Tronox Reports First Quarter 2021 Financial Results

STAMFORD, Conn., Apr. 28, 2021/PRNewswire/ --

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Note: For the Company's guidance with respect to second quarter 2021 Adjusted EBITDA, 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.

Tronox Holdings plc (NYSE:TROX) (“Tronox” or the “Company”), the world’s leading integrated manufacturer of titanium dioxide pigment, today reported its financial results for the quarter ending March 31, 2021, as follows:

			Y-o-Y %∆								Q-o-Q %∆
		Volume				Price				Volume				Price
TiO2			16	%			4	%			15	%			3	%
Local Currency Basis			n/a				1	%			n/a				3	%
Zircon			91	%			(2	)%			30	%			-	%

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Jean-François Turgeon, co-chief executive officer, added, "Anticipated first quarter foreign exchange rate and pigment cost headwinds outlined during our fourth quarter earnings call were offset by favorable pricing and volumes leading to an Adjusted EBITDA of $225 million, well above our previously forecasted range.  The organization has remained focused on safely operating the business to produce the feedstock used internally to produce safe, quality, low-cost, sustainable tons for our customers.

Mr. Turgeon concluded, “This is an exciting time in our Company, and we remain confident that with our portfolio of assets and market position, we are prepared to continue capitalizing on the momentum and delivering on our commitments to our stakeholders.  We have continued to operate with an eye on the future and are diligently progressing on our previously identified key capital projects to reduce costs and ensure we sustain our advantaged position.”

Tronox reported revenue of $891 million for the first quarter 2021, an increase of 23 percent compared to first quarter 2020 revenues of $722 million.  Income from operations of $125 million compared to $79 million in the year-ago quarter.  Net income attributable to Tronox was $19 million, or $0.12 per diluted share, compared to a net income attributable to Tronox of $32 million, or $0.22 per diluted share, in the year-ago quarter.  Net income attributable to Tronox in the first quarter 2021 included transaction costs, debt paydown costs, and other adjustments that totaled $47 million or $0.31 per diluted share.  Excluding these items, adjusted net income attributable to Tronox (Non-GAAP) was $66 million, or $0.43 per diluted share.  Adjusted EBITDA of $225 million increased 29 percent compared to $174 million in the prior-year quarter.

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Tronox will conduct a webcast conference call on Thursday, April 29, 2021, at 8:00 a.m. ET (New York).  The live call is open to the public via internet broadcast and telephone.

Dial-in Telephone Numbers:

United States: +1.866.270.1533

International: +1.412.317.0797

Replay Dial-in Telephone Numbers:

United States: +1.877.344.7529

International: +1.412.317.0088

Replay Access Code: 10154942

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During the second quarter 2021, a member of management is scheduled to present at the following conferences:

Accompanying conference and meeting materials will be available at http://investor.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 performance including the effects of the COVID-19 pandemic and anticipated synergies based on our growth and other strategies, anticipated completion of extensions and upgrades to our mining and operations, and anticipated trends in our business. 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 synergies, or achievements to differ materially from the results, level of activity, performance, anticipated synergies or achievements expressed or implied by the forward-looking statements. Significant risks and uncertainties may relate to, but are not limited to, business and market disruptions related to the COVID-19 pandemic, market conditions and price volatility for titanium dioxide, zircon and other feedstock materials, as well as global and regional economic downturns, including as a result of the COVID-19 pandemic, 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.

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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 loss attributable to Tronox, including its presentation on a per share basis, and a non-U.S. GAAP liquidity measure of Free Cash Flow.  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.

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		Three Months Ended March 31,
		2021				2020
Net sales		$	891			$	722
Cost of goods sold			685				547
Gross profit			206				175
Selling, general and administrative expenses			81				94
Restructuring			-				2
Income from operations			125				79
Interest expense			(50	)			(45	)
Interest income			1				3
Loss on extinguishment of debt			(34	)			-
Other income (expense), net			(10	)			10
Income before income taxes			32				47
Income tax provision			(6	)			(7	)
Net income			26				40
Net income attributable to noncontrolling interest			7				8
Net income attributable to Tronox Holdings plc		$	19			$	32
Earnings per share, basic:
Basic		$	0.13			$	0.23
Diluted		$	0.12			$	0.22
Weighted average shares outstanding, basic (in thousands)			147,071				142,736
Weighted average shares outstanding, diluted (in thousands)			153,928				143,596
Other Operating Data:
Capital expenditures			58				38
Depreciation, depletion and amortization expense			84				71

		Three Months Ended March 31,
		2021				2020
Net income attributable to Tronox Holdings plc (U.S. GAAP)		$	19			$	32
Transaction costs (a)			18				-
Restructuring (b)			-				2
Integration costs (c)			-				6
Loss on extinguishment of debt (d)			26				-
Gain on asset sale (e)			(2	)			-
Costs associated with former CEO retirement (f)			3				-
Costs associated with Exxaro deal (g)			1				-
Other (h)			1				1
Adjusted net income attributable to Tronox Holdings plc (non-U.S. GAAP)  (1)		$	66			$	41
Diluted net income per share (U.S. GAAP)		$	0.12			$	0.22
Transaction costs, per share			0.12				-
Restructuring, per share			-				0.02
Integration costs, per share			-				0.04
Loss on extinguishment of debt, per share			0.17				-
Gain on asset sale, per share			(0.01	)			-
Costs associated with former CEO retirement, per share			0.02				-
Costs associated with Exxaro deal, per share			0.01				-
Other, per share			0.01				0.01
Diluted adjusted net income per share attributable to Tronox Holdings plc (non-U.S. GAAP) (2)		$	0.43			$	0.29
Weighted average shares outstanding, diluted (in thousands)			153,928				143,596

(1) Only the restructuring, integration costs and loss on extinguishment of debt amounts have been tax impacted.  No income tax impacts have been given to other items as they were recorded in jurisdictions with full valuation allowances.

(2) Diluted adjusted net income per share attributable to Tronox Holdings plc was calculated from exact, not rounded Adjusted net income attributable to Tronox Holdings plc and share information.

(a) Represents breakage fee and other costs associated with termination of TTI Transaction which were primarily recorded in “Other income (expense)” in the unaudited Condensed Consolidated Statements of Income.

(b) Represents amounts for employee-related costs, including severance, net of tax.

(c) Represents Integration costs associated with the Cristal acquisition after the acquisition which were recorded in “Selling, general and administrative expenses” in the unaudited Condensed Consolidated Statements of Income, net of tax.

(d) Represents the loss in connection with the following: 1) termination of its Wells Fargo Revolver, 2) amendment and restatement of its term loan facility including the new revolving credit facility, 3) termination of its Senior Notes due 2026, and 4) issuance of its Senior Notes due 2029.

(e) Represents the gain on European Union carbon credits sold in March 2021 which were recorded in "Cost of goods sold" in the unaudited Condensed Consolidated Statement of Income.

(f) Represents costs associated with the retirement agreement of the former CEO, which includes $2 million for the acceleration of stock based compensation, which were recorded in "Selling, general and administrative expenses" in the unaudited Condensed Consolidated Statements of Income.

(g) Represents costs associated with the Exxaro flip-in transaction which were recorded in "Selling, general and administrative expenses" in the unaudited Condensed Consolidated Statements of Income.

(h) Represents other activity not representative of ongoing operations of the Company.

		March 31, 2021				December 31, 2020
ASSETS
Current Assets
Cash and cash equivalents		$	759			$	619
Restricted cash			8				29
Accounts receivable (net of allowance for credit losses of $5 million and $5 million as of March 31, 2021 and December 31, 2020, respectively)			652				540
Inventories, net			1,052				1,137
Prepaid and other assets			163				200
Income taxes receivable			6				4
Total current assets			2,640				2,529
Noncurrent Assets
Property, plant and equipment, net			1,710				1,759
Mineral leaseholds, net			795				803
Intangible assets, net			201				201
Lease right of use assets, net			78				81
Deferred tax assets			1,022				1,020
Other long-term assets			177				175
Total assets		$	6,623			$	6,568
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable		$	378			$	356
Accrued liabilities			308				350
Short-term lease liabilities			43				39
Long-term debt due within one year			514				58
Income taxes payable			11				2
Total current liabilities			1254				805
Noncurrent Liabilities
Long-term debt, net			2,901				3,263
Pension and postretirement healthcare benefits			144				146
Asset retirement obligations			156				157
Environmental liabilities			66				67
Long-term lease liabilities			33				41
Deferred tax liabilities			179				176
Other long-term liabilities			33				42
Total liabilities			4,766				4,697
Commitments and Contingencies			-				-
Shareholders’ Equity
Tronox Holdings plc ordinary shares, par value $0.01 — 153,257,799 shares issued and outstanding at March 31, 2021 and 143,557,479 shares issued and outstanding at December 31, 2020			2				1
Capital in excess of par value			2,038				1,873
Retained earnings			440				434
Accumulated other comprehensive loss			(668	)			(610	)
Total Tronox Holdings plc shareholders’ equity			1,812				1,698
Noncontrolling interest			45				173
Total equity			1,857				1,871
Total liabilities and equity		$	6,623			$	6,568

		Three Months Ended March 31,
		2021				2020
Cash Flows from Operating Activities:
Net income		$	26			$	40
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization			84				71
Deferred income taxes			(3	)			-
Share-based compensation expense			9				9
Amortization of deferred debt issuance costs and discount on debt			3				2
Loss on extinguishment of debt			34				-
Other non-cash items affecting net income			14				14
Changes in assets and liabilities:
Increase in accounts receivable, net of allowance for credit losses			(120	)			(92	)
Decrease in inventories, net			63				-
Decrease (increase) in prepaid and other assets			32				(3	)
Increase (decrease) in accounts payable and accrued liabilities			2				(54	)
Net changes in income tax payables and receivables			7				2
Changes in other non-current assets and liabilities			(16	)			(17	)
Cash provided by (used in) operating activities			135				(28	)
Cash Flows from Investing Activities:
Capital expenditures			(58	)			(38	)
Insurance proceeds			1				-
Cash used in investing activities			(57	)			(38	)
Cash Flows from Financing Activities:
Repayments of long-term debt			(2,260	)			(7	)
Proceeds from long-term debt			2,375				-
Proceeds from short-term debt			-				213
Call premium paid			(21	)			-
Debt issuance costs			(30	)			-
Dividends paid			(14	)			(10	)
Restricted stock and performance-based shares settled in cash for withholding taxes			(2	)			(3	)
Cash provided by financing activities			48				193
Effects of exchange rate changes on cash and cash equivalents and restricted cash			(7	)			(9	)
Net increase in cash, cash equivalents and restricted cash			119				118
Cash, cash equivalents and restricted cash at beginning of period			648				311
Cash, cash equivalents and restricted cash at end of period		$	767			$	429

		Three Months Ended March 31,
		2021				2020
Net income (U.S. GAAP)		$	26			$	40
Interest expense			50				45
Interest income			(1	)			(3	)
Income tax provision			6				7
Depreciation, depletion and amortization expense			84				71
EBITDA (non-U.S. GAAP)			165				160
Share-based compensation (a)			9				9
Transaction costs (b)			18				-
Restructuring (c)			-				2
Integration costs (d)			-				6
Loss on extinguishment of debt (e)			34				-
Costs associated with former CEO retirement (f)			1				-
Gain on asset sale (g)			(2	)			-
Foreign currency remeasurement (h)			(4	)			(10	)
Costs associated with Exxaro deal (i)			1				-
Other items (j)			3				7
Adjusted EBITDA (non-U.S. GAAP)		$	225			$	174

(a) Represents non-cash share-based compensation.

(b) Represents breakage fee and other costs associated with termination of TTI Transaction which were primarily recorded in “Other income (expense)” in the unaudited Condensed Consolidated Statements of Income.

(c) Represents amounts for employee-related costs, including severance.

(d) Represents integration costs associated with the Cristal acquisition after the acquisition which were recorded in “Selling, general and administrative expenses” in the unaudited Condensed Consolidated Statements of Income.

(e) Represents the loss in connection with the following: 1) termination of its Wells Fargo Revolver, 2) amendment and restatement of its term loan facility including the new revolving credit facility, 3) termination of its Senior Notes due 2026, and 4) issuance of its Senior Notes due 2029.

(f) Represents costs, excluding share-based compensation, associated with the retirement agreement of the former CEO which were recorded in "Selling, general and administrative expenses" in the unaudited Condensed Consolidated Statements of Income. The $2 million of share based compensation expense associated with the former CEO is included in the total share-based compensation amount of $9 million in the table above.

(g) Represents the gain on European Union carbon credits sold in March 2021 which were recorded in "Cost of goods sold" in the unaudited Condensed Consolidated Statement of Income.

(h) Represents realized and unrealized gains and losses associated with foreign currency remeasurement related to third-party and intercompany receivables and liabilities denominated in a currency other than the functional currency of the entity holding them, which are included in “Other income (expense), net” in the unaudited Condensed Consolidated Statements of Income.

(i) Represents costs associated associated with the Exxaro flip-in transaction which are included in "Selling, general and administrative expenses" in the unaudited Condensed Consoldiated Statements of Income.

(j) Includes noncash pension and postretirement costs, asset write-offs, accretion expense and other items included in “Selling general and administrative expenses”, “Cost of goods sold” and “Other income (expense), net” in the unaudited Condensed Consolidated Statements of Income.

		Consolidated
Cash provided by operating activities		$	135
Capital expenditures			(58	)
Free cash flow (non-U.S. GAAP)		$	77

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