Tronox (TROX) Misses Q2 EPS by 1c, Revenues Miss

Tronox (NYSE: TROX) reported Q2 EPS of ($0.03), $0.01 worse than the analyst estimate of ($0.02). Revenue for the quarter came in at $578 million versus the consensus estimate of $593.71 million.

CEO Commentary

Jeffry N. Quinn, chairman and chief executive officer, commented, "Tronox delivered solid financial results in the quarter despite the significant reduction in demand and other challenges associated with the COVID-19 pandemic. Our results were consistent with the outlook provided at the time of our first quarter earnings release. TiO2 volumes declined 19 percent quarter over quarter, and TiO2 pricing was sequentially flat. Zircon sales volumes and price were both up by 2 percent sequentially owing to shipment timing and favorable product mix. We delivered Adjusted EBITDA of $142 million and an Adjusted EBITDA margin of 25 percent, once again benefitting from the resiliency of our vertically integrated business model and synergies from the Cristal acquisition, as well as focused cost reduction actions that we implemented at the outset of the pandemic. I am pleased with our delivery of these results given the ongoing macroeconomic environment and the challenges the men and women of Tronox overcame in the quarter. As an organization, we have remained relentlessly focused on the health and safety of our employees, managing our ongoing operations, and preparing for the future. The efforts of our people to proactively implement stringent and prudent access protocols and other safeguards at all our worldwide locations preserved our ability to operate and continue to meet our customers' needs.

"During the quarter, we also signed a definitive agreement with Eramet S.A. to purchase TiZir's TTI facility. This highly strategic acquisition will further our vertical integration strategy by increasing our titanium feedstock production capacity, thereby enabling our ability to meet our internal feedstock requirements and better serve our pigment customers. The addition of the facility to our portfolio will reduce our costs by reducing our reliance on third party feedstock suppliers and presenting an opportunity for cost and operating synergies. We continue to work through customary closing conditions and regulatory approvals. As for Jazan, the amendment of the Jazan TSA will allow Tronox to increase technical and managerial resources devoted to the project as it continues to advance towards sustainable operations late in 2021.

"As we look to the third quarter, we are encouraged by the momentum carried forward from June, the strongest month of the second quarter. While the timing of re-opening of economies across the globe remains uncertain and subject to week-by-week developments, as of today, we anticipate TiO2 volumes to continue to improve in the third quarter relative to the second quarter and for the zircon market to remain relatively stable as compared to the last several quarters.

"We are utilizing our integrated business planning capabilities to ensure we continue to satisfy our customers' needs, providing the same high level of service our customers have grown to expect from Tronox, while prudently managing working capital. As a result of the successful implementation of cost savings and disciplined management of our capital expenditures, we are confident in our ability to generate strong free cash flow for the year. Available liquidity of over $1.1 billion is more than sufficient to fund the TTI acquisition and support our business."

Mr. Quinn concluded, "I am very pleased that we have continued to deliver on our commitments, especially considering the challenges presented by the continued global macroeconomic uncertainty due to COVID-19. Our ability to confront these challenges and protect our people and our business, all while delivering reliable, high-quality product for our customers is a demonstration of our capabilities as a leading TiO2 producer and the value of our vertically integrated business model."

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

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