Tronox Holdings PLC is a vertically integrated manufacturer of TiO2 pigment. It operates titanium-bearing mineral sand mines and beneficiation and smelting operations in Australia & South Africa to produce feedstock materials that can be processed into TiO2 for pigment, high-purity titanium chemicals, including titanium tetrachloride, and ultrafine TiO2 used in certain specialty applications. TiO2 and titanium feedstock are used to produce paints and coatings, as well as plastics, paper, and printing ink. It has three pigment production facilities in the United States, the Netherlands, and Western Australia and three mining operations in Western Australia and South Africa. North America, Asia-Pacific, and Europe, the Middle East, and Africa regions contribute the vast majority of revenue.
Performance Overview
Tronox Holdings PLC (TROX, Financial) reported second-quarter revenue of $820 million, falling short of the analyst estimate of $847.93 million. This represents a 3% year-over-year increase from $794 million in Q2 2023 and a 6% sequential increase from $774 million in Q1 2024. The revenue growth was primarily driven by higher TiO2 volumes, partially offset by lower pricing.
However, the company reported a GAAP diluted earnings per share (EPS) of $0.10, falling short of the analyst estimate of $0.20. Adjusted diluted EPS was $0.07, a 56% decline from $0.16 in the same quarter last year.
Key Financial Metrics
| Metric | Q2 2024 | Q2 2023 | Y-o-Y % | Q1 2024 | Q-o-Q % |
|---|---|---|---|---|---|
| Revenue ($M) | 820 | 794 | 3% | 774 | 6% |
| TiO2 Revenue ($M) | 653 | 611 | 7% | 605 | 8% |
| Zircon Revenue ($M) | 85 | 95 | (11%) | 88 | (3%) |
| Net Income (Loss) ($M) | 10 | (269) | n/m | (9) | n/m |
| Adjusted EBITDA ($M) | 161 | 168 | (4%) | 131 | 23% |
| Free Cash Flow ($M) | 84 | 81 | 4% | (105) | n/m |
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.”
Financial Achievements and Challenges
Tronox Holdings PLC (TROX, Financial) achieved several financial milestones in Q2 2024. The company reported an adjusted EBITDA of $161 million, representing a 4% year-over-year decrease but a 23% sequential increase. The adjusted EBITDA margin was 19.6%, down from 21.2% in Q2 2023 but up from 16.9% in Q1 2024.
Despite these achievements, the company faced challenges, including lower-than-targeted average pigment plant utilization rates, which led to higher costs and impacted margins. The company also experienced headwinds from average selling prices and mix impacts, partially offset by improved production costs, higher sales volumes, and favorable freight costs and exchange rates.
Balance Sheet and Cash Flow
Tronox ended the quarter with $2.8 billion of total debt and $2.6 billion of net debt, resulting in a net leverage ratio of 5.2x on a trailing twelve-month basis. The company had $680 million in available liquidity, including $201 million in cash and cash equivalents and $479 million available under revolving credit agreements. Free cash flow for the quarter was $84 million, and capital expenditures were $76 million.
Sustainability Initiatives
Tronox published its 2023 sustainability report, reinforcing its commitment to achieving carbon neutrality by 2050. The company aims to reduce scope 1 and 2 carbon intensity by 50% by 2030 against a 2019 baseline and achieve net zero by 2050. The report also outlines targets for scope 3 emissions and waste elimination.
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Explore the complete 8-K earnings release (here) from Tronox Holdings PLC for further details.
