Tronox Reports First Quarter 2017 Financial Results

STAMFORD, Conn., May 3, 2017 /PRNewswire/ -- Tronox Limited (NYSE:TROX) reported revenue of $569 million for the first quarter 2017, up 20 percent compared to $476 million in the first quarter 2016 and up 4 percent compared to $549 million in the fourth quarter 2016.  Income from operations of $16 million in the quarter improved from a loss from operations of $31 million in the year-ago quarter and compared to income from operations of $33 million in the prior quarter.  Net loss attributable to Tronox Limited of $41 million, or ($0.35) per diluted share, improved from a net loss attributable to Tronox Limited of $93 million, or ($0.80) per diluted share in the year-ago quarter and compared to net income attributable to Tronox Limited of $122 million, or $1.00 per diluted share in the prior quarter, which included a corporate reorganization tax benefit and a restructuring benefit totaling $138 million, or $1.14 per diluted share.  Adjusted net loss attributable to Tronox Limited (Non-GAAP) was $30 million, or ($0.26) per diluted share.  Adjusted EBITDA of $101 million was 153 percent, or $61 million, higher than the $40 million reported in the year-ago quarter and compared to $105 million in the prior quarter.

Tom Casey, chairman and CEO of Tronox, said: "Our first quarter performance provided a very strong start to 2017 as our TiO₂ and Alkali businesses combined to deliver $123 million of adjusted EBITDA and $132 million of free cash flow.  Our TiO₂ business exceeded the aggressive goals we set for first quarter performance with revenue growth of 33 percent and adjusted EBITDA growth of 286 percent compared to the year-ago quarter.  Driving this strong performance in TiO₂ were higher pigment selling prices, up 4 percent sequentially and 16 percent above prior year, higher sales volumes, including the highest single-month pigment sales volumes since June 2009 achieved in March, significantly higher titanium feedstock and zircon sales and continued cost savings from our Operational Excellence program.  Alkali delivered adjusted EBITDA of $38 million and free cash flow of $41 million despite record severe winter weather conditions at our Wyoming production facility which impacted adjusted EBITDA by $4 million in the quarter.  Our cash generation performance further strengthened our balance sheet, as we closed the quarter with $265 million of cash on hand and liquidity of $560 million.

"We see the momentum in our TiO₂ business continuing across the balance of this year and expect to benefit from additional pigment selling price increases, firming market conditions for titanium feedstock and co-products, continued margin expansion from top line growth in both pigment and historically higher margin feedstock as well as cost savings from our Operational Excellence program," said Casey.

Casey concluded, "The first quarter was a milestone one for Tronox, marked by the signing of a definitive agreement to acquire Cristal's TiO₂ business.  Our integration planning is underway so that we can from day one realize the substantial value creation enabled by our combination.  We also began a process to market our Alkali business and have received strong initial expressions of interest from both strategic and financial parties.  At the same time, we continue our laser-like focus on generating high performance from our current portfolio.  We are confident that 2017 will be a year of strong performance and that 2018 will be a transformational one for Tronox."   

First Quarter 2017

Tronox TiO₂

TiO₂ segment revenue of $378 million was 33 percent higher than $285 million in the year-ago quarter, driven by higher pigment sales volumes and selling prices coupled with higher zircon and CP slag sales volumes.  Pigment sales of $272 million increased 26 percent compared to $216 million in the year-ago quarter, as sales volumes increased 9 percent and average selling prices increased 16 percent (17 percent on a local currency basis).  Pigment selling prices were higher in all regions.  Titanium feedstock and co-products sales of $92 million increased 61 percent from $57 million in the year-ago quarter.  Zircon sales volumes increased 89 percent as a result of healthy demand coupled with tighter inventories, while selling prices were 10 percent lower than year-ago levels. CP slag shipments sold under a contract for 100,000 metric tons began in the first quarter whereas there were no sales of CP slag in the prior-year quarter.  Ilmenite sales volumes increased 35 percent.  Sales volumes for natural rutile were 4 percent lower while selling prices increased 4 percent.  Pig iron sales volumes were 8 percent lower while selling prices were 28 percent above the prior-year quarter.  Pig iron selling prices tend to follow iron ore selling prices.

Compared sequentially, TiO₂ segment revenue of $378 million increased 7 percent versus $352 million in the fourth quarter, driven by higher pigment sales volumes and selling prices.  Pigment sales of $272 were 11 percent higher than sales of $246 million in the fourth quarter, as sales volumes increased 6 percent and selling prices increased 4 percent (4 percent on a local currency basis).  Selling prices were higher in all regions.  Titanium feedstock and co-products sales of $92 million were level to the fourth quarter.  CP titanium slag sales were level while ilmenite sales volumes increased 86 percent.  Zircon sales volumes were 4 percent lower while selling prices improved by 1 percent.  Natural rutile sales volumes were level and selling prices were 3 percent lower.  Pig iron sales volumes increased 11 percent and selling prices were 26 percent higher.

TiO₂ segment adjusted EBITDA of $85 million was 286 percent, or $63 million, higher than $22 million in the year-ago quarter driven by higher pigment sales volumes and selling prices, significant cost reductions resulting from its Operational Excellence program and the benefit of higher pigment production efficiency and plant utilization.  Compared sequentially, adjusted EBITDA of $85 million improved by 6 percent from $80 million in the fourth quarter, driven by higher pigment sales volumes and selling prices.  TiO₂ segment income from operations of $32 million improved from a loss of $36 million in the year-ago quarter and income from operations of $18 million in the prior quarter.  TiO₂ delivered free cash flow of $91 million in the first quarter, as cash provided by operating activities was $111 million and capital expenditures were $20 million.

Tronox Alkali

Alkali segment revenue of $191 million was level to the year-ago quarter as sales volumes were 5 percent higher and selling prices were 4 percent lower.  Revenue in the quarter was reduced by $5 million as lower sales volumes resulted from lower production volumes due to record severe winter weather conditions at its Wyoming production facility early in the quarter.  In the domestic market, sales volumes were 3 percent lower due to lower demand from container glass and detergent markets while selling prices were 2 percent lower due to customer mix and freight pass-through costs.  In export markets, sales volumes increased 13 percent driven by strong demand in Asia-Pacific and Latin America while selling prices were 2 percent lower than the year-ago quarter.

Compared sequentially, Alkali revenue of $191 million declined 3 percent from $197 million in the fourth quarter, as sales volumes declined 3 percent driven by lower production volumes resulting from the record severe winter weather conditions in Wyoming.  Selling prices were level to the fourth quarter.  Domestic sales volumes declined 4 percent while selling prices were 2 percent higher.  Export sales volumes and selling prices were both 2 percent lower than the prior quarter. 

Alkali segment adjusted EBITDA of $38 million increased from $36 million in the year-ago quarter driven by operating cost reductions and higher plant efficiencies.  Adjusted EBITDA in the quarter was reduced by $4 million as a result of the record severe winter weather conditions.  Compared sequentially, Alkali segment adjusted EBITDA of $38 million declined from $46 million in the fourth quarter driven by lower sales and production volumes and higher energy and operating costs, primarily resulting from the record severe winter weather conditions.  Alkali segment income from operations of $19 million compared to $21 million in the year-ago quarter and $31 million in the prior quarter.  Alkali delivered free cash flow of $41 million in the first quarter, as cash provided by operating activities was $53 million and capital expenditures were $12 million.

Corporate

Corporate loss from operations was $35 million compared to a loss from operations of $16 million in the year-ago quarter and a loss from operations of $16 million in the fourth quarter.  The higher loss from operations in the first quarter resulted from higher professional fees of $15 million primarily related to the Cristal transaction and the process to market our Alkali business, as well as certain non-cash employee retirement-related and other costs of $10 million.  Corporate adjusted EBITDA was ($22) million compared to adjusted EBITDA of ($18) million in the year-ago quarter and adjusted EBITDA of ($21) million in the prior quarter.  Corporate cash used in operations was $104 million which included a semi-annual bond interest payment of $51 million made in the first and third quarters each year.

Consolidated

Selling, general and administrative expenses were $74 million in the first quarter compared to $50 million in the year-ago quarter and $59 million in the prior quarter. The higher expenses in the first quarter also resulted from higher professional fees of $15 million primarily related to the Cristal transaction and the process to market our Alkali business, as well as certain non-cash employee retirement-related and other costs of $10 million.  Interest and debt expense of $46 million was level to $46 million in the year-ago quarter and compared to $47 million in the prior quarter.  On March 31, 2017, gross consolidated debt was $3,053 million, and debt, net of cash and cash equivalents, was $2,788 million.  Liquidity was $560 million and cash and cash equivalents on the balance sheet were $265 million.  Capital expenditures were $32 million and depreciation, depletion and amortization expense was $61 million.

Webcast Conference Call

Tronox will conduct a conference call on Thursday, May 4, 2017, at 8:30 a.m. ET (New York).  The live call is open to the public via Internet broadcast and telephone.

Internet Broadcast:  http://www.tronox.com/ 
Dial-in telephone numbers:
U.S. / Canada: +1.877.831.3840
International: +1.253.237.1184
Conference ID: 4010868
Conference Call Presentation Slides will be used during the conference call and are available on our website at http://www.tronox.com/

Webcast Conference Call Replay: Available via the Internet and telephone beginning on Thursday, May 4, 2017, at 11:30 a.m. ET (New York), until 11:30 p.m. ET (New York), on Tuesday, May 9, 2017

Internet Replay: www.tronox.com 
Replay dial-in telephone numbers:
U.S. / Canada: +1.855.859.2056
International: +1.404.537.3406
Conference ID: 4010868

Upcoming Conferences

During the second quarter 2017 a member of management is scheduled to present at the following conferences:

• Wells Fargo Industrials Conference, New York, May 9, 2017
• Goldman Sachs Basic Materials Conference, New York, May 17, 2017
• Vertical Research Basic Materials Conference, Westbrook, CT, June 14-15, 2017

Accompanying conference materials will be available at http://investor.tronox.com

About Tronox

Tronox Limited operates two vertically integrated mining and inorganic chemical businesses. Tronox TiO₂ mines and processes titanium ore, zircon and other minerals, and manufactures titanium dioxide pigments that add brightness and durability to paints, plastics, paper, and other everyday products. Tronox Alkali mines trona ore and manufactures natural soda ash, sodium bicarbonate, caustic soda, and other compounds which are used in the production of glass, detergents, baked goods, animal nutrition supplements, pharmaceuticals, and other essential products.  For more information, visit www.tronox.com

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 based on our growth strategies 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 or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements. These and other risk factors are discussed in the company's filings with the Securities and Exchange Commission (SEC), including those under the heading entitled "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2016.

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 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 as a result of new information or future developments.

Use of Non-U.S. GAAP Financial Information

To provide investors and others with additional information regarding Tronox Limited's operating results, we have disclosed in this press release certain non-U.S. GAAP financial measures, including EBITDA, Adjusted EBITDA, free cash flow and adjusted net loss attributable to Tronox.  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 than non-U.S. GAAP financial measures presented by other companies.  The non-U.S. GAAP financial measures are provided to enhance the user's overall understanding of the company's operating performance. 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 are 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.

Management believes these non-U.S. GAAP financial measures:

• Reflect Tronox Limited's ongoing business in a manner that allows for meaningful period-to-period comparison and analysis of trends in its business, as they exclude income and expense that are not reflective of ongoing operating results;
• Provide useful information to investors and others in understanding and evaluating Tronox Limited's operating results and future prospects in the same manner as management and in comparing financial results across accounting periods;
• Provide additional view of the operating performance of the company by adding interest expenses, taxes, depreciation, depletion and amortization to the net income. Further adjustments due to purchase accounting and stock-based compensation charges attempt to exclude items that are either non-cash or unusual in nature;
• Assist investors to assess the company's compliance with financial covenants under its debt instruments;
• Adjusted EBITDA is one of the primary measures management uses for planning and budgeting processes and to monitor and evaluate financial and operating results. Adjusted EBITDA is not a recognized term under U.S. GAAP and does not purport to be an alternative to measures of our financial performance as determined in accordance with U.S. GAAP, such as net income (loss). Because other companies may calculate EBITDA and Adjusted EBITDA differently than Tronox, EBITDA may not be, and Adjusted EBITDA as presented in this release is not, comparable to similarly titled measures reported by other companies, and
• We believe that the non-U.S. GAAP financial measure "Adjusted net loss attributable to Tronox Limited" and its presentation on a per share basis provide useful information about our operating results to investors and securities analysts. We also believe that excluding the effects of these items from operating results allows management and investors to compare more easily the financial performance of our underlying businesses from period to period.

Media Contact: Bud Grebey
Direct: +1.203.705.3721

Investor Contact: Brennen Arndt
Direct: +1.203.705.3722

SOURCE Tronox Limited

Related Links

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