Earnings Results Analysis: Tronox Holdings plc (NYSE: TROX)

Kristian Marshall

I am Kristian Marshall I give “News Perception” an insight into the most recent news hitting the “Basic Materials” sector in Wall Street.

I have been an independent financial adviser for over 11 years in the city and in recent years turned my experience in finance and passion for journalism into a full time role. I perform analysis of Companies and publicize valuable information for shareholder community.

Address: 2853 Howard Street Ionia, MI 48846, USA
Phone: (+1) 616-522-4280
Email: Kristianmarshall@newsperception.com
Kristian Marshall

STAMFORD, Conn., October 25, 2019 – Shares of Tronox Holdings plc (NYSE: TROX) declined -1.78% to $8.30. The stock traded total volume of 676.626K shares lower than the average volume of 1.42M shares.

Tronox Holdings plc (TROX) reported revenue of $390.0M for the first quarter 2019, down 12 percent from $442.0M in the prior-year quarter and down 9 percent from $429.0M in the prior quarter. Excluding revenue of $12.0M in the year-ago quarter from the Electrolytic business sold in September 2018, revenue declined 9 percent versus the prior-year quarter. Income from operations of $16.0M compared to $14.0M in the year-ago quarter and $68.0M in the prior quarter. Net loss attributable to Tronox of $34.0M, or ($0.27) per diluted share, compared to a net loss attributable to Tronox of $44.0M, or ($0.36) per diluted share, in the year-ago quarter and a net loss attributable to Tronox of $5.0M, or ($0.05) per diluted share in the prior quarter. Net loss attributable to Tronox in the first quarter 2019 included transaction costs primarily related to the Cristal acquisition, debt modification costs and a charge to indemnify Exxaro Resources for capital gains tax pursuant to the Mineral Sands Completion Agreement that, combined, totaled $11.0M or $0.09 per diluted share.  Excluding these items, adjusted net loss attributable to Tronox (Non-GAAP) was $23.0M, or ($0.18) per diluted share. Adjusted EBITDA of $80.0M compared to $117.0M in the prior-year quarter and $120.0M in the prior quarter.

First Quarter 2019

First Quarter 2019 versus First Quarter 2018

Revenue of $390.0M was 12 percent lower than $442.0M in the year-ago quarter primarily due to lower pigment sales volumes, the absence of revenue from the Electrolytic business sold in September 2018 and unfavorable Euro translation, partially offset by higher zircon selling prices.  Revenue was 9 percent lower excluding $12.0M of revenue from the Electrolytic business in the prior-year quarter.

Pigment sales of $286.0M compared to $333.0M in the year-ago quarter.  Sales volumes were 10 percent lower as customer destocking in Europe and Asia continued in the first quarter.  Selling prices were 2 percent lower on a local currency basis and 5 percent lower on a U.S. dollar basis, as translation of the Euro was a $6.0M headwind on revenue.

Titanium feedstock and co-products sales of $104.0M increased 7 percent from $97.0M in the year-ago quarter.  Zircon sales of $64.0M increased 5 percent from $61.0M in the year-ago quarter driven by 17 percent higher selling prices, partially offset by 10 percent lower sales volumes due to the timing of shipments.  Pig iron sales of $19.0M were level to the year-ago quarter, as 2 percent higher selling prices were offset by 2 percent lower sales volumes.  Feedstock and other products sales of $21.0M increased from $17.0M in the year-ago quarter primarily driven by higher synthetic rutile and slag fines sales volumes.  There were no ilmenite sales in the first quarter compared to $5.0M in the year-ago quarter, as we were not actively selling ilmenite in the market in preparation for increased internal requirements following the closing of the Cristal acquisition.

Adjusted EBITDA of $80.0M was 32 percent lower than $117.0M in the year-ago quarter.  Higher zircon selling prices and favorable foreign exchange on costs were more than offset by lower pigment and zircon sales volumes, unfavorable overhead absorption related to planned maintenance in South Africa, higher costs for coke, electrodes, anthracite and labor, higher one-time SG&A costs associated with re-domiciliation and other initiatives, and a $9.0M royalty refund received in the year-ago quarter.

Other Financial Information

Selling, general and administrative expenses were $67.0M compared to $76.0M in the year-ago quarter and $50.0M in the prior quarter. Selling, general and administrative expenses primarily attributable to the Cristal acquisition were $8.0M in the first quarter 2019 compared to $20.0M in the year-ago quarter and $7.0M in the prior quarter. Interest expense of $49.0M was level to the year-ago quarter and prior quarter.  On March 31, 2019, debt was $3,375.0M and debt, net of cash and cash equivalents, was $1,641.0M, including $666.0M of cash restricted for the Cristal transaction. Liquidity was $1,947.0M comprised of cash and cash equivalents of $1,734.0M, including $666.0M of restricted cash, and $213.0M available under revolving credit agreements. In the first quarter 2019, capital expenditures were $25.0M and depreciation, depletion and amortization expense was $47.0M.

TROX has the market capitalization of $1.16B and its EPS growth ratio for the past five years was 43.30%. The return on assets ratio of the Company was -1.90% while its return on investment ratio stands at 4.10%. Price to sales ratio was 0.56 while 59.10% of the stock was owned by institutional investors.

Kristian Marshall

Kristian Marshall

I am Kristian Marshall I give “News Perception” an insight into the most recent news hitting the “Basic Materials” sector in Wall Street. I have been an independent financial adviser for over 11 years in the city and in recent years turned my experience in finance and passion for journalism into a full time role. I perform analysis of Companies and publicize valuable information for shareholder community. Address: 2853 Howard Street Ionia, MI 48846, USA Phone: (+1) 616-522-4280 Email: Kristianmarshall@newsperception.com

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