NOTIFICATION: The Technology Channels will soon be discontinued.
Click here to download complimentary copies of Fastmarkets RISI’s pulp and paper newsletters.

 

Tronox 4Q 2019 results: revenue up 62% from year ago to $693 million

Read so far

Tronox 4Q 2019 results: revenue up 62% from year ago to $693 million

February 26, 2020 - 09:28
Posted in:

STAMFORD, CT , Feb. 25, 2020 (PRNewswire) -Fourth Quarter 2019 Highlights (Reported Basis):

  • Revenue of $693 million
  • Income from operations of $44 million; Adjusted EBITDA of $156 million; Adjusted EBITDA margin of 23 percent (Non-GAAP)
  • GAAP diluted EPS of $0.00; Adjusted diluted EPS of $0.14 (Non-GAAP)
  • TiO2 local selling prices 1 percent lower benefiting from margin stability initiatives and sales volumes down within seasonally typical range, 9 percent, versus third quarter 2019
  • Zircon continues to deliver strong profitability and margin enhancement despite softer market conditions as revenue up 4 percent versus third quarter 2019 driven by 7 percent sales volume increase partially offset by 3 percent lower selling prices

Full Year 2019 Highlights (Reported Basis):

  • Revenue of $2,642 million
  • Income from operations of $95 million; Adjusted EBITDA of $615 million within previously issued guidance range; Adjusted EBITDA margin of 23 percent (Non-GAAP)
  • GAAP diluted loss per share from continuing operations of ($0.81); Adjusted diluted EPS of $0.47 above top-end of previously issued guidance range (Non-GAAP)
  • Total acquisition synergies of $89 million achieved, exceeding increased guidance issued in the third quarter of $65 million by $24 million
  • Free Cash Flow of $214 million exceeded top-end of previously issued guidance by $79 million (Non-GAAP)
  • Returned $315 million to shareholders through share repurchases and regular dividend payments
  • $100 million discretionary debt repayment made in December 2019

Dividend Increase; Raising Synergy Targets; Full Year 2020 Outlook:

  • Board declared increase in quarterly dividend of 56%, which equates to a $0.28 per share annual dividend, up from $0.18 per share, reinforcing confidence in our business model and ability to generate strong free cash flow throughout cycles
  • Raising total synergies targets for 2020 to $190 million, 2021 to $275 million, and 2022 to $325 million
  • Full Year 2020 Outlook:
    • Revenue of $3.0 – $3.3 billion
    • Adjusted EBITDA of $700 – $800 million (Non-GAAP)
    • Adjusted diluted EPS of $0.55 – $1.10 (Non-GAAP)
    • Capex of $260 – $290 million
    • Free Cash Flow over $200 million (Non-GAAP)

Tronox Holdings plc (“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, 2019, as follows:

Summary of Financial Results for the Quarter Ending December 31, 2019

Jeffry Quinn, Chairman and Chief Executive Officer commented:

“2019 marked a transformative year for Tronox with the close of the Cristal acquisition.  As the world’s largest vertically integrated TiO2 producer with an unmatched global footprint, we continue to grow with our customers as they grow anywhere in the world and benefit from our alignment with customers growing faster than the overall market. The success of our bespoke win-win margin stability initiative continues to enhance the stability of our top line relative to historical industry patterns.  We are well-positioned to create significant value for our shareholders.

“Our financial performance in 2019 was driven by strong execution on the many operating and commercial initiatives that were within our control, such as delivering synergies through our accelerated acquisition integration program, optimizing our global vertically integrated footprint, managing our cost structure and wisely allocating capital.  Despite macro-economic challenges, our Adjusted EBITDA margin remained strong at 23 percent, we generated free cash flow of $214 million and returned $315 million to shareholders through share repurchases and our dividend.  We also achieved total acquisition synergies of $89 million during the year, exceeding our Investor Day target by $44 million and third quarter increased guidance by $24 million.  Every day we are finding additional value-creating opportunities in the new Tronox.  As a result, we are significantly increasing our synergy targets for 2020 and beyond.

“Our global team is moving forward in 2020 together as one new Tronox.  We remain focused on execution and delivery of our vertical integration strategy, which is creating an enterprise that displays greater stability in financial performance and cash generation throughout the cycle.  We will continue to manage what we can control – achieving the increased synergy targets, investing in our business through well-conceived, well-executed high return projects, deleveraging the balance sheet, and returning capital to shareholders through an increased dividend.

“Certainly, economic and global macro uncertainty remain as we have entered 2020, but we believe the outlook for the TiO2 sector is strong. As we emerge from a prolonged, but shallow industry trough, we have seen the beginning of an uptick in volumes and believe that historically this has been a precursor to an improving price environment. Due to our competitive advantage of vertical integration through a global footprint, we are confident that we will continue to outperform our industry peers in terms of EBITDA margin and free cash flow generation irrespective of the economic environment.  We will deliver on our financial targets while remaining committed to employee development, safety and sustainability.”

The Board of Directors declared a quarterly dividend of $0.07 per share payable on Friday, March 20, 2020, to shareholders of record of the Company’s ordinary shares at the close of business on Monday, March 9, 2020.

Full Year 2020 Outlook

Regarding the Company’s outlook for the full year 2020, Quinn commented, “Balancing global macro-economic uncertainty and near-term softness in zircon demand with the beginning of an uptick in the TiO2 sector and our confidence in our ability to deliver our increased synergy target, we are issuing the following outlook for 2020:

  • Full Year 2020 Outlook:
  • Revenue of $3.0 – $3.3 billion
  • Adjusted EBITDA of $700 – $800 million (Non-GAAP)
  • Adjusted diluted EPS of $0.55 – $1.10 (Non-GAAP)
  • Capex of $260 – $290 million
  • Free Cash Flow over $200 million (Non-GAAP)

Financial Summary for the Quarter Ending December 31, 2019 (Reported Basis)

Tronox reported revenue of $693 million for the fourth quarter 2019, an increase of 62 percent from $429 million in the fourth quarter 2018.  Income from operations of $44 million compared to $68 million in the year-ago quarter.  Net income from continuing operations attributable to Tronox was nil, or $0.00 per diluted share, compared to net loss from continuing operations attributable to Tronox of $5 million, or $0.05 per diluted share, in the year-ago quarter.  Net loss from continuing operations attributable to Tronox in the fourth quarter 2019 included an inventory step-up charge, transaction costs, restructuring and integration costs, loss on extinguishment of debt, a pension settlement gain and a charge for a capital gains tax payment that, combined, totaled $19 million or $0.14 per diluted share.  Excluding these items, adjusted net income attributable to Tronox (Non-GAAP) was $19 million, or $0.14 per diluted share.  Adjusted EBITDA of $156 million increased 30 percent compared to $120 million in the prior-year quarter.

Fourth Quarter 2019 vs. Fourth Quarter 2018

Reported Basis

  • Revenue of $693 million, increased 62 percent from $429 million
  • TiO2 sales of $544 million, including revenue from the acquired Cristal operations, increased 116 percent compared to $252 million
  • Zircon sales of $71 million, including revenue from the acquired Cristal operations, decreased 13 percent from $82 million
  • Feedstock and other products sales of $78 million, including revenue from the acquired Cristal operations, decreased 18 percent from $95 million
  • Adjusted EBITDA of $156 million increased 30 percent compared to $120 million

Pro Forma Basis

  • Revenue of $693 million was 5 percent lower than $728 million in the year-ago quarter
  • TiO2 sales of $544 million were 1 percent lower compared to $550 million; sales volumes increased 3 percent; selling prices were 4 percent lower on a local currency basis and 5 percent lower on a U.S. dollar basis
  • Zircon sales of $71 million were 34 percent lower than $107 million in the year-ago quarter; sales volumes were 29 percent lower when compared to a very strong prior-year quarter of shipments, as well as softer market conditions, primarily in China, with continued impacts felt by the trade war, environmental regulations and generally slower growth
  • Feedstock and other products sales of $78 million increased 10 percent from $71 million on higher CP slag sales
  • Adjusted EBITDA of $156 million was 28 percent lower than $216 million in the year-ago quarter, due to lower TiO2 selling prices, lower zircon sales volumes and selling prices and higher production costs, partially offset by favorable foreign exchange on costs, primarily the South African rand and Australian dollar, and acquisition synergies

Fourth Quarter 2019 vs. Third Quarter 2019

Reported Basis

  • Revenue of $693 million decreased 10 percent compared to $768 million
  • TiO2 sales of $544 million were 10 percent lower than $603 million; sales volumes declined within the seasonally typical range – 9 percent – and selling prices were 1 percent lower on a local currency basis and on a U.S. dollar basis
  • Zircon sales of $71 million increased 4 percent from $68 million, driven by a 7 percent increase in sales volumes benefiting from shipment timing, partially offset by 3 percent lower selling prices
  • Feedstock and other products sales of $78 million decreased 20 percent from $97 million driven by lower CP slag and pig iron sales volumes
  • Adjusted EBITDA of $156 million decreased 15 percent compared to $184 million, primarily due to seasonally normal lower sales volumes for TiO2, lower feedstock and other sales volumes, higher production costs and the absence of integration margin benefits, partially offset by favorable foreign exchange on costs, primarily the South African rand and Australian dollar, and acquisition synergies

Other Financial Information

  • On December 31, 2019, debt was $3,026 million and debt, net of cash and cash equivalents was $2,724 million, excluding restricted cash
  • As of December 31, 2019, liquidity was $648 million comprised of cash and cash equivalents of $302 million and $346 million available under revolving credit agreements
  • In the fourth quarter 2019, capital expenditures were $58 million and depreciation, depletion and amortization expense was $75 million
  • Tronox returned approximately $315 million to shareholders in 2019 through share repurchases and regular dividend payments

Financial Summary for the Year Ending December 31, 2019 (Reported Basis)

Tronox reported revenue of $2,642 million for 2019, an increase of 45 percent from $1,819 million in 2018.  Income from operations of $95 million compared to $200 million in the year-ago period.  Net loss from continuing operations attributable to Tronox of $114 million, or $0.81 per diluted share, compared to a net loss from continuing operations attributable to Tronox of $7 million, or $0.06 per diluted share, in the year-ago period.  Net loss from continuing operations attributable to Tronox in 2019 included an inventory step-up charge; transaction, restructuring and integration costs; loss on extinguishment of debt; a pension settlement gain; and a charge for a capital gains tax payment that, combined, totaled $180 million or $1.28 per diluted share.  Excluding these items, adjusted net income from continuing operations attributable to Tronox (Non-GAAP) was $66 million, or $0.47 per diluted share.  Adjusted EBITDA of $615 million increased 20 percent compared to $513 million in the prior year.

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.