Tronox Reports
Second Quarter 2024 Financial Results
Delivered results within previously guided ranges
STAMFORD, Conn., August 1, 2024/PRNewswire/ — Tronox Holdings plc (NYSE:TROX) (“Tronox” or the “Company”), the world’s leading integrated manufacturer of titanium dioxide
("TiO2") pigment, today reported its financial results for the quarter ending June 30, 2024, as follows:
Second Quarter 2024 Financial Highlights:
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Produced revenue of $820 million, a 6% increase compared to the prior quarter, or a 3% increase compared to the prior year
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Generated income from operations of $76 million, and net income of $10 million; adjusted net income was $12 million (non-GAAP)
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GAAP diluted earnings per share of $0.10; Adjusted diluted earnings per share was $0.07 (non-GAAP)
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Delivered Adjusted EBITDA of $161 million, within previously issued guidance of $160-180 million,
and an Adjusted EBITDA margin of 19.6% (non-GAAP)
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Invested $76 million in capital expenditures in the quarter
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Generated $84 million in free cash flow in the quarter (non-GAAP)
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Q3 2024 Outlook:
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TiO2 volumes expected to decline approximately 2-4% compared to Q2 2024 (an increase in the high-teens range compared to Q3 2023)
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Zircon volumes expected to be relatively flat compared to Q2 2024 (an increase of ~160% compared to Q3 2023)
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Adjusted EBITDA expected to be $145-165 million and Adjusted EBITDA margin to be in the high-teens
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This outlook is based on Tronox's views on current global economic activity and is subject to changes and impacts associated with the macroeconomic
conditions, global supply chain, and inflation-related challenges, among others.
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Note: For the Company's guidance with respect to third quarter 2024 non-GAAP measures, we are not able to provide without unreasonable effort the most
directly comparable GAAP financial measure, or reconciliation to such GAAP financial measure, because certain items that impact such measures are uncertain, out of the Company's control or cannot be reasonably predicted.
Summary of Select Financial Results for the Quarter Ending June 30, 2024
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($M unless otherwise noted)
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Q2 2024
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Q2 2023
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Y-o-Y%∆
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Q1 2024
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Q-o-Q%∆
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Revenue
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$
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820
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$
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794
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3
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% |
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$
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774
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6
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% |
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TiO2
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$
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653
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$
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611
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7
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% |
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$
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605
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8
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% |
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Zircon
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$
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85
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$
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95
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(11
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)
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%
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$
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88
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(3
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%) |
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Other products
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$
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82
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$
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88
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(7
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)
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%
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$
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81
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1
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% |
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Income from operations
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$
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76
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$
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84
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(10
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)
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%
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$
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41
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85
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% |
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Net Income (Loss)
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$
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10
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$
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(269
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)
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n/
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m
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$
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(9
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)
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n/
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m |
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Net Income (Loss) attributable to Tronox
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$
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16
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$
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(269
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)
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n/
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m
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$
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(9
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)
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n/
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m |
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GAAP diluted earnings (loss) per share
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$
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0.10
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$
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(1.72
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)
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n/
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m
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$
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(0.06
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)
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n/
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m |
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Adjusted diluted earnings (loss) per share
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$
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0.07
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$
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0.16
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(56
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)
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%
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$
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(0.05
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)
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n/
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m |
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Adjusted EBITDA
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$
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161
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$
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168
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(4
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)
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%
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$
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131
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23
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% |
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Adjusted EBITDA Margin %
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19.6
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%
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21.2
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%
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(160)
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bps
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16.9
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%
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270
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bps |
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Free cash flow
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$
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84
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$
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81
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4
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% |
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$
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(105
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)
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n/
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m |
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Y-o-Y % ∆
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Q-o-Q % ∆
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Volume
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Price / Mix
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FX
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Volume
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Price / Mix
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FX
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TiO2
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16
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%
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(8
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)%
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(1
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)%
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8
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%
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0
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%
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0
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%
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Zircon
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4
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%
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(15
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)%
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—
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(4
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)%
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1
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%
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—
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CEO's Remarks and Outlook
Chief Executive Officer John D. Romano commented, “Tronox’s second quarter performance was consistent with our previous guidance and demonstrated the continued
recovery across both TiO2 and zircon. Our TiO2 volumes increased 8% compared to the first quarter, or 16% compared to the prior year quarter, as we continued to see demand increase across all regions, consistent with seasonal trends. Zircon demand remained relatively stable compared to the first quarter. Pricing for
both TiO2 and zircon increased from the first quarter into the second, as expected, partially offset by unfavorable mix. We generated $84 million in free cash flow in the quarter and returned $41 million to shareholders in the form of
dividends.
“On the operations side, our average pigment plant utilization rate in the second quarter was lower than targeted, driven by short-term challenges relating to ramping
up our assets. As a result, we incurred higher costs in the second quarter than anticipated and delivered Adjusted EBITDA at the lower end of our guided range. While this will impact the margins of pigment sold in the third quarter, the operating
challenges we experienced during the ramp up in the second quarter are resolved, and our average pigment plant utilization rate for July was in the range of 80%."
Mr. Romano added, “While the macro backdrop for the second half of 2024 is expected to be less robust than previously anticipated, Tronox has realized and expects to
continue to realize considerable growth compared to 2023. For the third quarter, we expect TiO2 volumes to decline in-line with normal seasonal patterns by approximately 2-4% compared to the second quarter (an increase in the high-teens
range compared to Q3 2023). We expect zircon demand to remain relatively stable, with third quarter volumes in-line with second quarter levels (an increase of ~160% compared to Q3 2023). As previously referenced, the higher cost pigment tons
manufactured in the second quarter will result in lower profitability as they are sold in the third quarter. As a result, we expect third quarter Adjusted EBITDA to be between $145-165 million and our Adjusted EBITDA margin to be in the high-teens.
Furthermore, although we will not be providing any specific guidance ranges for the fourth quarter at this time, based on our current forecast and improved utilization rates, we expect our second half Adjusted EBITDA will be stronger than the first
half.”
Mr. Romano concluded, “Our team is highly focused on ensuring we deliver on our commitments to our stakeholders. Our vertically integrated business model serves as a
differentiator for Tronox by providing security of supply from a global footprint that we can leverage to our customers' advantage and co-products that contribute significant value to our portfolio. We are now running our pigment plants in the
range of 80% utilization rates, and we expect to continue running at this rate through the second half of the year. This will result in an improvement in pigment manufacturing costs and a step up in earnings power in the fourth quarter. Our results
would not be possible without the ongoing efforts of our Tronox team. I would like to take this opportunity to thank the Tronox team for their dedication to operating safely and their steadfast commitment to fulfilling our customer's needs."
Second Quarter 2024 Results
(Comparisons are to prior year (Q2 2024 vs. Q2 2023) unless otherwise noted)
The Company recorded second quarter revenue of $820 million, an increase of 3% primarily driven by higher TiO2 volumes, partially offset by lower pricing.
Revenue from TiO2 sales was $653 million, an increase of 7% driven by an 16% increase in volumes, partially offset by a 8% decrease in average selling prices including mix, and a 1% decrease due to exchange rates. Sequentially, TiO2 sales increased 8%, driven by an 8% increase in sales volumes, while price increases were partially offset by mix.
Zircon revenue decreased 11%
to $85 million, driven by a 15% decrease in average selling prices, partially offset by a 4% increase in volumes. Sequentially, zircon revenue decreased 3%, driven by a 4% decrease in volumes, partially offset
by a 1% increase in average selling prices including mix.
Revenue from other products was $82 million, a decline of 7% year-over-year primarily due to decreases in pig iron sales volumes and average selling prices. Sequentially, revenue from other
products increased 1% primarily due to increased volumes across various products.
Net income attributable to Tronox in the quarter was $16 million, or $0.10 per diluted share, compared to net loss attributable to Tronox of $269 million, or a loss of $1.72 per diluted share in the year-ago period. Adjusted net income attributable to Tronox (non-GAAP) was $12
million, or $0.07 per diluted share.
Adjusted EBITDA of $161 million represented a 4% decrease, driven primarily by headwinds from average selling prices and mix impacts, partially offset by tailwinds from improved production
costs, higher sales volumes, and favorable freight costs and exchange rates. Adjusted EBITDA margin was 19.6%.
Sequentially, Adjusted EBITDA increased 23% due to improved production costs, higher TiO2 sales volumes and average selling prices, partially offset by headwinds from exchange rates.
The Company's selling, general and administrative expenses were $74 million for the quarter,
an increase of 1%. Tronox's net interest expense in the quarter was $40 million. Depreciation, depletion and amortization expense was $72 million.
Balance Sheet, Cash Flow and Capital Allocation
Tronox ended the quarter with $2.8 billion of total debt, $2.6 billion of net debt and a
net leverage ratio of 5.2x on a trailing twelve-month basis. Available
liquidity at the end of the quarter totaled $680 million, including $201 million in cash and cash equivalents and $479 million available under our revolving credit agreements. There are no significant debt maturities until 2028 and no financial
covenants on the Company's term loans or bonds.
Free cash flow for the quarter was $84 million. Capital expenditures were $76 million, including investments in the Company's key capital projects to extend existing mines reaching their end of life and sustain the Company's vertical integration
benefit. The Company returned $41 million to shareholders in the form of dividends in the quarter, reflecting payments for both first and second quarter declared dividends.
Sustainability
This week, Tronox published its 2023 sustainability report reinforcing previously established sustainability targets including: path to carbon neutrality by 2050 with
scope 1 and 2 carbon intensity reduction targets of 50% by 2030 against a 2019 baseline and net zero by 2050; scope 3 emissions targets to decrease carbon emissions intensity by 9% by 2025 and 16% by 2030 against a 2021 baseline; and recommitting
to eliminating waste to external landfills by 2050. The Company reduced its 2025 scope 1 and 2 target to 25% (from 35%) to align with the latest anticipated timing of its second renewable project in South Africa, now expected to come online by
2027. The report includes facts, figures and case studies that illustrate our ongoing commitment to sustainability and the strategic initiatives that will allow us to maintain our privilege to operate. Please visit our website and download our 2023
sustainability report to learn more about these initiatives and more underway at Tronox.
Webcast Conference Call
Tronox will conduct a webcast conference call on Friday, August 2, 2024, at 10:00 AM ET (New York). The live call is open to the public via internet
broadcast and telephone.
Internet Broadcast: http://investor.tronox.com
Dial-in Telephone Numbers:
United States: +1 (800) 549-8228
International: +44 80 0279 7040
Conference ID: 81362
Conference Call Presentation Slides will be used during the conference call and made available on our website: http://investor.tronox.com
Conference Call Replay: Available via the internet and telephone beginning on August 2, 2024, by
1:00 PM ET, until August 7, 2024, 11:59 PM ET.
Internet Replay: http://investor.tronox.com
Replay Dial-in Telephone Numbers:
US Toll Free: +1 (888) 660-6264
International: +44 20 8609 4320
Replay Access Code: 81362 #
About Tronox
Tronox Holdings plc is one of the world's leading producers of high-quality titanium products, including titanium dioxide pigment, specialty-grade titanium dioxide
products and high-purity titanium chemicals, and zircon. We mine titanium-bearing mineral sands and operate upgrading facilities that produce high-grade titanium feedstock materials, pig iron and other minerals, including the rare earth-bearing
mineral, monazite. With approximately 6,500 employees across six continents, our rich diversity, unmatched vertical integration model, and unparalleled operational and technical expertise across the value chain, position Tronox as the preeminent
titanium dioxide producer in the world. For more information about how our products add brightness and durability to paints, plastics, paper and other everyday products, visit tronox.com.
Cautionary Statement about Forward-Looking Statements
Statements in this release that are not historical are forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995.
These forward-looking statements, which are subject to known and unknown risks, uncertainties and assumptions about us, may include projections of our future financial and operational performance, anticipated completion of extensions and upgrades
to our mining operations, anticipated trends in our business and industry, anticipated costs, benefits and timing of capital projects including planned mining expansions, the Company's anticipated capital allocation strategy including future
capital expenditures, and our sustainability goals, commitments and programs. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual
results, level of activity, performance, actual costs, benefits and timing of capital projects, or achievements to differ materially from the results, level of activity, performance, anticipated costs, benefits and timing of capital projects, or
achievements expressed or implied by the forward-looking statements. Significant risks and uncertainties may relate to, but are not limited to, macroeconomic conditions; inflationary pressures and energy costs; currency movements; political
instability, including the ongoing conflicts in Eastern Europe and the Middle East and any expansion of such conflicts, and other geopolitical events; supply chain disruptions; market conditions and price volatility for titanium dioxide, zircon and
other feedstock materials, as well as global and regional economic downturns, that adversely affect the demand for our end-use products; disruptions in production at our mining and manufacturing facilities; and other financial, economic,
competitive, environmental, political, legal and regulatory factors. These and other risk factors are discussed in the Company's filings with the Securities and Exchange Commission.
Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for our
management to predict all risks and uncertainties, nor can management assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained
in any forward-looking statements. Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance, synergies or achievements. Neither we nor any
other person assumes responsibility for the accuracy or completeness of any of these forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. Unless otherwise required by applicable laws, we
undertake no obligation to update or revise any forward-looking statements, whether because of new information or future developments.
Use of Non-GAAP Information
To provide investors and others with additional information regarding the financial results of Tronox
Holdings plc, we have disclosed in this release certain non-U.S. GAAP operating performance measures of EBITDA, Adjusted EBITDA, Adjusted EBITDA margin and Adjusted net income attributable to Tronox, including its presentation on a per share
basis, a non-U.S. GAAP liquidity measure of Free Cash Flow and net leverage ratio on a trailing twelve-month basis. These non-U.S. GAAP financial measures are a supplement to and not a substitute for or superior to, the Company's results
presented in accordance with U.S. GAAP. The non-U.S. GAAP financial measures presented by the Company may be different from non-U.S. GAAP financial measures
presented by other companies. Specifically, the Company believes the non-U.S. GAAP information provides useful measures to investors regarding the Company's financial performance by excluding certain costs and expenses that the Company believes
are not indicative of its core operating results. The presentation of these non-U.S. GAAP financial measures is not meant to be considered in isolation or as a substitute for results or
guidance prepared and presented in accordance with U.S. GAAP. A reconciliation of the non-U.S. GAAP financial measures to U.S. GAAP results is included herein.
Media & Investor Contact: Jennifer Guenther +1.646.960.6598