Tronox Reports Fourth Quarter and Full Year 2020 Financial Results

STAMFORD, Conn., Feb. 17, 2021 /PRNewswire/ --

Fourth Quarter 2020 Highlights:

• Revenue of $783 million
• Income from operations of $94 million; Net income from continuing operations of $57 million
• Adjusted EBITDA of $204 million; Adjusted EBITDA margin of 26 percent (Non-GAAP)
• GAAP diluted EPS of $0.31; Adjusted diluted EPS of $0.19 (Non-GAAP)
• TiO₂ selling prices remained level, benefiting from margin stability initiatives, and sales volumes increased 8 percent versus fourth quarter 2019 driven by improved market demand globally
• Zircon volumes increased 48 percent versus fourth quarter 2019 driven primarily by strong demand in China

Full Year 2020 Highlights:

• Revenue of $2,758 million
• Income from operations of $271 million; Net income from continuing operations of $995 million
• Adjusted EBITDA of $668 million; Adjusted EBITDA margin of 24 percent (Non-GAAP)
• GAAP diluted income per share from continuing operations of $6.69; Adjusted diluted EPS of $0.56 (Non-GAAP)
• Total acquisition synergies of $243 million achieved, exceeding run rate synergy target of $220 million set at Investor Day in 2019; $193 million reflected in EBITDA, exceeding $183 million target set on third quarter 2020 earnings call
• Cash flow provided by operating activities of $355 million; Free Cash Flow of $160 million (Non-GAAP)
• $200 million discretionary debt repayment made in December 2020

Debt Repayment, Dividend, and Q1 2021 Outlook:

• $300 million discretionary debt repayment expected to be made by end of Q1 2021 from cash on the balance sheet
• Increased annualized dividend to $0.32 per share, equivalent to a 14 percent increase, effective when the normal first quarter 2021 dividend is expected to be declared
• Q1 2021 Outlook:
• TiO₂ sales volumes expected to increase 11-15 percent sequentially from global demand strength
• Q1 2021 Adjusted EBITDA outlook of $200-$210 million

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Note: For the Company's guidance with respect to first 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 December 31, 2020, as follows:

Summary of Financial Results for the Quarter Ending December 31, 2020

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Note: Q4 2019 figures are presented on a pro forma basis for comparison purposes. Reported figures can be found in the press release tables at the end of this release.

Tronox's fourth quarter results grew sequentially driven by significantly improved market conditions in the quarter.  TiO₂ volumes increased 8 percent, while pricing remained unchanged on a U.S. dollar basis, both versus the prior year and prior quarter. TiO₂ sales volumes increased globally year over year led by South and Central America, followed by North America and Europe, Middle East, and Africa ("EMEA").  Compared to the third quarter of 2020, sales volumes grew most significantly in Asia Pacific, followed by South and Central America, and EMEA.  Zircon revenue increased 32 percent versus the prior year and 68 percent sequentially, driven primarily by demand recovery in China and some benefit from shipment timing compared to the third quarter.  Fourth quarter zircon price was 10 percent lower versus the prior year, consistent with previous quarters in 2020 due to a pricing decrease in the first quarter of 2020, and 2 percent lower versus the third quarter.  Feedstock and other products revenues improved sequentially due to improved pig iron sales.  For the quarter, Tronox delivered Adjusted EBITDA of $204 million and an Adjusted EBITDA margin of 26 percent, driven by improved sales volumes, synergies, and favorable exchange rates, partially offset by increased production costs, when compared to Adjusted EBITDA in Q4 2019 of $156 million.  Acquisition synergies totaled $243 million in 2020, with $193 million reflected in full year Adjusted EBITDA. 

Commenting on these results, John D. Romano, co-chief executive officer on an interim basis, stated, "As previewed in our earnings pre-release in January, Tronox delivered exceptional results in the fourth quarter, with the highest Adjusted EBITDA results since closing the Cristal acquisition.  Driving these results is a significant recovery across all products, end markets, and geographies across our portfolio.  As we have entered 2021, market demand for TiO₂ and Zircon remains strong.  Due to the favorable market trajectory, we anticipate TiO₂ sales volumes to increase 11-15 percent sequentially in Q1 2021."

Jean-François Turgeon, co-chief executive officer on an interim basis, added, "Throughout the global pandemic, we have focused on three priorities: the safety, health and well-being of our employees and their families; operating safely in all respects while managing our ongoing operations; and protecting, preserving, and strengthening our business and laying the foundation for the future.  I am proud to say that, despite the numerous challenges presented by COVID-19, we achieved a record-breaking year for safety in 2020, an incredible accomplishment attributable to the unrelenting focus by the Tronox team.  John and I want to thank our employees for their continued commitment to safety during these challenging times.  I am also extremely pleased with the accomplishments of the organization in once again over-delivering on our synergy targets.  We delivered $243 million in total acquisition synergies in 2020, exceeding the $220 million run rate synergy target we set for 2022 at our Investor Day in 2019, and there are additional synergies that will be realized in 2021.  Continued delivery of incremental synergies combined with the momentum on the commercial side of the business we anticipate will result in Q1 2021 Adjusted EBITDA of $200-$210 million."

Mr. Romano added, "We ended the year with $3.3 billion in debt.  In addition to the $200 million discretionary debt repayment we made in December, we intend to repay an additional $300 million of debt by the end of the first quarter from cash on the balance sheet.  We remain committed to deleveraging and reducing our gross debt to $2.5 billion and anticipate achieving this by 2023.  Synergies from the Cristal transaction, prudent capital spending, and focused working capital management allowed us to generate $160 million in free cash flow during a very difficult year that brought many challenges due to the global pandemic.  Our differentiated vertically integrated global manufacturing platform provided us with a number of levers to generate cash in 2020, including reducing planned capital expenditures by $80 million, and will enable us to optimize our financial performance during the market recovery."

Mr. Turgeon concluded, "We will remain focused on realizing the benefits from our vertically integrated business model.  In 2021, this will also encompass two key capital projects: newTRON, our multi-year, global digital transformation project; and the Atlas Campaspe mine development project, which will strengthen our vertical integration by providing a future source of high-titanium content ilmenite, natural rutile, and zircon, while allowing us to further unlock the value of our enterprise and improve our return on capital to shareholders.  We have emerged from 2020 a more resilient company and are confident our vertically integrated business model will continue to differentiate Tronox and enable continued outperformance of industry peers."

Financial Summary for the Quarter Ending December 31, 2020

Tronox reported revenue was $783 million for the fourth quarter 2020, an increase of 13 percent, compared to fourth quarter 2019 revenues of $693 million.  Income from operations was $94 million compared to $50 million in the year-ago quarter.  Net income attributable to Tronox was $45 million, or $0.31 per diluted share, compared to a net loss attributable to Tronox of $4 million, or $0.03 per diluted share, in the year-ago quarter.  Net income attributable to Tronox in the fourth quarter of 2020 included transaction costs related to the acquisition of TiZir Titanium and Iron ("TTI"), a net release of tax valuation allowances, and other adjustments that, combined, totaled $17 million or $0.12 per diluted share.  Excluding these items, adjusted net income attributable to Tronox (Non-GAAP) was $28 million, or $0.19 per diluted share.  Adjusted EBITDA of $204 million increased 31 percent compared to $156 million in the prior-year quarter.

Fourth Quarter 2020 vs. Fourth Quarter 2019

• Revenue of $783 million increased 13 percent compared to $693 million
• TiO₂ sales of $587 million increased 8 percent compared to $544 million; sales volumes increased 8 percent versus the year ago quarter driven by market recovery and a positive deviation from normal seasonal trends; selling prices remain unchanged on a U.S. dollar basis and declined 2 percent on a local currency basis year over year
• Zircon sales of $94 million increased 32 percent from $71 million; sales volumes improved 48 percent primarily due to demand recovery in China while selling prices were 10 percent lower
• Feedstock and other products sales of $102 million increased 31 percent from $78 million due to improved pig iron demand
• Adjusted EBITDA of $204 million increased 31 percent compared to $156 million, driven primarily by higher sales volumes, acquisition synergies, and favorable exchange rates, partially offset by lower pricing and increased production costs due to higher fixed cost absorption; includes $4 million of reimbursement from claims related to the Ginkgo concentrator failure we inherited as part of the Cristal transaction
• Selling, general and administrative ("SG&A") expenses were $84 million compared to $92 million
• Interest expense of $49 million increased from $47 million in the year-ago quarter

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Note: Q4 2019 figures are presented on a pro forma basis for comparison purposes. Reported figures can be found in the press release tables at the end of this release.

Fourth Quarter 2020 vs. Third Quarter 2020

• Revenue of $783 million increased 16 percent compared to $675 million
• TiO₂ sales of $587 million increased 8 percent compared to $543 million; sales volumes increased 8 percent driven by continued recovery across all markets and geographies and a positive deviation from normal seasonal trends; selling prices remained level sequentially on both a U.S. dollar and local basis
• Zircon sales of $94 million increased 68 percent from $56 million, driven by a 70 percent increase in sales volumes due to demand recovery in China and some benefit from shipment timing between quarters while selling prices declined 2 percent
• Feedstock and other products sales of $102 million increased 34 percent compared to $76 million, due to improved sales volumes of pig iron
• Adjusted EBITDA of $204 million increased 38 percent compared to $148 million, driven primarily by improved sales volumes, improved production costs, and synergies, partially offset by exchange rate headwinds; includes $4 million of reimbursement from claims related to the Ginkgo concentrator failure we inherited as part of the Cristal transaction
• SG&A expenses were $84 million compared to $89 million
• Interest expense was $49 million compared to $48 million

Other Financial Information

• As of December 31, 2020, debt was $3.3 billion and debt, net of cash and cash equivalents was $2.7 billion
• Liquidity was $1.0 billion as of December 31, 2020, comprised of cash and cash equivalents of $619 million and $422 million available under revolving credit agreements
• Restricted cash of $29 million includes $18 million which was released as a break fee in January 2021 related to the TTI acquisition
• FY 2020 capital expenditures were $195 million
• FY 2020 depreciation, depletion and amortization expense was $304 million
• Free Cash Flow for the year was $160 million

Financial Summary for the Year Ending December 31, 2020

Tronox reported revenue of $2,758 million for 2020, an increase of 4 percent from $2,642 million in 2019 on a reported basis.  Income from operations of $271 million compared to $95 million in the year-ago period on a reported basis.  Net income from continuing operations attributable to Tronox of $969 million, or $6.69 per diluted share, compared to a net loss from continuing operations attributable to Tronox of $114 million, or $0.81 per diluted share, in the year-ago period on a reported basis.  Net income from continuing operations attributable to Tronox in 2020 included a net release of tax valuation allowances and a pension curtailment gain, partially offset by transaction costs related to the TTI acquisition, restructuring and integration costs, loss on extinguishment of debt, and other charges that, combined, totaled $888 million or $6.13 per diluted share. Excluding these items, adjusted net income from continuing operations attributable to Tronox (Non-GAAP) was $81 million, or $0.56 per diluted share.  Adjusted EBITDA of $668 million increased 9 percent compared to $615 million in the prior year on a reported basis.

Webcast Conference Call

Tronox will conduct a webcast conference call on Thursday, February 18, 2021, at 8:00 a.m. 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: +1.866.270.1533
International: +1.412.317.0797

Conference Call Presentation Slides will be used during the conference call and will be available on our website: http://investor.tronox.com

Conference Call Replay: Available via the internet and telephone beginning on February 18, 2021, 1:00 p.m. ET (New York), until February 23, 5:00 p.m. ET (New York)
Internet Replay: http://investor.tronox.com 
Replay Dial-in Telephone Numbers:
United States: +1.877.344.7529
International: +1.412.317.0088
Replay Access Code: 10151992

Upcoming Conferences

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

• Alembic Global Advisors Chemical & Industrial Conference (Virtual), February 26, 2021
• NYSE Basic Materials Access Day (Virtual), March 9, 2021
• Fermium ESG Forum (Virtual), March 24, 2021

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

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. With nearly 7,000 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 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 (SEC).

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.

Unaudited Pro Forma Financial Information

On April 10, 2019, we announced the completion of the acquisition of the TiO₂ business of Cristal which impacts the comparability of the reported results for the fourth quarter and full year 2020 compared to the fourth quarter and full year 2019. Since Tronox and Cristal have combined their respective businesses effective with the merger date of April 10, 2019, the three and twelve months ended December 31, 2020 reflect the results of the combined business, while the three and twelve months ended December 31, 2019 reflect the results of the combined business from April 10, 2019. To assist with a discussion of the fourth quarter and full year 2020 and the fourth quarter and full year 2019 results on a comparable basis, certain supplemental unaudited pro forma income statement and Adjusted EBITDA information is provided on a consolidated basis and is referred to as "pro forma information."  The pro forma information has been prepared on a basis consistent with Article 11 of Regulation S-X, assuming the merger and merger-related divestitures of Cristal's North American TiO₂ business and the 8120 paper laminate grade had been consummated on January 1, 2018. In preparing this pro forma information, the historical financial information has been adjusted to give effect to pro forma adjustments that are (i) directly attributable to the business combination and other transactions presented herein, such as the merger-related divestitures, (ii) factually supportable, and (iii) expected to have a continuing impact on the combined entity's consolidated results. The pro forma information is based on management's assumptions and is presented for illustrative purposes and does not purport to represent what the results of operations would actually have been if the business combination and merger-related divestitures had occurred as of the dates indicated or what the results would be for any future periods. Also, the pro forma information does not include the impact of any revenue, cost or other operating synergies in the periods prior to the acquisition that may result from the business combination or any related restructuring costs.

Media Contact: Melissa Zona
+1.636.751.4057

Investor Contact: Jennifer Guenther
+1.646.960.6598

SOURCE Tronox Holdings plc

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