principal amount of up to $300 million, with a maturity of five years.~~

~~The Term Loan Facility will amortize in aggregate annual amounts equal to 1% of the original principal amount of the Term Loan Facility, payable quarterly commencing in the fourth quarter of 2017.~~

maturity dates. Availability to borrow ~~under the $300 million of commitments~~ under the ABL Facility is subject to a borrowing base calculation ~~comprised of~~comprising both accounts receivable and inventory in ~~United States,~~the U.S., Canada, the ~~United Kingdom,~~U.K. and Germany and only accounts receivable in France and ~~Spain, that~~Spain. Thus, the base calculation may fluctuate from time to time and may be further impacted by the lenders’ discretionary ability to impose reserves and availability blocks that might otherwise incrementally increase borrowing availability. AsThe borrowing base calculation as of June 30, 2019 is in excess of $292 million, of which $257 million is available to be drawn.

Items Impacting Short-Term and Long-Term Liquidity

Our liquidity can be significantly impacted by various factors. The following matters had, or are expected to have, a ~~result, the aggregate amount available for extensions~~significant impact on our liquidity:

•

Cash invested in our accounts receivable and inventory, net of accounts payable, as reflected in our unaudited condensed consolidated statements of cash flows decreased by $28 million for the six months ended June 30, 2019 as compared to the same period in the prior year. We expect volatility in our working capital components to continue due to seasonal changes in working capital throughout the year.

We expect to spend approximately $130 million on capital expenditures during 2019. Our future expenditures include certain EHS maintenance and upgrades, periodic maintenance and repairs applicable to major units of ~~credit under the ABL Facility at any time is the lesser~~manufacturing facilities; expansions of ~~$300 million~~our existing facilities or construction of new facilities; certain cost reduction projects; and the ~~borrowing base calculated according~~cost to transfer specialty and differentiated manufacturing from Pori, Finland to other sites within our manufacturing network. We expect to fund this spending with cash on hand as well as cash provided by operations and borrowings.

During the ~~formula described above minus~~six months ended June 30, 2019, we made contributions to our pension and postretirement benefit plans of $12 million. During the ~~aggregate~~remainder of 2019, we expect to contribute an additional amount of ~~extensions of credit outstanding under the ABL Facility at such time.~~

~~Borrowings under the Term Loan Facility will bear interest at a rate equal~~approximately $23 million to at Venator’s option, either (a) a London Interbank Offering Rate (“LIBOR”) based rate determined by reference to the costs of funds for Eurodollar deposits for the interest period relevant to such borrowing, adjusted for certain additional costs subject to an interest rate floor to be agreed or (b) a base rate determined by reference to the highest of (i) the rate of interest per annum determined from time to time by JPMorgan Chase Bank, N.A. as its prime rate in effect at its principal office in New York City, (ii) the federal funds rate plus 0.50% per annum and (iii) the one-month adjusted LIBOR plus 1.00% per annum, in each case plus an applicable margin to be agreed upon. Borrowings under the ABL Facility bear interest at a variable rate equal to an applicable margin based on the applicable quarterly average excess availability under the ABL Facility plus either a LIBOR or a base rate. The applicable margin percentage is calculated and established once every three calendar months and varies from 150 to 200 basis points for LIBOR loans depending on the quarterly average excess availability under the ABL Facility for the immediately preceding three month period.

~~All obligations under the Senior Credit Facilities~~these plans.

•

We are ~~guaranteed by Venator and substantially all of its subsidiaries (the “Guarantors”), and are secured by substantially all of the assets of Venator and the Guarantors, in each~~

~~Table of Contents~~

~~case subject to certain exceptions. Lien priority as between the Term Loan Facility and the ABL Facility with respect to the collateral will be governed by an intercreditor agreement.~~

~~AUGUSTA MATTER~~

In February 2017, Huntsman filed suit against the legacy owner and certain former executives of Rockwood, primarily related to the failure of new technology that Huntsman acquired in the Rockwood acquisition that was to be implemented at the new Augusta, Georgia, facility and subsequently at other facilities. Huntsman is seeking various forms of legal remedy, including compensatory damages, punitive damages, expectation damages, consequential damages and restitution. Venator is not party to the suit.

~~RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS~~

~~Since the Rockwood acquisition in 2014, we have been~~ involved in a number of cost reduction programs for which we have established restructuring accruals. As of June 30, 2019, we had $19 million of accrued restructuring costs of which $8 million is classified as current. We expect to incur additional restructuring and plant closing costs of approximately $28 million, including $9 million for noncash charges, and pay approximately $16 million through the remainder of 2019. For further discussion of these plans and the costs involved, see "Note 7. Restructuring, Impairment, and Plant Closing and Transition Costs" of the notes to unaudited condensed consolidated financial statements.

In the fourth quarter of 2018 we commenced additional cost reduction ~~program that has delivered more than $200~~initiatives which are expected to provide approximately $40 million of annual ~~cost synergies~~adjusted EBITDA benefit compared to 2018. We expect actions will be complete in 2020, ending the year at the full run-rate level.

Table of Contents

•

On January 30, 2017, our TiO₂ manufacturing facility in Pori, Finland, experienced fire damage. We are in the process of closing our Pori, Finland, TiO₂ manufacturing facility and transferring the production of specialty and differentiated product grades to other sites within our existing network. In the first half of 2019, we had capital expenditures of $35 million related to project wind-down and closure costs. We intend to operate the Pori facility at reduced production rates through the transition period, which is expected to last through at least 2022, subject to economic and other factors.

We have $734 million in aggregate principal outstanding consisting of $371 million of 5.75% Senior Notes due 2025, and ~~improved its global competitiveness.~~a $363 million Term Loan Facility. In addition we ~~implemented~~have $24 million in aggregate principal outstanding under our ABL Facility. See further discussion under "Financing Arrangements."

As of June 30, 2019 and December 31, 2018, we had $32 million and $8 million, respectively, classified as current portion of debt.

As of June 30, 2019 and December 31, 2018, we had $13 million and $36 million, respectively, of cash and cash equivalents held outside of the U.S. and Europe, including our variable interest entities. As of June 30, 2019, our non-U.K. subsidiaries have no plan to distribute funds in a ~~capacity reduction at our TiO~~₂ ~~manufacturing facility in Calais, France, which has generated approximately $35 million of annual savings beginning in~~manner that would cause them to be subject to U.K., or other local country taxation. In the first half of 2016. We have since determined to close the Calais, France facility. Further, we are incurring additional restructuring charges for recently identified plans for business improvements expected to be completed by the end of 2018. We have realized approximately $9 million of savings in the third quarter of ~~2017~~2019, a non-U.K. subsidiary distributed $12 million to a U.K. subsidiary subject to a 5% withholding tax.

Cash Flows for the Six Months Ended June 30, 2019 Compared to the Six Months Ended June 30, 2018

Net cash used in operating activities was $50 million for the six months ended June 30, 2019 while net cash provided by operating activities was $305 million for the six months ended June 30, 2018. The unfavorable variance in net cash from operating activities for the six months ended June 30, 2019 compared with the same period in 2018 was primarily attributable to a $258 million decrease in net income as described in "—Results of Operations" above, a $135 million unfavorable variance in noncash restructuring and impairment charges, a $40 million unfavorable variance in deferred income taxes, offset by a $86 million favorable variance in operating assets and liabilities for 2019 as compared with the same period in 2018.

Net cash used in investing activities was $82 million for the six months ended June 30, 2019, compared to $162 million for the six months ended June 30, 2018. The decrease in net cash used in investing activities was primarily attributable to a decrease in capital expenditures of $84 million as a result of ~~these programs.~~

higher capital expenditures related to our TiO₂ manufacturing facility in Pori, Finland in the prior year period.

Net cash provided by financing activities was $17 million for the six months ended June 30, 2019, compared to $14 million used in financing activities for the six months ended June 30, 2018. The decrease in net cash used in financing activities for the six months ended June 30, 2019 compared with the same period in 2018 was primarily attributable to $24 million of proceeds from issuance of short-term debt and a $7 million decrease in repayment of long-term debt.

Table of Contents

Changes in Financial Condition

The following information summarizes our working capital as of June 30, 2019 and December 31, 2018:



(Dollars in millions)	June 30, 2019		December 31, 2018		Increase (Decrease)			Percent Change
Cash and cash equivalents	$	50	$	165	$	(115	)	(70	%)
Accounts receivable, net	423		351		72			21	%
Inventories	508		538		(30		)	(6	%)
Prepaid expenses	9		20		(11		)	(55	%)
Other current assets	66		51		15			29	%
Total current assets	$	1,056	$	1,125	$	(69	)	(6	%)
Accounts payable	299		382		(83		)	(22	%)
Accounts payable to affiliates	14		18		(4		)	(22	%)
Accrued liabilities	116		135		(19		)	(14	%)
Current operating lease liability	9		—		9			NM
Current portion of debt	32		8		24			300	%
Total current liabilities	$	470	$	543	$	(73	)	(13	%)
Working capital	$	586	$	582	$	4		1	%

Our working capital increased by $4 million as a result of the net impact of the following significant changes:

Cash and cash equivalents decreased by $115 million primarily due to outflows of $50 million from operating activities, and $82 million from investing activities, partially offset by inflows of $17 million provided by financing activities.

Accounts receivable increased by $72 million primarily due to seasonally higher revenues in the second quarter of 2019 compared to the fourth quarter of 2018.

Inventory decreased $30 million reflecting lower levels of finished goods at June 30, 2019 as compared to the prior year end as a result of seasonality and efforts across the organization to manage inventory levels.

Accounts payable decreased by $83 million primarily as a result of the timing of cash payments versus receipt of raw materials and a $44 million reduction in capital accruals.


•	Current portion of debt increased by $24 million primarily due to the issuance of short-term debt in the second quarter of 2019 compared to the fourth quarter of 2018.

Accrued liabilities decreased by $19 million primarily due to a reduction in accrued interest and accrued payroll which is a reflection of the timing of the payments versus the amounts accrued at June 30, 2019 as compared to December 31, 2018.


•	Current operating lease liability increased by $9 million as a result of the adoption of ASU No. 2016-02, Leases (Topic 842) in the first quarter of 2019. See "Note 2. Recently Issued Accounting Pronouncements" of the notes to unaudited condensed consolidated financial statements for further discussion of the implementation of this accounting standard.

Financing Arrangements

For ~~further~~a discussion of ~~these~~financing arrangements see "Note 8. Debt" of the notes to unaudited condensed consolidated financial statements.

Restructuring, Impairment and ~~other~~Plant Closing and Transition Costs

For a discussion of our restructuring plans and the costs involved, see ~~“Note 6.~~"Note 7. Restructuring, Impairment, and Plant Closing ~~Costs”~~and Transition Costs" of the notes to ~~our~~unaudited condensed consolidated ~~and combined~~ financial ~~statements.~~

~~LEGAL PROCEEDINGS~~

statements.

Table of Contents

Legal Proceedings

For a discussion of legal proceedings, see ~~“Note 11.~~"Note 12. Commitments and ~~Contingencies—~~Contingencies—Legal ~~Matters”~~Matters" of the notes to ~~our~~unaudited condensed consolidated financial statements.

Environmental, Health and ~~combined financial statements.~~

~~ENVIRONMENTAL, HEALTH AND SAFETY MATTERS~~

Safety Matters

As noted in the ~~Prospectus,~~2018 Form 10-K, specifically within ~~“Business—~~"Part I. Item 1. Business—Environmental, Health and Safety ~~Matters”~~Matters" and ~~“Risk~~"Part I. Item 1A. Risk Factors,”" we are subject to extensive environmental regulations, which may impose significant additional costs on our operations in the future. While we do not expect any of these enactments or proposals to have a material adverse effect on us in the near term, we cannot predict the ~~longer‑term~~longer-term effect of any of these regulations or proposals on our future financial condition. For a discussion of EHS matters, see ~~“Note 12.~~"Note 13. Environmental, Health and Safety ~~Matters”~~Matters" of the notes to ~~our~~unaudited condensed consolidated ~~and combined~~ financial ~~statements.~~

~~RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS~~

statements.

Recently Issued Accounting Pronouncements

For a discussion of recently issued accounting pronouncements, see ~~“Note~~"Note 2. Recently Issued Accounting ~~Pronouncements”~~Pronouncements" of the notes to ~~our~~unaudited condensed consolidated ~~and combined~~ financial ~~statements.~~

~~CRITICAL ACCOUNTING POLICIES~~

statements.

Critical Accounting Policies

The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts in our ~~combined~~unaudited condensed consolidated financial ~~statements. Our significant accounting policies are summarized in note "1. Description of Business, Recent Developments, Basis of Presentation and Summary of Significant Accounting Policies”~~statements. There have been no changes to ~~our combined financial statements in the Prospectus. Summarized below are~~ our critical accounting ~~policies:~~

~~Employee Benefit Programs~~

~~We sponsor several contributory~~policies or estimates. See the Company’s critical accounting policies in "Part 2. Item 7. Management’s Discussion and ~~non-contributory defined benefit plans, covering employees primarily~~Analysis of Financial Condition and Results of Operations—Critical Accounting Policies" in the U.S., the U.K., Germany, Spain and Finland, but also covering employees in a number of other countries. We fund the material plans through trust arrangements (or local equivalents) where the assets are held separately from us. We also sponsor unfunded postretirement plans which provide medical and, in some cases, life insurance benefits covering

2018 Form 10-K.

~~Table of Contents~~

certain employees in the U.S., Canada and South Africa. Amounts recorded in our combined financial statements are recorded based upon actuarial valuations performed by various third-party actuaries. Inherent in these valuations are numerous assumptions regarding expected long-term rates of return on plan assets, discount rates, compensation increases, mortality rates and health care cost trends. These assumptions are described in note "19. Employee Benefit Plans" to our combined financial statements in the Prospectus.

~~Income Taxes~~

We use the asset and liability method of accounting for income taxes. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial and tax reporting purposes. We evaluate deferred tax assets to determine whether it is more likely than not that they will be realized. Valuation allowances are reviewed on a tax jurisdiction basis to analyze whether there is sufficient positive or negative evidence to support a change in judgment about the realizability of the related deferred tax assets for each jurisdiction. These conclusions require significant judgment. In evaluating the objective evidence that historical results provide, we consider the cyclicality of businesses and cumulative income or losses during the applicable period. Cumulative losses incurred over the period limit our ability to consider other subjective evidence such as our projections for the future. Changes in expected future income in applicable jurisdictions could affect the realization of deferred tax assets in those jurisdictions. See note "18. Income Taxes" to our combined financial statements in the Prospectus for more information regarding our valuation allowances.

As of December 31, 2016, there were no unremitted earnings of subsidiaries to consider for indefinite reinvestment. Going forward, to the extent future cash flow needs require distributions from foreign subsidiaries, based on existing law, we have the ability to repatriate the cash without incurring incremental income tax.

Accounting for uncertainty in income taxes prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The application of income tax law is inherently complex. We are required to determine if an income tax position meets the criteria of more-likely-than-not to be realized based on the merits of the position under tax law, in order to recognize an income tax benefit. This requires us to make significant judgments regarding the merits of income tax positions and the application of income tax law. Additionally, if a tax position meets the recognition criteria of more-likely-than-not we are required to make judgments and apply assumptions in order to measure the amount of the tax benefits to recognize. These judgments are based on the probability of the amount of tax benefits that would be realized if the tax position was challenged by the taxing authorities. Interpretations and guidance surrounding income tax laws and regulations change over time. As a consequence, changes in assumptions and judgments can materially affect amounts recognized in our combined financial statements.

~~Long-Lived Assets~~

The useful lives of our property, plant and equipment are estimated based upon our historical experience, engineering estimates and industry information and are reviewed when economic events indicate that we may not be able to recover the carrying value of the assets. The estimated lives of our property range from 3 to 50 years and depreciation is recorded on the straight-line method. Inherent in our estimates of useful lives is the assumption that periodic maintenance and an appropriate level of annual capital expenditures will be performed. Without on-going capital improvements and maintenance, the productivity and cost efficiency declines and the useful lives of our assets would be shorter.

We are required to evaluate the carrying value of our long-lived tangible and intangible assets whenever events indicate that such carrying value may not be recoverable in the future or when management's plans change regarding those assets, such as idling or closing a plant. We evaluate impairment by comparing undiscounted cash flows of the related asset groups that are largely independent of the cash flows of other asset groups to their carrying values. Key assumptions in determining the future cash flows include the useful life, technology, competitive pressures, raw material pricing and regulations. In connection with our asset evaluation policy, we reviewed all of our long-lived assets for indicators that the carrying value may not be recoverable. See note "11. Restructuring, Impairment and Plant Closing Costs" to our combined financial statements in the Prospectus.

~~Table of Contents~~

~~Restructuring and Plant Closing Costs~~

We have recorded restructuring charges in recent periods in connection with closing certain plant locations, workforce reductions and other cost savings programs in each of our business segments. These charges are recorded when management has committed to a plan and incurred a liability related to the plan. Estimates for plant closing costs include the write-off of the carrying value of the plant, any necessary environmental and/or regulatory costs, contract termination and demolition costs. Estimates for workforce reductions and other costs savings are recorded based upon estimates of the number of positions to be terminated, termination benefits to be provided and other information, as necessary. Management evaluates the estimates on a quarterly basis and will adjust the reserve when information indicates that the estimate is above or below the currently recorded estimate. For further discussion of our restructuring activities, see note "5. Restructuring, Impairment and Plant Closing Costs" to our condensed combined financial statements in the Prospectus.

~~Contingent Loss Accruals~~

Environmental remediation costs for our facilities are accrued when it is probable that a liability has been incurred and the amount can be reasonably estimated. Estimates of environmental reserves require evaluating government regulation, available technology, site-specific information and remediation alternatives. We accrue an amount equal to our best estimate of the costs to remediate based upon the available information. The extent of environmental impacts may not be fully known and the processes and costs of remediation may change as new information is obtained or technology for remediation is improved. Our process for estimating the expected cost for remediation considers the information available, technology that can be utilized and estimates of the extent of environmental damage. Adjustments to our estimates are made periodically based upon additional information received as remediation progresses. For further information, see note "22. Environmental, Health and Safety Matters" to our combined financial statements in the Prospectus.

We are subject to legal proceedings and claims arising out of our business operations. We routinely assess the likelihood of any adverse outcomes to these matters, as well as ranges of probable losses. A determination of the amount of the reserves required, if any, for these contingencies is made after analysis of each known claim. We have an active risk management program consisting of numerous insurance policies secured from many carriers. These policies often provide coverage that is intended to minimize the financial impact, if any, of the legal proceedings. The required reserves may change in the future due to new developments in each matter. For further information, see note "21. Commitments and Contingencies—Legal Proceedings" to our combined financial statements in the Prospectus.

~~Variable Interest Entities—Primary Beneficiary~~

We evaluate each of our variable interest entities on an on-going basis to determine whether we are the primary beneficiary. Management assesses, on an on-going basis, the nature of our relationship to the variable interest entity, including the amount of control that we exercise over the entity as well as the amount of risk that we bear and rewards we receive in regards to the entity, to determine if we are the primary beneficiary of that variable interest entity. Management judgment is required to assess whether these attributes are significant. The factors management considers when determining if we have the power to direct the activities that most significantly impact each of our variable interest entity's economic performance include supply arrangements, manufacturing arrangements, marketing arrangements and sales arrangements. We consolidate all variable interest entities for which we have concluded that we are the primary beneficiary. For further information, see note "7. Variable Interest Entities" to our combined financial statements in the Prospectus.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risks, such as changes in interest rates, foreign exchange rates, and commodity prices. We manage these risks through normal operating and financing activities and, when appropriate, through the use of derivative instruments. We do not invest in derivative instruments for speculative purposes.

Interest Rate Risk

~~In connection with our IPO and the Separation, we entered into the Senior Credit Facilities. Through our borrowing activities, we expect to be~~

We are exposed to interest rate ~~risk. Such~~ risk ~~will arise due to~~through the ~~anticipated~~ structure of our debt portfolio ~~including the~~which includes a mix of fixed and floating ~~interest~~ rates. Actions ~~we may take~~taken to reduce interest rate risk include managing the mix and rate characteristics of various ~~interest bearing liabilities, as well as entering into interest~~interest-bearing liabilities.

The carrying value of our floating rate ~~derivative instruments.~~

~~Table of Contents~~

~~From time to time, we may purchase interest rate swaps and/or other derivative instruments to reduce the impact of changes~~debt is $363 million at June 30, 2019. A hypothetical 1% increase in interest rates on our ~~floating-rate long-term debt. Under~~floating rate debt as of June 30, 2019 would increase our interest ~~rate swaps, we agree with other parties to exchange, at specified intervals, the difference between fixed-rate and floating-rate interest amounts calculated~~expense by ~~reference to~~approximately $4 million on an ~~agreed notional principal amount.~~

annualized basis.

Foreign Exchange Rate Risk

~~Venator is~~

We are exposed to market risks associated with foreign ~~exchange risk. Venator’s~~exchange. Our cash flows and earnings are subject to fluctuations due to exchange rate variation. ~~Venator’s~~Our revenues and expenses are denominated in various foreign currencies. ~~Venator enters~~We enter into foreign currency derivative instruments to minimize the short-term impact of movements in foreign currency rates. Where practicable, ~~Venator~~we generally ~~nets~~net multicurrency cash balances among ~~its~~our subsidiaries to help reduce exposure to foreign currency exchange rates. Certain other exposures may be managed from time to time through financial market transactions, principally through the purchase of spot or forward foreign exchange contracts (generally with maturities of three months or less). ~~Venator does~~We do not hedge ~~its~~our foreign currency exposures in a manner that would eliminate the effect of changes in exchange rates on ~~its~~our cash flows and earnings. At ~~September~~June 30, ~~2017, Venator~~2019 and December 31, 2018, we had ~~approximately $84~~$79 million inand $89 million, respectively, notional amount (in U.S. dollar equivalents) outstanding ~~with maturities of approximately one month.~~

Table of Contents

In December 2017, we entered into three cross-currency swap agreements to convert a portion of our intercompany fixed-rate, U.S. dollar denominated notes, including the semi-annual interest payments and the payment of remaining principle at maturity, to a fixed-rate, Euro denominated debt. The economic effect of the swap agreement was to eliminate the uncertainty of the cash flows in U.S. Dollars associated with the notes by fixing the principle amount at €169 million with a fixed annual rate of 3.43%. These hedges have been designated as cash flow hedges and the critical terms of the cross-currency swap agreements correspond to the underlying hedged item. These swaps mature in July 2022, which is our best estimate of the repayment date of these intercompany loans. The amount and timing of the semi-annual principle payments under the cross-currency swap also correspond with the terms of the intercompany loans. Gains and losses from these hedges offset the changes in the value of interest and principal payments as a result of changes in foreign exchange rates.

During 2019, the changes in accumulated other comprehensive loss associated with these cash flow hedging activities was a gain of $5 million.

Commodity Price Risk

A portion of our products and raw materials are commodities whose prices fluctuate as market supply and demand fundamentals change. Accordingly, product margins and the level of our profitability tend to fluctuate with the changes in the business cycle. We try to protect against such instability through various business strategies. These include provisions in sales contracts allowing us to pass on higher raw material costs through timely price increases and formula price contracts to transfer or share commodity price risk. We did not have any commodity derivative instruments in place as of June 30, 2019 and December 31, 2018.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As ~~of September 30, 2017, Venator carried out an evaluation~~required by Rule 13-a 15(b) under the Exchange Act, we have evaluated, under the supervision and with the participation of ~~their respective~~our management, including ~~the Chief Executive Officer~~our principal executive officer and ~~Chief Financial Officer, as to~~principal financial officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined ~~Exchange Act~~in Rules 13a-15(e) and 15d-15(e)~~). Venator maintains~~ under the Exchange Act) as of the end of the period covered by this Quarterly Report. Based on this evaluation, our principal executive officer and principal financial officer have concluded that, as of June 30, 2019, our disclosure controls and procedures ~~designed to provide reasonable assurance~~were effective, in that they ensure that information required to be disclosed by us in ~~their respective~~the reports that ~~are filed~~we file or ~~submitted~~submit under the Exchange Act ~~are~~is (1) recorded, processed, summarized and reported within the time periods specified byin the Security and Exchange Commission’s rules and forms, ~~of the SEC,~~ and ~~that information is~~(2) accumulated and communicated to ~~their respective~~our management, including ~~the Chief Executive Officer~~our principal executive officer and ~~Chief Financial Officer,~~principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Such management, including the Chief Executive Officer and Chief Financial Officer, do not expect that the disclosure controls and procedures or the internal controls will prevent and/or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Venator’s disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives and our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of September 30, 2017.

Internal Control over Financial Reporting

We identified a material weakness over our financial reporting as of March 31, 2017. As defined in Regulation 12b‑2 under the Exchange Act, a "material weakness" is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our company’s annual or interim financial statements will not be prevented, or detected on a timely basis. Specifically, we determined that there is a deficiency in the design of our internal controls surrounding the review of the statements of cash flows for carve out financial statements. This material weakness led

There were no changes to a material misstatement in our combined statements of cash flows for the three years ended December 31, 2016 and in our condensed combined statements of cash flows for the three months periods ended March 31, 2017 and 2016.

~~As described further in footnote 25 to our combined financial statements and footnote 13 to our condensed combined financial statementsof the Prospectus,~~ ~~the misstatements related to the presentation of cash flows associated with the cash pooling programs in which we participated in with certain subsidiaries of Huntsman International. These~~

~~Table of Contents~~

~~transactions were improperly classified between cash flows from operating activities and cash flows from either investing or financing activities.~~

We have initiated various programs to mitigate this material weakness in future periods and are in the process of supplementing our existing internal controls related to carve-out cash flow reporting, including hiring of additional accounting personnel and providing training specific to cash flow reporting to our existing accounting personnel. In addition, after the Separation, we no longer participate in a cash pooling program with affiliates outside of the Venator legal entities and no related cash flow transactions exist in periods subsequent to the Separation.

Although we plan to complete the above remediation process and integrate incremental internal controls into our 2017 testing plan, the implementation of these initiatives may not fully address any material weakness or other deficiencies that we may have in our internal control over financial reporting. See "Risk Factors—Risks Related to Our Business—We have identified a material weakness in our internal control over financial reporting ~~which resulted in the restatement of our financial statements” included in~~ ~~the Prospectus.~~

~~There were no other changes in internal control over financial reporting that occurred~~ during the ~~quarter~~three months ended ~~September~~June 30, ~~2017~~2019 that ~~has~~have materially affected, or isare reasonably likely to materially affect, our internal control over financial ~~reporting.~~

reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). However, we can only give reasonable assurance that our internal control over financial reporting will prevent or detect material misstatements on a timely basis. Ineffective internal control over financial reporting could cause investors to lose confidence in our reported financial information and could result in a lower trading price for our securities.

Table of Contents

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

~~During~~

Shareholder Litigation

On February 8, 2019 we, certain of our executive officers, Huntsman and certain banks who acted as underwriters in connection with our IPO and secondary offering were named as defendants in a proposed class action civil suit filed in the ~~three months ended September 30,~~District Court for the State of Texas, Dallas County (the "Dallas District Court"), by an alleged purchaser of our ordinary shares in connection with our IPO on August 3, 2017 ~~there~~and our secondary offering on December 1, 2017. The plaintiff, Macomb County Employees’ Retirement System, alleges that inaccurate and misleading statements were made regarding the impact to our operations, and prospects for restoration thereof, resulting from the fire that occurred at our Pori, Finland manufacturing facility, among other allegations. Additional complaints making substantially the same allegations were filed in the Dallas District Court by the Firemen's Retirement System of St. Louis on March 4, 2019 and by Oscar Gonzalez on March 13, 2019, with the third case naming two of our directors as additional defendants. A fourth case was filed in the U.S. District Court for the Southern District of New York by the City of Miami General Employees' & Sanitation Employees' Retirement Trust on July 31, 2019, making substantially the same allegations, adding claims under sections 10(b) and 20(a) of the U.S. Exchange Act, and naming all of our directors as additional defendants.

The plaintiffs in these cases seek to determine that the proceedings should be certified as class actions and to obtain alleged compensatory damages, costs, rescission and equitable relief. The cases filed in the Dallas District Court have been consolidated into a single action.

On May 8, 2019, we filed a “special appearance” in the Dallas District Court action contesting the court’s jurisdiction over the Company and a motion to transfer venue to Montgomery County, Texas and on June 7, 2019 we and certain defendants filed motions to dismiss. On July 9, 2019, a hearing was held on the motions, but no ~~material developments~~ruling has been made following the hearing.

We may be required to indemnify our executive officers and directors, Huntsman, and the banks who acted as underwriters in our IPO and secondary offerings, for losses incurred by them in connection with ~~respect~~these matters pursuant to ~~material legal proceedings referenced in “Business – Legal Proceedings”~~our agreements with such parties. Because of the ~~Prospectus.~~

early stage of this litigation, we are unable to reasonably estimate any possible loss or range of loss and we have not accrued for a loss contingency with regard to these matters.

Tronox Litigation

On April 26, 2019, we acquired intangible assets related to the European paper laminates business from Tronox. A separate agreement with Tronox entered into on July 14, 2018 requires that Tronox promptly pay us a “break fee” of $75 million upon the consummation of Tronox’s merger with Cristal once the sale of the European paper laminates business to us was consummated, if the sale of Cristal’s Ashtabula manufacturing complex to us was not completed. The deadline for such payment was May 13, 2019. On April 26, 2019, Tronox publicly stated that it believes it is not obligated to pay the break fee.

On May 14, 2019, we commenced a lawsuit in the Delaware Superior Court against Tronox arising from Tronox's breach of its obligation to pay the break fee. We are seeking a judgment for $75 million, plus pre- and post-judgment interest, and reasonable attorneys' fees and costs. On June 17, 2019, Tronox filed an answer denying that it is obligated to pay the break fee and asserting affirmative defenses and counterclaims of approximately $400 million, alleging that we failed to negotiate the purchase of the Ashtabula complex in good faith. Because of the early stage of this litigation, we are unable to reasonably estimate any possible gain, loss or range of gain or loss and we have not made any accrual with regard to this matter.

Huelva, Spain EHS Matters

On April 28, 2019, a release of acidic effluent occurred at our Huelva facility in Spain impacting an adjacent watercourse and soils. Remediation work has been undertaken following the incident. We are fully cooperating with the regulatory authorities investigating this matter. Because of the early stage of this investigation we are unable to reasonably

Table of Contents

estimate any sanction that may be imposed by the local regulator, Junta de Andalucia, however we believe that such sanctions could exceed $100,000.

On June 20 2019, a release of nitrous oxide gas occurred at our Huelva facility in Spain. The gas cloud quickly dissipated but temporarily created an off-site visual impact. We are fully cooperating with the regulatory authorities investigating this matter. Because of the early stage of this investigation we are unable to reasonably estimate any sanction that may be imposed by Junta de Andalucia, however we believe that such sanctions could exceed $100,000.

ITEM 1A. RISK FACTORS

~~Factors that could materially adversely affect our business, financial condition, cash flows, results~~

As of the date of this filing, the Company and its operations ~~and share price are described in~~continue to be subject to the ~~Risk Factors~~risk factors previously disclosed in ~~the Prospectus. This information should be considered carefully, together with other information in this report and other reports and materials we file with the SEC.~~ "Part I. Item 1A. Risk Factors" of our 2018 Form 10-K. In addition to the risk factors noted in the ~~Prospectus,~~Form 10‑K, the following ~~updated~~ risk factor is applicable to us:

~~The classification of TiO~~₂ ~~as a Category 2 Carcinogen or higher in the European Union could decrease demand for our products and subject us to manufacturing regulations that could significantly increase our costs.~~

Restrictions on disposal of waste from our manufacturing processes could result in higher costs and negatively impact our ability to operate our manufacturing facilities.

Our manufacturing processes generate byproducts, some of which are saleable and others of which are not and must be reused or disposed of as waste. The ~~European Union (“EU”) adopted~~storage, transportation, reuse and disposal of waste are generally regulated by governmental authorities in the ~~Globally Harmonised System (“GHS”)~~jurisdictions in which we operate. If existing arrangements for reuse or disposal of the United Nations for a uniform system for the classification, labelling and packaging of chemical substances in Regulation (EC) No 1272/2008, the Classification, Labelling and Packaging Regulation (“CLP”). Pursuantwaste cease to ~~the CLP, an EU Member State can propose a classification for a substance~~be available to the European Chemicals Agency (“ECHA”), which upon review by ECHA’s Committee for Risk Assessment (“RAC”), can be submitted to the European Commission for adoption by regulation. On May 31, 2016, the French Agency for Food, Environmental and Occupational Health and Safety (“ANSES”) submitted a proposal to ECHA that would classify TiO₂ as a Category 1B Carcinogen presumed to have carcinogenic potential for humans by inhalation. We, together with other companies, relevant trade associations and the European Chemical Industry Council (“Cefic”), submitted comments opposing any classification of TiO₂ ~~as carcinogenic, based on evidence from multiple epidemiological studies covering more than 24,000 production workers at 18 TiO~~₂ ~~manufacturing sites over several decades that found no increased incidence of lung cancer~~us, as a result of ~~workplace exposure~~new rules, regulations or interpretations thereof, exhaustion of reclamation activities, landfill closures, or otherwise, we will need to find new arrangements for reuse or disposal, which could result in increased costs to us and negatively impact our consolidated financial statements. For example, gypsum is generated by our TiO₂ manufacturing facilities that use the sulfate process, such as those at Scarlino, Italy and ~~other scientific studies that concluded that~~Telok Kalong, Malaysia. The gypsum from our Scarlino facility is currently used in the ~~response to lung overload studies with poorly soluble particles upon~~reclamation of a nearby former quarry. We are currently seeking an extension of our existing permit which, if granted, would allow the ANSES proposed classification is based is unique to the rat and is not seen in other animal species or humans. On June 8, 2017, the RAC announced its preliminary conclusion that certain evidence meets the criteria under CLP to classify TiO₂ ~~as a Category 2 Carcinogen (described by the EU regulation as appropriate for “suspected human carcinogens”) for humans by inhalation. The~~ ~~RAC published their final opinion on September 14, 2017, which proposes that TiO~~₂ be classified as a Category 2 carcinogen by inhalation. In addition, the RAC proposed a Note in their opinion to the effect that coated particles must be evaluated to assess whether a higher category (Category 1B or 1A) should be applied and additional routes of exposure (oral or dermal) should be included. The ~~European Commission will now evaluate the RAC opinion in deciding what, if any, regulatory measures should be taken. We, Cefic and others expect~~facility to continue to ~~advocate~~use the material to reclaim the site for approximately 16 months and we intend to seek an additional extension thereafter to the ~~European Commission~~extent physical capacity remains available. We are also currently pursuing replacement options for sale, reuse and/or disposal of gypsum produced at the Scarlino facility. Such options generally require governmental approval and there can be no assurance that ~~the RAC’s report should not justify anything other than minimal regulatory measures~~such approvals will be received in a timely manner or at all. Failure to find viable new disposal arrangements for ~~the reasons stated above, among others. If the European Commission were to subsequently adopt the Category 2 Carcinogen classification, or a higher categorization for coated particles, it~~our manufacturing byproducts, including those originating at our Scarlino, Italy site, could ~~require that many end-use products manufactured with TiO~~₂ ~~be classified and labelled as containing a potential carcinogenic component, which could negatively~~significantly impact ~~public perception of products containing TiO~~₂~~. This type of regulatory response could also limit the marketability of and demand for TiO~~₂ ~~or products containing TiO~~₂ and potentially have spill-over, restrictive effects under other EU laws, e.g., those affecting medical and pharmaceutical applications, cosmetics, food packaging and food additives. Such classifications would also affect our manufacturing operations, ~~by subjecting us~~up to ~~new workplace safety requirements that could significantly increase costs. In addition, any classification, use restriction,~~and including the temporary or authorization requirement for use imposed by ECHA could trigger heightened regulatory scrutiny in countries outside the EU based on health or safety grounds, which could have a wider adverse impact geographically on market demand for and pricespermanent closure of ~~TiO~~₂ ~~or other products containing TiO~~₂ and increase our compliance obligations outside the EU. It is also possible that heightened regulatory scrutiny would lead to claims by consumers of such products alleging adverse health impacts. Finally, the classification of TiO₂ as a Category 2 Carcinogen or higher could lead the ECHA to evaluate other products with similar particle characteristics (such as iron oxides or functional additives) for human carcinogenic potential by inhalation, which may ultimately have similar negative impacts on other members of our product portfolio. In addition, under our separation agreement with Huntsman entered into in connection with our IPO and the Separation, we are required to indemnify Huntsman for any liabilities relating to our TiO₂ ~~operations.~~

~~Sales of TiO~~₂ ~~in the EU represented approximately 32% of our revenues for the twelve months ended September 30, 2017.~~

related manufacturing facilities.

Table of Contents

~~Disruptions in production at our manufacturing facilities, including our Pori facility, may have a material adverse impact on our business, results of operations and/or financial condition.~~

Manufacturing facilities in our industry are subject to planned and unplanned production shutdowns, turnarounds, outages and other disruptions. Any serious disruption at any of our facilities could impair our ability to use our facilities and have a material adverse impact on our revenues and increase our costs and expenses. Alternative facilities with sufficient capacity may not be available, may cost substantially more or may take a significant time to increase production or qualify with our customers, any of which could negatively impact our business, results of operations and/or financial condition. Long-term production disruptions may cause our customers to seek alternative supply which could further adversely affect our profitability.

Unplanned production disruptions may occur for external reasons including natural disasters, weather, disease, strikes, transportation interruption, government regulation, political unrest or terrorism, or internal reasons, such as fire, unplanned maintenance or other manufacturing problems. Any such production disruption could have a material impact on our operations, operating results and financial condition. For example, a fire occurred in January 2017 at our TiO₂ manufacturing facility in Pori, Finland and the facility is currently not fully operational. We are currently operating at 20% of total prior capacity but producing only specialty products, and we currently intend to restore manufacturing of the balance of these more profitable specialty products by the fourth quarter of 2018. The remaining 40% of site capacity is more commoditized and we will determine if and when to rebuild this commoditized capacity depending on market conditions, costs and projected long term returns relative to our other investment opportunities. However, we may experience delays in construction, equipment procurement, or in start-up or plant commissioning, and, even if we are able to resume production on this schedule, we may lose customers that have in the meantime found alternative suppliers elsewhere. The site is insured for property damage as well as business interruption losses subject to retained deductibles of $15 million and 60 days, respectively, with a limit of $500 million, and we currently expect our over-the-limit costs to be within $100 million to $150 million of such limit, in light of increased business interruption claims arising from increased TiO₂ profitability and recently estimated reconstruction costs. We expect to account for these costs over our insurance limits as capital expenditures and fund them from cash from operations, which will decrease our liquidity and adversely impact earnings in the periods those costs in excess of our insurance limits are incurred. ~~However, these are preliminary estimates based on a number of significant assumptions,~~ ~~and the amount by which insurance proceeds does not fully cover our damages may exceed current estimates,which would further adversely impact liquidity and earnings.~~ ~~Factors that could materially impact our current estimates include our actual future TiO~~₂ profitability and related impact on our business interruption losses; the accuracy of our current property damage estimates; the actual costs and timing of our reconstruction efforts; the extent to which we rebuild the 40% of site capacity that produces commoditized products; our ability to secure government subsidies related to our reconstruction efforts; and a number of other significant market and facility-related assumptions. In addition, if we experience delays in receiving the insurance proceeds, our short term liquidity and earnings may be impacted. Additionally, our premiums and deductibles may increase substantially as a result of the fire.

In addition, we rely on a number of vendors, suppliers and, in some cases, sole-source suppliers, service providers, toll manufacturers and collaborations with other industry participants to provide us with chemicals, feedstocks and other raw materials, along with energy sources and, in certain cases, facilities that we need to operate our business. If the business of these third parties is disrupted, some of these companies could be forced to reduce their output, shut down their operations or file for bankruptcy protection. If this were to occur, it could adversely affect their ability to provide us with the raw materials, energy sources or facilities that we need, which could materially disrupt our operations, including the production of certain of our products. Moreover, it could be difficult to find replacements for certain of our business partners without incurring significant delays or cost increases. All of these risks could have a material adverse effect on our business, results of operations, financial condition and liquidity.

While we maintain business recovery plans that are intended to allow us to recover from natural disasters or other events that could disrupt our business, we cannot provide assurances that our plans would fully protect us from the effects of all such disasters or from events that might increase in frequency or intensity due to climate change. In addition, insurance may not adequately compensate us for any losses incurred as a result of natural or other disasters. In areas prone to frequent natural or other disasters, insurance may become increasingly expensive or not available at all. Furthermore, some potential climate-driven losses, particularly flooding due to sea-level rises, may pose long-term risks to our physical facilities such that operations cannot be restored in their current locations.

~~Table of Contents~~

~~ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS~~

Upon our formation, we issued 50,000 of our ordinary shares, par value £1 per share (the "Subscriber Shares"), to Huntsman International (Netherlands) B.V., an indirect wholly-owned subsidiary of Huntsman. On June 30, 2017, (a) Huntsman International (Netherlands) B.V. transferred the Subscriber Shares to Huntsman International, and (b) we issued 50,000 redeemable shares, par value £1 per share, and one ordinary share, par value $1 per share, to Huntsman International, all of which (including the Subscriber Shares) were repurchased by us prior to the consummation of our IPO. Prior to the consummation of our IPO, we issued 106,271,712 ordinary shares, par value $0.001 per share, to Huntsman through its wholly-owned subsidiaries Huntsman International and Huntsman International (Netherlands) B.V. Each issuance of shares made prior to our IPO was made pursuant to the exemption from registration in Section 4(a)(2) of the Securities Act because the offer and issuance of the ordinary shares did not involve a public offering.

ITEM 6. EXHIBITS

Each exhibit identified below is filed as a part of this report. Exhibits designated with an "*" are filed as an exhibit to this Quarterly Report on Form 10-Q and Exhibits designated with an "+" indicates a management contract or compensatory plan.

Incorporated by Reference
Exhibit
Number

Description

Schedule
Form

File
Number

Exhibit

Filing Date

2.1

Separation Agreement, dated August 7, 2017, by and among Venator Materials PLC and Huntsman Corporation

8-K

001-38176

2.1

08/11/17

3.1

Amended and Restated Articles of Association

8-K

001-38176

3.1

08/07/17

4.1

Registration Rights Agreement, dated August 8, 2017, by and among Venator Materials PLC, Huntsman International LLC and Huntsman (Holdings) Netherlands B.V.

8-K

001-38176

10.4

08/11/17

4.2

Indenture, dated as of July 14, 2017, by and among Venator Finance S.à r.l., Venator Materials LLC and Wilmington Trust, National Association, as trustee

S-1/A

333-217753

4.3

07/14/17

4.3

Form of 5.75% Senior Note due 2025 (included as Exhibit A to Exhibit 4.1)

S-1/A

333-217753

4.3

07/14/17

4.4

Supplemental Indenture, dated August 8, 2017, by and among Venator Finance S.a r. l., Venator Materials LLC, the guarantors party thereto and Wilmington Trust, National Association

8-K

001-38176

10.8

08/11/17

10.1+

Venator Materials 2017 Stock Incentive Plan

8-K

001-38176

10.1

08/07/17

10.2+

Form of Non-qualified Stock Option Agreement (Employee Form) related to the Venator Materials 2017 Stock Incentive

S-8

333-219982

4.4

08/15/17

10.3+

Form of Performance Unit Agreement (Employee Form) related to the Venator Materials 2017 Stock Incentive Plan

S-8

333-219982

4.5

08/15/17

~~Table of Contents~~

10.4+

Form of Phantom Share Agreement (Employee Form) related to the Venator Materials 2017 Stock Incentive Plan

S-8

333-219982

4.6

08/15/17

10.5+

Form of Restricted Stock Unit Agreement (Employee Form, IPO Award Conversion) related to the Venator Materials 2017 Stock Incentive Plan

S-8

333-219982

4.7

08/15/17

10.6+

Form of Restricted Stock Unit Agreement (Employee Form, New Grants) related to the Venator Materials 2017 Stock Incentive Plan

S-8

333-219982

4.8

08/15/17

10.7+

Form of Restricted Stock Unit Agreement (Director Form) related to the Venator Materials 2017 Stock Incentive Plan

S-8

333-219982

4.9

08/15/17

10.8+

Form of Share Unit Agreement (Director Form) related to the Venator Materials 2017 Stock Incentive Plan

S-8

333-219982

4.10

08/15/17

10.9+

Form of Notice of Award of Ordinary Shares (Director Form) related to the Venator Materials 2017 Stock Incentive Plan

S-8

333-219982

4.11

08/15/17

10.10

Employment Transfer Agreement, dated June 19, 2017 (Stolle)

S-1

333-217753

10.8

07/14/17

10.11

Employment Transfer Agreement, dated July 11, 2017 (Ogden)

S-1

333-217753

10.9

07/14/17

10.12

Employment Agreement, dated September 15, 2014 (Buberl)

S-1

333-217753

10.10

07/14/17

10.13

Transition Services Agreement, dated August 7, 2017, by and among Venator Materials PLC and Huntsman International LLC.

8-K

001-38176

10.1

08/11/17

10.14

Tax Matters Agreement, dated August 7, 2017, by and among Venator Materials PLC and Huntsman Corporation.

8-K

001-38176

10.2

08/11/17

10.15

Employee Matters Agreement, dated August 7, 2017, by and among Venator Materials PLC and Huntsman Corporation

8-K

001-38176

10.3

08/11/17

10.16

ABL Facility Agreement, dated August 8, 2017, by and among Venator Materials PLC, the borrowers party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent.

8-K

001-38176

10.5

08/11/17



		Incorporated by Reference
Exhibit Number	Description	Schedule Form	Exhibit	Filing Date
10.1	First Incremental Amendment to Revolving Credit Agreement, dated as of June 20, 2019, by and among Venator Materials PLC, the borrowers and guarantors party thereto, the incremental lenders party thereto, and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent	8-K	10.1	June 24, 2019
31.1*	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*	Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*	Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	XBRL Taxonomy Definition Linkbase Document
101.LAB*	XBRL Taxonomy Extension Labels Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document

Table of Contents

10.17

Term Loan Agreement, dated August 8, 2017, by and among Venator Materials PLC, Venator Finance S.À.R.L. and Venator Materials LLC, as borrowers, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative and collateral agent.

8-K

001-38176

10.6

08/11/17

31.1*

Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002

31.2*

Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002

32.1*

Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2*

Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS*

XBRL Instance Document

101.SCH*

XBRL Taxonomy Extension Schema Document

101.CAL*

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*

XBRL Taxonomy Definition Linkbase Document

101.LAB*

XBRL Taxonomy Extension Labels Linkbase Document

101.PRE*

XBRL Taxonomy Extension Presentation Linkbase Document

SIGNATURES

~~Table of Contents~~

~~SIGNATURES~~

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		VENATOR MATERIALS PLC (Registrant)

Date: ~~November~~ 2~~, 2017~~	~~By:~~ August 6, 2019	By:	/s/ Kurt D. Ogden
			Kurt D. Ogden
	~~Senior~~		Executive Vice President and Chief Financial Officer

Date: ~~November~~ 2~~, 2017~~	~~By:~~ August 6, 2019	By:	/s/ Stephen Ibbotson
			Stephen Ibbotson
			Vice President and Controller



England and Wales	~~98‑1373159~~ 98-1373159
(State or other jurisdiction	(I.R.S. Employer Identification No.)
of incorporation or organization)



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Ordinary Shares, $0.001 par value per share	VNTR	New York Stock Exchange



Large accelerated filer ☐	☑	Accelerated filer ☐	☐	Non-accelerated filer ☑	☐	Smaller reporting company ☐	☐	Emerging growth company ☐
		~~(Do not check if a smaller reporting company)~~ ☐

					~~Page~~
~~NOTEREGARDINGFORWARD~~-~~LOOKINGSTATEMENTS~~		2
			Page
~~PART I~~ GENERAL		~~FINANCIAL INFORMATION~~		2 3

NOTE REGARDING FORWARD-LOOKING STATEMENTS		2

PART I	FINANCIAL INFORMATION	4

ITEM 1.	Condensed Consolidated ~~and Combined~~ Financial Statements (Unaudited)		4 3

	Condensed Consolidated ~~and Combined~~ Balance Sheets		4 3

	Condensed Consolidated ~~and Combined~~ Statements of Operations		5 4

	Condensed Consolidated ~~and Combined~~ Statements of Comprehensive Income ~~(Loss)~~		6 5

	Condensed Consolidated ~~and Combined~~ Statements of Equity		7 6

	Condensed Consolidated ~~and Combined~~ Statements of Cash Flows		8 7

	Notes to Unaudited Condensed Consolidated ~~and Combined~~ Financial Statements		9 8

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		27 26

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk		39 42

ITEM 4.	Controls and Procedures		40 43

PART II	OTHER INFORMATION		41 45

ITEM 1.	Legal Proceedings		41 45

ITEM 1A.	Risk Factors		42 45

ITEM 2.6.	~~Unregistered Sales of Equity Securities and Use of Proceeds~~		Exhibits 47	43

~~ITEM 6.~~Signatures	~~Exhibits~~		44 47

	~~Signatures~~		50


•	increased manufacturing regulations for some of our products, including the outcome of the pending potential classification of TiO₂ as a carcinogen in the EU or any increased regulatory scrutiny;


	Three months ended				Nine months ended
	September 30,				September 30,
(Dollars in millions, except per share amounts)	2017		2016		2017		2016
Trade sales, services and fees, net	$	582	$	532	$	1,681	$	1,648
Cost of goods sold		446		491		1,351		1,547
Operating expenses:
Selling, general and administrative (includes corporate allocations from Huntsman Corporation of $9, $27, $62 and $76, respectively)		51		55		159		168
Restructuring, impairment and plant closing costs		16		7		49		31
Other income, net		(6)		(22)		1		(33)
Total expenses		61		40		209		166
Operating income (loss)		75		1		121		(65)
Interest expense		(30)		(14)		(54)		(44)
Interest income		22		2		25		13
Other income		—		—		—		1
Income (loss) from continuing operations before income taxes		67		(11)		92		(95)
Income tax (expense) benefit		(14)		7		(26)		14
Income (loss) from continuing operations		53		(4)		66		(81)
Income from discontinued operations, net of tax		—		2		8		8
Net income (loss)		53		(2)		74		(73)
Net income attributable to noncontrolling interests		(2)		(3)		(8)		(8)
Net income (loss) attributable to Venator	$	51	$	(5)	$	66	$	(81)

Basic earnings (losses) per share:
Income (loss) from continuing operations attributable to Venator Materials PLC ordinary shareholders	$	0.48	$	(0.07)	$	0.55	$	(0.84)
Income from discontinued operations attributable to Venator Materials PLC ordinary shareholders		—		0.02		0.08		0.08
Net income (loss) attributable to Venator Materials PLC ordinary shareholders	$	0.48	$	(0.05)	$	0.63	$	(0.76)

Diluted earnings (losses) per share:
Income (loss) from continuing operations attributable to Venator Materials PLC ordinary shareholders	$	0.48	$	(0.07)	$	0.54	$	(0.84)
Income from discontinued operations attributable to Venator Materials PLC ordinary shareholders		—		0.02		0.08		0.08
Net income (loss) attributable to Venator Materials PLC ordinary shareholders	$	0.48	$	(0.05)	$	0.62	$	(0.76)


	Total Venator Materials PLC Equity
	Parent’s Net								Accumulated
	Investment				Additional				Other		Noncontrolling
	and		Ordinary		Paid-in		Accumulated		Comprehensive		Interest in
(Dollars in millions)	Advances		Shares		Capital		Deficit		Loss		Subsidiaries		Total
Balance, January 1, 2017	$	588	$	—	$	—	$	—	$	(423)	$	12	$	177
Net income (loss)		67		—		—		(1)		—		8		74
Net changes in other comprehensive income		—		—		—		—		111		—		111
Dividends paid to noncontrolling interests		—		—		—		—		—		(9)		(9)
Net changes in parent’s net investment and advances		663		—		—		—		—		—		663
Conversion of parent's net investment and advances to paid-in capital		(1,318)		—		1,318		—		—		—		—
Balance, September 30, 2017	$	—	$	—	$	1,318	$	(1)	$	(312)	$	11	$	1,016


			Other
	Workforce		restructuring
(Dollars in millions)	reductions(1)		costs		Total(2)
Accrued liabilities as of December 31, 2016	$	21	$	—	$	21
2017 charges		34		8		42
2017 payments		(15)		(8)		(23)
Foreign currency effect on liability balance		1		—		1
Accrued liabilities as of September 30, 2017	$	41	$	—	$	41


	Titanium		Performance
(Dollars in millions)	Dioxide		Additives		Total
Accrued liabilities as of December 31, 2016	$	12	$	9	$	21
2017 charges		33		9		42
2017 payments		(14)		(9)		(23)
Foreign currency effect on liability balance		1		—		1
Accrued liabilities as of September 30, 2017	$	32	$	9	$	41

Current portion of restructuring reserves	$	28	$	9	$	37
Long-term portion of restructuring reserve		4		—		4



	Workforce reductions⁽¹⁾			Other restructuring costs			Total⁽²⁾
Accrued liabilities as of December 31, 2018	$	32		$	—		$	32
2019 charges for 2018 and prior initiatives	5			5			10
2019 charges for 2019 initiatives	4			—			4
2019 payments for 2018 and prior initiatives	(19		)	(5		)	(24		)
2019 payments for 2019 initiatives	(3		)	—			(3		)
Accrued liabilities as of June 30, 2019	$	19		$	—		$	19
Current portion of restructuring reserves	8			$	—		8
Long-term portion of restructuring reserve	11			—			11


⁽¹⁾	The total workforce reduction reserves of $19 million relate to the termination of 258 positions, of which 12 positions had been terminated but not yet paid as of June 30, 2019.


⁽²⁾	Accrued liabilities remaining at June 30, 2019 and December 31, 2018 by year of initiatives were as follows:



	June 30, 2019		December 31, 2018
2017 initiatives and prior	$	9	$	18
2018 initiatives	9		14
2019 initiatives	1		—
Total	$	19	$	32



	June 30, 2019		December 31, 2018
Senior Notes	$	371	$	370
Term Loan Facility	363		365
Other	36		13
Total debt	770		748
Less: short-term debt and current portion of long-term debt	32		8
Long-term debt	$	738	$	740


			Pension and other		Other
	Foreign		postretirement		comprehensive				Amounts
	currency		benefits		income of				attributable to		Amounts
	translation		adjustments,		unconsolidated				noncontrolling		attributable to
(Dollars in millions)	adjustment(a)		net of tax(b)		affiliates		Total		interests		Venator
Beginning balance, January 1, 2017	$	(112)	$	(306)	$	(5)	$	(423)	$	—	$	(423)
Adjustments related to other entities under common control		5		24		—		29		—		29
Tax expense		—		(3)		—		(3)		—		(3)
Other comprehensive income before reclassifications		68		3		—		71		—		71
Tax benefit		2		1		—		3		—		3
Amounts reclassified from accumulated other comprehensive loss, gross(c)		—		11		—		11		—		11
Tax expense		—		—		—		—		—		—
Net current-period other comprehensive income		75		36		—		111		—		111
Ending balance, September 30, 2017	$	(37)	$	(270)	$	(5)	$	(312)	$	—	$	(312)