Tronox (TROX) Misses Q2 EPS by 12c

Tronox (NYSE: TROX) reported Q2 EPS of ($0.43), $0.12 worse than the analyst estimate of ($0.31). Revenue for the quarter came in at $537 million versus the consensus estimate of $531.5 million.

Tom Casey, chairman and CEO of Tronox, said: "Our TiO2 business generated considerable momentum in the second quarter, reporting adjusted EBITDA of $59 million, which represents a 168 percent improvement over our first quarter result. We benefited from pigment selling price increases, healthy demand growth and our continued strong operating cost performance. Pigment selling prices increased sequentially for the first time since 2012 and we expect to see another sequential improvement in the third quarter as announced price increases roll across our global customer base. We continue to match pigment production volumes to robust sales volumes and keep inventory at or below normal levels, even though our utilization rate increased to the mid-90s percent range in the quarter. We believe pigment inventories are normal or below normal at both customer and producer levels across the globe. Our Alkali business continues to operate in a sold-out mode and deliver significant free cash flow to the company. Both TiO2 and Alkali ratified new multi-year labor contracts for our operations in South Africa and Green River, Wyo, respectively."

Casey concluded: "We believe that the second quarter marked the turn in pigment pricing and we expect feedstock prices to follow within a few quarters. It also marked the halfway point of our three-year Operational Excellence program in TiO2 to generate more than $600 million of aggregate cash from cost and working capital reductions over the period 2015-2017. We are ahead of schedule in meeting our targets. Cash generated from annual cost reduction totals $220 million through the first half of 2016. 2015 initiatives generated $90 million in 2015 and, after an additional $3 million of costs to achieve the 2015 savings that were paid in 2016, we sustained $87 million of these savings in the first half of 2016. 2016 initiatives generated an additional $43 million in the first half. Cash delivered from working capital reductions totals $202 million through the first half of 2016. In 2015, $98 million was delivered and an additional $104 million was delivered in the first half of 2016. Total Operational Excellence aggregate cash generation totals $422 million through the first half 2016."

For earnings history and earnings-related data on Tronox (TROX) click here.

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