Tronox Reports First Quarter 2019 Financial Results
May 9, 2019 - Press ReleasesFirst Quarter 2019 Highlights:
- Revenue of
$390 million down 12 percent versus first quarter 2018; down 9 percent excluding$12 million of revenue in prior-year quarter from Electrolytic business sold inSeptember 2018 ; primary drivers were 10 percent lower pigment sales volumes and$6 million of unfavorable Euro translation - Revenue down 9 percent versus fourth quarter 2018, as higher pigment sales volumes were more than offset by lower zircon, feedstock and pig iron sales volumes due to shipment timing
- Income from operations of
$16 million ; Adjusted EBITDA of$80 million (Non-GAAP) reflected transitioning TiO2 pigment market conditions that improved as the quarter was completed and the financial impact of certain actions taken in operations in preparation for moving from a long to short feedstock position following the closing of the Cristal acquisition - For the second quarter 2019, Adjusted EBITDA (Non-GAAP) of
$125 million to $135 million expected for legacyTronox driven by improved pigment market conditions, increased zircon shipments and the margin benefits of the actions taken in operations prior to closing the Cristal acquisition (1) - GAAP diluted loss per share
($0.27) ; adjusted diluted loss per share of($0.18) (Non-GAAP) - Continued to successfully work with our pigment customers on margin stability initiatives; TiO2 pigment selling prices 2 percent lower than prior-year quarter and 1 percent lower than prior quarter on local currency basis
Strategic Developments:
- Transformational acquisition of
Cristal TiO 2 business completed onApril 10, 2019 - Sale of Cristal’s former North American TiO2 business to
INEOS Enterprises for$700 million closed onMay 1, 2019 and divestiture of 8120 paper laminate grade toVenator Materials closed onApril 26, 2019 - Repurchased 14 million
Tronox shares directly fromExxaro Resources at a price of$14.32 per share onMay 9, 2019 , using portion of proceeds fromINEOS transaction
1) |
For the Company’s guidance with respect to second quarter 2019 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 measure are uncertain or out of our control, or cannot be reasonable predicted. |
The Board of Directors declared a quarterly dividend of $0.045 per share payable on May 31, 2019, to shareholders of record of the company’s ordinary shares at the close of business on May 20, 2019.
Discussing the unique positioning of
Finally, because of these positive developments, Quinn stated, “For the second quarter of 2019, we expect Adjusted EBITDA (Non-GAAP) to range between
First Quarter 2019
First Quarter 2019 versus First Quarter 2018
Revenue of
Titanium feedstock and co-products sales of
Adjusted EBITDA of
First Quarter 2019 versus Fourth Quarter 2018
Revenue of
Titanium feedstock and co-products sales of
Adjusted EBITDA of
Other Financial Information
Selling, general and administrative expenses were
Webcast Conference Call
Internet Broadcast: tronox.com
Dial-in Telephone Numbers:
U.S. /
International: +1.253.237.1184
Conference ID: 3492939
Conference Call Presentation Slides will be used during the conference call and are available on our website: tronox.com
Conference Call Replay: Available via the internet and telephone beginning on
Internet Replay:tronox.com
U.S. /
International: +1.404.537.3406
Conference ID: 3492939
Upcoming Conferences and Investor Meetings
During the second quarter of 2019 a member of management is scheduled to present at the following conferences:
Tronox Investor Conference ,New York ,May 30, 2019 Deutsche Bank Global Industrial & Materials Summit ,Chicago ,June 6, 2019 Barclays High Yield Conference ,Colorado Springs, CO ,June 6-7, 2019 Vertical Research Partners Materials Conference ,New York ,June 18, 2019 Citi Leveraged Finance Conference ,Park City, UT ,June 19-21, 2019 BMO Capital Markets Chemicals & Materials Conference ,New York ,June 27, 2019
Accompanying conference and meeting materials will be available at http://investor.tronox.com
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 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 (
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 because of new information or future developments.
Use of Non-U.S. GAAP Financial Information
To provide investors and others with additional information regarding the financial results of
For the Company’s guidance with respect to second quarter 2019 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 measure are uncertain or out of our control, or cannot be reasonably predicted.
Management believes these non-U.S. GAAP financial measures:
- Reflect the ongoing business of
Tronox Holdings plc 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 the operating results and future prospects of
Tronox Holdings plc ; - Provide an additional view of the operating performance of the company by adding interest expense & income, income taxes, depreciation, depletion and amortization to the net income. Further adjustments due to gain (loss) on extinguishment of debt, stock-based compensation charges, transaction costs associated with acquisitions, foreign currency re-measurements, impairments, settlements of pension and postretirement plans, impacts of tax settlements on non-income related taxes, severance expense, and noncash pension and postretirement expense and accretion expense are made to exclude items that are either non-cash or unusual in nature;
- 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 income (loss) attributable to
Tronox Holdings plc ” 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:
Investor Contact:
TRONOX HOLDINGS PLC |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (U.S. GAAP) |
||||||
(UNAUDITED) |
||||||
(Millions of U.S. dollars, except share and per share data) |
||||||
Three Months Ended |
||||||
2019 |
2018 |
|||||
Net sales |
$ 390 |
$ 442 |
||||
Cost of goods sold |
307 |
327 |
||||
Gross profit |
83 |
115 |
||||
Selling, general, and administrative expenses |
67 |
76 |
||||
Impairment loss |
– |
25 |
||||
Income from operations |
16 |
14 |
||||
Interest expense |
(49) |
(49) |
||||
Interest income |
9 |
8 |
||||
Loss on extinguishment of debt |
(2) |
– |
||||
Other expense, net |
(2) |
(9) |
||||
Loss before income taxes |
(28) |
(36) |
||||
Income tax provision |
(2) |
(5) |
||||
Net loss |
(30) |
(41) |
||||
Net income attributable to noncontrolling interest |
4 |
3 |
||||
Net loss attributable to Tronox Holdings plc |
$ (34) |
$ (44) |
||||
Net loss per share, basic and diluted |
$ (0.27) |
$ (0.36) |
||||
Weighted average shares outstanding, basic and diluted (in thousands) |
124,296 |
122,327 |
||||
Other Operating Data: |
||||||
Capital expenditures |
$ 25 |
$ 28 |
||||
Depreciation, depletion and amortization expense |
$ 47 |
$ 48 |
TRONOX HOLDINGS PLC |
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RECONCILIATION OF NON-U.S. GAAP FINANCIAL MEASURES |
|||||
(UNAUDITED) |
|||||
(Millions of U.S. dollars, except share and per share data) |
|||||
RECONCILIATION OF NET LOSS |
|||||
ATTRIBUTABLE TO TRONOX HOLDINGS PLC (U.S. GAAP) |
|||||
TO ADJUSTED NET INCOME (LOSS) FROM OPERATIONS |
|||||
ATTRIBUTABLE TO TRONOX HOLDINGS PLC (NON-U.S. GAAP) |
|||||
Three Months Ended |
|||||
2019 |
2018 |
||||
Net loss attributable to Tronox Holdings plc (U.S. GAAP) |
$ (34) |
$ (44) |
|||
Impairment loss (a) |
– |
25 |
|||
Transaction costs (b) |
8 |
20 |
|||
Loss on extinguishment of debt (c) |
2 |
– |
|||
Charge for potential capital gains tax payment to Exxaro (d) |
1 |
– |
|||
Adjusted net (loss) income attributable to Tronox Holdings plc (non-U.S. GAAP) |
$ (23) |
$ 1 |
|||
Diluted net loss per share (U.S. GAAP) |
$ (0.27) |
$ (0.36) |
|||
Impairment loss, per share |
– |
0.21 |
|||
Transaction costs, per share |
0.06 |
0.16 |
|||
Loss on extinguishment of debt, per share |
0.02 |
– |
|||
Charge for potential capital gains tax payment to Exxaro |
0.01 |
– |
|||
Diluted adjusted net (loss) income per share attributable to Tronox Holdings plc (non-U.S. GAAP) |
$ (0.18) |
$ 0.01 |
|||
Weighted average shares outstanding, diluted (in thousands) |
124,296 |
126,117 |
(a) |
Represents a pre-tax charge for the impairment and loss on sale of the assets of our Tronox Electrolytic Operations which was recorded in “Impairment loss” in the unaudited Condensed Consolidated Statements of Operations. |
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(b) |
Represents transaction costs primarily associated with the Cristal Transaction which were recorded in “Selling, general and administrative expenses” in the unaudited Condensed Consolidated Statements of Operations. |
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(c) |
Represents the loss in connection with the modification of the Wells Fargo Revolver and termination of the ABSA Revolver. |
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(d) |
Represents the potential payment to Exxaro for capital gains tax on the disposal of its ordinary shares in Tronox Holding plc included in “Other expense, net” in the unaudited Condensed Consolidated Statements of Operations. |
TRONOX HOLDINGS PLC |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
||||||
(UNAUDITED) |
||||||
(Millions of U.S. dollars, except share and per share data) |
||||||
March 31, |
December 31, |
|||||
2019 |
2018 |
|||||
ASSETS |
||||||
Current Assets |
||||||
Cash and cash equivalents |
$ 1,068 |
$ 1,034 |
||||
Restricted cash |
666 |
662 |
||||
Accounts receivable, net of allowance for doubtful accounts |
300 |
317 |
||||
Inventories, net |
486 |
479 |
||||
Prepaid and other assets |
49 |
50 |
||||
Income taxes receivable |
2 |
2 |
||||
Total current assets |
2,571 |
2,544 |
||||
Noncurrent Assets |
||||||
Property, plant and equipment, net |
992 |
1,004 |
||||
Mineral leaseholds, net |
787 |
796 |
||||
Intangible assets, net |
169 |
176 |
||||
Lease right of use assets |
62 |
– |
||||
Deferred tax assets |
35 |
37 |
||||
Other long-term assets |
110 |
85 |
||||
Total assets |
$ 4,726 |
$ 4,642 |
||||
LIABILITIES AND EQUITY |
||||||
Current Liabilities |
||||||
Accounts payable |
$ 150 |
$ 133 |
||||
Accrued liabilities |
119 |
140 |
||||
Short-term lease liabilities |
19 |
– |
||||
Short-term debt |
94 |
– |
||||
Long-term debt due within one year |
58 |
22 |
||||
Income taxes payable |
2 |
5 |
||||
Total current liabilities |
442 |
300 |
||||
Noncurrent Liabilities |
||||||
Long-term debt, net |
3,223 |
3,139 |
||||
Pension and postretirement healthcare benefits |
91 |
93 |
||||
Asset retirement obligations |
70 |
68 |
||||
Long-term lease liabilities |
44 |
– |
||||
Long-term deferred tax liabilities |
159 |
163 |
||||
Other long-term liabilities |
17 |
17 |
||||
Total liabilities |
4,046 |
3,780 |
||||
Commitments and Contingencies |
||||||
Shareholders’ Equity |
||||||
Tronox Holdings plc ordinary shares, par value $0.01 â 125,738,462 shares issued and outstanding at March 31, 2019 and 123,015,301 shares issued and 122,933,845 shares outstanding at December 31, 2018 |
1 |
1 |
||||
Capital in excess of par value |
1,584 |
1,579 |
||||
Accumulated deficit |
(397) |
(357) |
||||
Accumulated other comprehensive loss |
(612) |
(540) |
||||
Total Tronox Holdings plc shareholders’ equity |
576 |
683 |
||||
Noncontrolling interest |
104 |
179 |
||||
Total equity |
680 |
862 |
||||
Total liabilities and equity |
$ 4,726 |
$ 4,642 |
TRONOX HOLDINGS PLC |
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CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||
(UNAUDITED) |
|||
(Millions of U.S. dollars) |
|||
Three Months Ended |
|||
2019 |
2018 |
||
Cash Flows from Operating Activities: |
|||
Net loss |
$ (30) |
$ (41) |
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
|||
Depreciation, depletion and amortization |
47 |
48 |
|
Deferred income taxes |
(3) |
3 |
|
Share-based compensation expense |
8 |
7 |
|
Amortization of deferred debt issuance costs and discount on debt |
2 |
5 |
|
Impairment loss |
– |
25 |
|
Loss on extinguishment of debt |
2 |
– |
|
Other non-cash affecting net loss |
6 |
10 |
|
Changes in assets and liabilities: |
|||
Decrease in accounts receivable, net |
19 |
1 |
|
Increase in inventories, net |
(10) |
(9) |
|
Increase in prepaid and other assets |
(1) |
(1) |
|
Increase (decrease) in accounts payable and accrued liabilities |
8 |
(47) |
|
Net changes in income tax payables and receivables |
(3) |
(2) |
|
Changes in other non-current assets and liabilities |
(6) |
(3) |
|
Cash provided by (used in) operating activities |
39 |
(4) |
|
Cash Flows from Investing Activities: |
|||
Capital expenditures |
(25) |
(28) |
|
Loans |
(25) |
– |
|
Cash used in investing activities |
(50) |
(28) |
|
Cash Flows from Financing Activities: |
|||
Repayments of long-term debt |
(101) |
(6) |
|
Proceeds from short-term debt |
94 |
– |
|
Proceeds from long-term debt |
222 |
– |
|
Acquisition of noncontrolling interest |
(148) |
– |
|
Debt issuance costs |
(4) |
(1) |
|
Proceeds from the exercise of warrants |
– |
2 |
|
Dividends paid |
(7) |
(6) |
|
Restricted stock and performance-based shares settled in cash for withholding taxes |
(6) |
(4) |
|
Cash provided by (used in) financing activities |
50 |
(15) |
|
Effects of exchange rate changes on cash, cash equivalents and restricted cash |
(1) |
7 |
|
Net increase (decrease) in cash and cash equivalents and restricted cash |
38 |
(40) |
|
Cash, cash equivalents and restricted cash at beginning of period |
1,696 |
1,769 |
|
Cash, cash equivalents and restricted cash at end of period |
$1,734 |
$1,729 |
TRONOX HOLDINGS PLC |
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RECONCILIATION OF NET LOSS TO EBITDA AND ADJUSTED EBITDA (NON-U.S. GAAP) |
|||||
(UNAUDITED) |
|||||
(Millions of U.S. dollars) |
|||||
Three Months Ended |
|||||
2019 |
2018 |
||||
Net loss (U.S. GAAP) |
$(30) |
$ (41) |
|||
Interest expense |
49 |
49 |
|||
Interest income |
(9) |
(8) |
|||
Income tax provision |
2 |
5 |
|||
Depreciation, depletion and amortization expense |
47 |
48 |
|||
EBITDA (non-U.S. GAAP) |
59 |
53 |
|||
Impairment loss (a) |
– |
25 |
|||
Share based compensation (b) |
8 |
7 |
|||
Transaction costs (c) |
8 |
20 |
|||
Loss on extinguishment of debt (d) |
2 |
– |
|||
Foreign currency remeasurement (e) |
(1) |
10 |
|||
Other items (f) |
4 |
2 |
|||
Adjusted EBITDA (non-U.S. GAAP) |
$ 80 |
$117 |
(a) |
Represents a pre-tax charge for the impairment and loss on sale of the assets of our Tronox Electrolytic Operations which was recorded in “Impairment loss” in the unaudited Condensed Consolidated Statements of Operations. |
||||
(b) |
Represents non-cash share-based compensation. |
||||
(c) |
Represents transaction costs associated with the Cristal Transaction which were recorded in “Selling, general and administrative expenses” in the unaudited Condensed Consolidated Statements of Operations. |
||||
(d) |
Represents the loss in connection with the modification of the Wells Fargo Revolver and termination of the ABSA Revolver. |
||||
(e) |
Represents realized and unrealized gains and losses associated with foreign currency remeasurement related to third-party and intercompany receivables and liabilities denominated in a currency other than the functional currency of the entity holding them, which are included in “Other expense, net” in the unaudited Condensed Consolidated Statements of Operations. Prior to the first quarter of 2019, realized gains and losses associated with third party receivables and liabilities had been included in Adjusted EBITDA. Commencing with 2019, we are now excluding these amounts from Adjusted EBITDA and prior period amounts have been revised for comparability purposes. The exclusion of all of the realized and unrealized gains and losses is consistent with the reporting of Adjusted EBITDA we make to our lenders |
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(f) |
Includes noncash pension and postretirement costs, accretion expense and other items included in “Selling general and administrative expenses”, “Cost of goods sold” and “Other expense, net” in the unaudited Condensed Consolidated Statements of Operations. Amounts for 2019 also include the potential payment to Exxaro for capital gains tax on the disposal of its ordinary shares in Tronox Holding plc included in “Other expense, net” in the unaudited Condensed Consolidated Statements of Operations. |
TRONOX HOLDINGS PLC |
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SEGMENT INFORMATION |
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REVENUE, OPERATING INCOME |
|||||||
AND |
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FREE CASH FLOW (NON-U.S. GAAP) |
|||||||
(UNAUDITED) |
|||||||
(Millions of U.S. dollars) |
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The following table reconciles net sales and sales growth excluding Electrolytic: |
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Three Months Ended |
|||||||
2019 |
2018 |
% variance |
|||||
Net sales |
$ 390 |
$442 |
-12 |
% |
|||
Electrolytic sales |
– |
(12) |
-100 |
% |
|||
Net sales, excluding Electrolytic sales |
$ 390 |
$430 |
-9 |
% |
|||
The following table reconciles Cash provided by operating activities, to free cash flow for the three months ended March 31, 2019: |
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Consolidated |
|||||||
Cash provided by operating activities, continuing operations |
$ 39 |
||||||
Capital expenditures |
(25) |
||||||
Free cash flow (non-U.S. GAAP) |
$ 14 |
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