Tronox Reports Third Quarter 2022 Financial Results

Tronox Holdings plc (NYSE:TROX) (“Tronox” or the “Company”), the world’s leading integrated manufacturer of titanium dioxide (“TiO2“) pigment, today reported its financial results for the quarter ending September 30, 2022, as follows:

Third Quarter 2022 Financial Highlights:
*Produced revenue of $895 million, an increase of 3% compared to the prior year, driven by higher TiO2, zircon and pig iron prices and higher pig iron volumes
*Generated income from operations of $163 million and net income of $123 million
*Achieved GAAP diluted EPS of $0.77; adjusted diluted EPS of $0.69 (non-GAAP) primarily due to an Australian valuation allowance adjustment of $0.10
*Delivered Adjusted EBITDA of $247 million and an Adjusted EBITDA margin of 27.6%
*Invested $112 million in capital expenditures, primarily in our vertical integration and newTRON initiatives
*Generated free cash flow of $25 million in the quarter
*Returned $110 million to shareholders in the nine months ending September 30, 2022 in the form of share repurchases and dividends

Co-CEOs’ Remarks
“Despite a significant reduction in demand in Europe, Middle East, Africa and Asia Pacific, we generated a gross profit margin of 25.9% and an Adjusted EBITDA margin of 27.6% against a backdrop of continuing cost pressures,” commented John D. Romano, co-chief executive officer. “Tronox’s third quarter financial results are a demonstration of the strength of our vertically integrated portfolio and transformed business model. Pricing across all products continued to increase, as a result of the execution against our commercial strategy. I am proud of the Tronox team’s ability to deliver against the fast-changing backdrop and continued challenges through which we are navigating the Company.”

Mr. Romano continued, “Looking to the remainder of the year, we expect fourth quarter pigment demand to decline 25% to 30% sequentially, driven by customer destocking, continued weakness in Europe, Middle East, Africa, and Asia Pacific, and seasonal weakness in North America. We believe customer inventory levels remain low relative to previous periods of economic weakness, so we do not believe we will see similar levels of destocking as we move into 2023.”

Jean-François Turgeon, co-chief executive officer, added, “We continue to be laser-focused on cost reductions and have a number of levers to optimize performance across a variety of scenarios on which we are executing. As we have highlighted previously, vertical integration investments and newTRON are key projects to support our medium- and long-term profitable growth initiatives. However, we have implemented plans to significantly reduce our annual capital spend to below $275 million in 2023 to adapt to the macroeconomic environment as it unfolds. Softening demand drove increased TiO2 inventory levels in the third quarter, and allowed us to replenish our safety stocks, which have been below seasonal normal levels for the last several quarters. As a result, we have taken actions to reduce production levels in the fourth quarter due to lower customer demand. We will continue to balance cash generation while ensuring we have the product necessary to meet our customers’ needs and are effectively positioning Tronox for future success.”
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