Tronox Holdings plc (NYSE:TROX) Q2 2020 Results Conference Call July 30, 2020 8:30 AM ET Company Participants Jennifer Gunther - IR Jeff Quinn - Chairman and CEO Jean-François Turgeon - COO John Romano - Chief Commercial and Strategy Officer Tim Carlson - CFO Conference Call Participants Aziza Gazieva - Fermium Research Duffy Fisher - Barclays Hassan Ahmed - Alembic Global Jim Sheehan - SunTrust Roger Spitz - Bank of America Colton Bina - BMO Capital Markets Travis Edwards - Goldman Sachs Operator Good day ...

[Form 10-Q Filing Information](index=1&type=section&id=Form%2010-Q) [Filing Details](index=1&type=section&id=Filing%20Details) The document is a Form 10-Q quarterly report for Tronox Holdings PLC for the period ending June 30, 2020 - The report is a Quarterly Report on Form 10-Q for the period ended June 30, 2020[2](index=2&type=chunk) - Tronox Holdings PLC is registered in England and Wales[4](index=4&type=chunk) - Ordinary Shares are registered on the New York Stock Exchange under the trading symbol **TROX**[4](index=4&type=chunk) [Registrant Status](index=1&type=section&id=Registrant%20Status) Tronox Holdings PLC has filed all required reports, is a large accelerated filer, and is not a shell company - The Registrant has filed all required reports and Interactive Data Files during the preceding 12 months[5](index=5&type=chunk) Filer Type | Filer Type | Status | | :---------------------- | :----- | | Large accelerated filer | ☒ | | Accelerated filer | ☐ | | Non-accelerated filer | ☐ | | Smaller reporting company | ☐ | | Emerging growth company | ☐ | - The Registrant is not a shell company[5](index=5&type=chunk) - As of July 20, 2020, there were **143,519,623 ordinary shares outstanding**[6](index=6&type=chunk) [Table of Contents](index=3&type=section&id=Table%20of%20Contents) [PART I – FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements and accompanying notes for Tronox Holdings PLC [Unaudited Condensed Consolidated Statements of Operations](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) Condensed Consolidated Statements of Operations (Unaudited) - Three Months Ended June 30 | Metric (Millions of U.S. dollars) | 2020 | 2019 | | :-------------------------------- | :--- | :--- | | Net sales | $578 | $791 | | Gross profit | $129 | $100 | | Income (loss) from operations | $49 | $(13) | | Net (loss) income | $(4) | $(56) | | Net (loss) income attributable to Tronox Holdings plc | $(4) | $(62) | | Net (loss) income per share, basic | $(0.03) | $(0.41) | Condensed Consolidated Statements of Operations (Unaudited) - Six Months Ended June 30 | Metric (Millions of U.S. dollars) | 2020 | 2019 | | :-------------------------------- | :--- | :--- | | Net sales | $1,300 | $1,181 | | Gross profit | $304 | $183 | | Income (loss) from operations | $128 | $3 | | Net (loss) income | $36 | $(86) | | Net (loss) income attributable to Tronox Holdings plc | $28 | $(96) | | Net (loss) income per share, basic | $0.19 | $(0.69) | [Unaudited Condensed Consolidated Statements of Comprehensive Loss](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) Condensed Consolidated Statements of Comprehensive (Loss) Income (Unaudited) - Three Months Ended June 30 | Metric (Millions of U.S. dollars) | 2020 | 2019 | | :-------------------------------- | :--- | :--- | | Net income (loss) | $(4) | $(56) | | Other comprehensive (loss) income | $61 | $— | | Total comprehensive income (loss) | $57 | $(56) | | Comprehensive income (loss) attributable to Tronox Holdings plc | $57 | $(66) | Condensed Consolidated Statements of Comprehensive (Loss) Income (Unaudited) - Six Months Ended June 30 | Metric (Millions of U.S. dollars) | 2020 | 2019 | | :-------------------------------- | :--- | :--- | | Net income (loss) | $36 | $(86) | | Other comprehensive (loss) income | $(209) | $— | | Total comprehensive income (loss) | $(173) | $(86) | | Comprehensive income (loss) attributable to Tronox Holdings plc | $(134) | $(111) | [Unaudited Condensed Consolidated Balance Sheets](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets (Unaudited) | Metric (Millions of U.S. dollars) | June 30, 2020 | December 31, 2019 | | :-------------------------------- | :------------ | :---------------- | | **ASSETS** | | | | Cash and cash equivalents | $722 | $302 | | Total current assets | $2,507 | $2,073 | | Property, plant and equipment, net | $1,642 | $1,762 | | Total assets | $5,482 | $5,268 | | **LIABILITIES AND EQUITY** | | | | Total current liabilities | $727 | $702 | | Long-term debt, net | $3,427 | $2,988 | | Total liabilities | $4,754 | $4,352 | | Total equity | $728 | $916 | | Total liabilities and equity | $5,482 | $5,268 | [Unaudited Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows (Unaudited) - Six Months Ended June 30 | Metric (Millions of U.S. dollars) | 2020 | 2019 | | :-------------------------------- | :--- | :--- | | Cash provided by operating activities - continuing operations | $72 | $133 | | Cash used in investing activities - continuing operations | $(92) | $(991) | | Cash provided by (used in) financing activities - continuing operations | $466 | $(417) | | Net increase (decrease) in cash, cash equivalents and restricted cash | $438 | $(1,290) | | Cash, cash equivalents and restricted cash at end of period | $749 | $406 | [Unaudited Condensed Consolidated Statement of Shareholders' Equity](index=12&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Shareholders'%20Equity) Changes in Tronox Holdings plc Shareholders' Equity (Unaudited) - Six Months Ended June 30, 2020 | Metric (Millions of U.S. dollars) | Balance, Dec 31, 2019 | Net Income | Other Comprehensive (Loss) Income | Share-based Compensation | Shares Cancelled | Dividends Paid | Balance, Jun 30, 2020 | | :-------------------------------- | :-------------------- | :--------- | :-------------------------------- | :----------------------- | :--------------- | :------------- | :-------------------- | | Total Tronox Holdings plc Shareholders' Equity | $748 | $28 | $(162) | $11 | $(3) | $(20) | $602 | Changes in Tronox Holdings plc Shareholders' Equity (Unaudited) - Six Months Ended June 30, 2019 | Metric (Millions of U.S. dollars) | Balance, Dec 31, 2018 | Net (Loss) Income | Other Comprehensive (Loss) Income | Share-based Compensation | Shares Cancelled | Acquisition of Noncontrolling Interest | Shares Issued for Acquisition | Shares Repurchased and Cancelled | Dividends Paid | Balance, Jun 30, 2019 | | :-------------------------------- | :-------------------- | :---------------- | :-------------------------------- | :----------------------- | :--------------- | :------------------------------------- | :---------------------------- | :------------------------------- | :------------- | :-------------------- | | Total Tronox Holdings plc Shareholders' Equity | $683 | $(96) | $(15) | $15 | $(6) | $(148) | $526 | $(257) | $(13) | $779 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=14&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) [Note 1. The Company](index=14&type=section&id=Note%201.%20The%20Company) - Tronox operates titanium-bearing mineral sand mines and smelter operations in Australia, South Africa, and Brazil, producing feedstock for **TiO2 pigment**, high purity titanium chemicals, and Ultrafine© titanium dioxide[24](index=24&type=chunk) - The company's strategic goal is **vertical integration**, aiming to consume all feedstock in its nine TiO2 pigment facilities globally[24](index=24&type=chunk) - Tronox re-domiciled to the United Kingdom in March 2019, with Tronox Limited becoming a wholly-owned subsidiary[25](index=25&type=chunk) - The acquisition of Cristal's TiO2 business on April 10, 2019, **doubled the company's size** and expanded its TiO2 pigment facilities from three to nine[25](index=25&type=chunk) - The financial statements are unaudited and prepared under U.S. GAAP, reflecting all normal recurring adjustments[26](index=26&type=chunk)[28](index=28&type=chunk) - The Cristal acquisition impacts the comparability of financial statements between 2019 and 2020[27](index=27&type=chunk) - The company adopted ASU 2018-13 (Fair Value Measurement) and ASU 2016-13 (Credit Losses) on January 1, 2020, with **immaterial impact**[30](index=30&type=chunk)[31](index=31&type=chunk) - The company is evaluating the impact of ASU 2020-04 (Reference Rate Reform) issued in Q1 2020[32](index=32&type=chunk) [Note 2. Acquisitions and Related Divestitures](index=15&type=section&id=Note%202.%20Acquisitions%20and%20Related%20Divestitures) - In May 2020, Tronox signed an agreement to acquire Tizir Titanium and Iron (TTI) for approximately **$300 million in cash**, plus 3% per annum accrual from January 1, 2020[33](index=33&type=chunk) - A **$18 million termination fee** was placed in escrow for the TTI acquisition, reflected in 'Restricted cash' at June 30, 2020[34](index=34&type=chunk) - The Cristal acquisition was completed on April 10, 2019, for **$1.675 billion cash** and 37,580,000 ordinary shares (totaling approximately $2.2 billion)[36](index=36&type=chunk) - Cristal's North American TiO2 business was divested to INEOS in May 2019 for **$701 million** (net of transaction costs) to obtain regulatory approval[37](index=37&type=chunk) - The 8120 paper laminate grade from the Botlek facility was divested to Venator Materials PLC for 8 million Euros, with a **$19 million contract loss** recorded in Q2 2019[39](index=39&type=chunk) - The purchase price allocation for Cristal was finalized in Q1 2020, resulting in minor adjustments to environmental liabilities, PPE, noncontrolling interest, deferred taxes, and inventory[43](index=43&type=chunk) Cristal Acquisition Purchase Price Consideration (April 10, 2019) | Item | Amount (Millions of U.S. dollars) | | :----------------------------------- | :------------------------------ | | Total fair value of Tronox Holdings plc shares issued | $526 | | Cash consideration paid | $1,675 | | **Total purchase price** | **$2,201** | Cristal Acquisition Fair Value of Net Assets Acquired (April 10, 2019) | Item | Fair Value (Millions of U.S. dollars) | | :----------------------------------- | :------------------------------ | | Total assets acquired | $2,923 | | Total liabilities assumed | $674 | | Less noncontrolling interest | $48 | | **Purchase price** | **$2,201** | - For the three and six months ended June 30, 2019, the acquired Cristal business contributed **$353 million in revenue** and **$(48) million in operating income**[48](index=48&type=chunk) Supplemental Pro Forma Financial Information (Six Months Ended June 30, 2019) | Metric (Millions of U.S. dollars) | 2019 | | :-------------------------------- | :--- | | Net sales | $1,547 | | Net income from continuing operations attributable to Tronox Holdings plc | $3 | [Note 3. Restructuring Initiatives](index=19&type=section&id=Note%203.%20Restructuring%20Initiatives) - Restructuring costs of **$2 million** were recorded for the six months ended June 30, 2020, primarily for employee-related costs[52](index=52&type=chunk) - Restructuring costs of **$10 million** were recorded for both the three and six months ended June 30, 2019, following the Cristal acquisition[52](index=52&type=chunk) Restructuring Liability Balance (Millions of U.S. dollars) | Metric | December 31, 2019 | March 31, 2020 | June 30, 2020 | | :-------------------- | :---------------- | :------------- | :------------ | | Balance | $10 | $9 | $4 | [Note 4. Revenue](index=19&type=section&id=Note%204.%20Revenue) - Revenue is recognized when the customer obtains control of the promised products, typically at shipment or a specified destination[54](index=54&type=chunk) - The company operates under one operating and reportable segment: **TiO2**[57](index=57&type=chunk) Net Sales by Geographic Area (Millions of U.S. dollars) | Geographic Area | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :---------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | North America | $154 | $180 | $332 | $318 | | South and Central America | $21 | $48 | $61 | $61 | | Europe, Middle-East and Africa | $201 | $316 | $493 | $446 | | Asia Pacific | $202 | $247 | $414 | $356 | | **Total net sales** | **$578** | **$791** | **$1,300** | **$1,181** | Net Sales by Product Type (Millions of U.S. dollars) | Product Type | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | TiO2 | $466 | $625 | $1,046 | $902 | | Zircon | $68 | $88 | $133 | $152 | | Feedstock and other products | $44 | $78 | $121 | $127 | | **Total net sales** | **$578** | **$791** | **$1,300** | **$1,181** | - The ten largest third-party TiO2 customers represented **33%** and **31%** of consolidated net sales for the six months ended June 30, 2020 and 2019, respectively[59](index=59&type=chunk) [Note 5. Discontinued Operations](index=20&type=section&id=Note%205.%20Discontinued%20Operations) - Cristal's North American TiO2 business was divested on May 1, 2019, for **$701 million cash**, with operating results included in 'Net income (loss) from discontinued operations, net of tax'[60](index=60&type=chunk) Summary of Discontinued Operations (Three and Six Months Ended June 30, 2019) | Metric (Millions of U.S. dollars) | 2019 | | :-------------------------------- | :--- | | Net sales | $41 | | Gross profit | $12 | | Income before income taxes | $9 | | Net loss from discontinued operations, net of tax | $(1) | [Note 6. Income Taxes](index=22&type=section&id=Note%206.%20Income%20Taxes) Income Tax (Provision) Benefit and Effective Tax Rate | Metric | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Income tax (provision) benefit | $(10) | $4 | $(16) | $2 | | Income (loss) from continuing operations before income taxes | $6 | $(59) | $52 | $(87) | | Effective tax rate | 167% | (7)% | 31% | (2)% | - The statutory tax rate in the U.K. was **19%** at June 30, 2020 and 2019[64](index=64&type=chunk) - Effective tax rates are influenced by income/losses in jurisdictions with full valuation allowances, disallowable expenditures, restructuring impacts, and jurisdictional mix of income at varying tax rates[64](index=64&type=chunk) - Full valuation allowances are maintained against net deferred tax assets in Australia, Belgium, Brazil, Switzerland, and the U.S., and against specific tax assets in the Netherlands, South Africa, and the U.K[66](index=66&type=chunk) - A full valuation allowance of **$2 million** was recorded against deferred tax assets in Saudi Arabia during Q2 2020[67](index=67&type=chunk) - The company's ability to use U.S. loss and expense carryforwards could be limited by an ownership change under IRC Section 382, potentially impacting up to **$5.5 billion**[68](index=68&type=chunk) - The Australian Taxation Office commenced a tax audit for pre-Cristal Transaction periods, with Cristal obligated to indemnify Tronox for related tax liabilities[70](index=70&type=chunk) [Note 7. Income (Loss) Per Share](index=24&type=section&id=Note%207.%20Income%20(Loss)%20Per%20Share) Net Income (Loss) Per Share (Unaudited) | Metric | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) available to ordinary shares | $(4) | $(62) | $28 | $(96) | | Weighted-average ordinary shares, basic (in thousands) | 143,465 | 150,686 | 143,080 | 137,569 | | Basic net income (loss) operations per ordinary share | $(0.03) | $(0.41) | $0.19 | $(0.69) | | Diluted net income (loss) operations per ordinary share | $(0.03) | $(0.41) | $0.19 | $(0.69) | Anti-Dilutive Shares Not Recognized (in thousands) | Item | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :---------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Options | 1,208,055 | 1,269,443 | 1,208,055 | 1,269,443 | | Restricted share units | 6,831,965 | 5,206,611 | 6,831,965 | 5,206,611 | [Note 8. Inventories, Net](index=25&type=section&id=Note%208.%20Inventories,%20Net) Inventories, Net (Millions of U.S. dollars) | Category | June 30, 2020 | December 31, 2019 | | :-------------------- | :------------ | :---------------- | | Raw materials | $172 | $205 | | Work-in-process | $109 | $129 | | Finished goods, net | $677 | $573 | | Materials and supplies, net | $216 | $224 | | **Inventories, net – current** | **$1,174** | **$1,131** | - Inventory obsolescence reserves were **$43 million** at June 30, 2020, up from $39 million at December 31, 2019[76](index=76&type=chunk) - Reserves for lower of cost or market and net realizable value were **$21 million** at June 30, 2020, down from $25 million at December 31, 2019[76](index=76&type=chunk) [Note 9. Property, Plant and Equipment, Net](index=25&type=section&id=Note%209.%20Property,%20Plant%20and%20Equipment,%20Net) Property, Plant and Equipment, Net (Millions of U.S. dollars) | Category | June 30, 2020 | December 31, 2019 | | :-------------------- | :------------ | :---------------- | | Land and land improvements | $177 | $191 | | Buildings | $327 | $340 | | Machinery and equipment | $1,934 | $2,028 | | Construction-in-progress | $174 | $156 | | Other | $57 | $54 | | Subtotal | $2,669 | $2,769 | | Less: accumulated depreciation | $(1,027) | $(1,007) | | **Property, plant and equipment, net** | **$1,642** | **$1,762** | - The decline in PPE, net from December 31, 2019, to June 30, 2020, is primarily due to **foreign currency translation impacts** from the devaluation of the South African rand and Brazilian real[77](index=77&type=chunk) - Substantially all PPE, net is pledged as collateral for debt[78](index=78&type=chunk) Depreciation Expense (Millions of U.S. dollars) | Line Item | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Cost of goods sold | $52 | $58 | $109 | $90 | | Selling, general and administrative expenses | $1 | $1 | $3 | $2 | | **Total** | **$53** | **$59** | **$112** | **$92** | [Note 10. Mineral Leaseholds, Net](index=27&type=section&id=Note%2010.%20Mineral%20Leaseholds,%20Net) Mineral Leaseholds, Net (Millions of U.S. dollars) | Category | June 30, 2020 | December 31, 2019 | | :-------------------- | :------------ | :---------------- | | Mineral leaseholds | $1,301 | $1,352 | | Less: accumulated depletion | $(523) | $(500) | | **Mineral leaseholds, net** | **$778** | **$852** | - The decline in mineral leaseholds, net is primarily due to **foreign currency translation** from the devaluation of the South African rand[79](index=79&type=chunk) - Depletion expense was **$12 million** (Q2 2020) and **$14 million** (YTD Q2 2020), recorded in 'Cost of goods sold'[79](index=79&type=chunk) [Note 11. Intangible Assets, Net](index=27&type=section&id=Note%2011.%20Intangible%20Assets,%20Net) Intangible Assets, Net (Millions of U.S. dollars) | Category | June 30, 2020 Net Carrying Amount | December 31, 2019 Net Carrying Amount | | :-------------------- | :-------------------------------- | :------------------------------------ | | Customer relationships | $108 | $118 | | TiO2 technology | $73 | $75 | | Internal-use software | $14 | $15 | | **Intangible assets, net** | **$195** | **$208** | Amortization Expense (Millions of U.S. dollars) | Line Item | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Cost of goods sold | $— | $1 | $1 | $1 | | Selling, general and administrative expenses | $7 | $7 | $16 | $13 | | **Total** | **$7** | **$8** | **$17** | **$14** | - Estimated future amortization expense for intangible assets is **$16 million** for the remainder of 2020, **$31 million** for 2021, **$29 million** for 2022, **$27 million** for 2023, **$26 million** for 2024, and **$66 million** thereafter[80](index=80&type=chunk) [Note 12. Balance Sheet and Cash Flow Supplemental Information](index=28&type=section&id=Note%2012.%20Balance%20Sheet%20and%20Cash%20Flow%20Supplemental%20Information) Accrued Liabilities (Millions of U.S. dollars) | Category | June 30, 2020 | December 31, 2019 | | :-------------------- | :------------ | :---------------- | | Employee-related costs and benefits | $98 | $103 | | Interest | $21 | $16 | | Sales rebates | $28 | $39 | | Restructuring | $4 | $10 | | Interest rate swaps | $62 | $22 | | Currency contracts | $10 | $— | | Professional fees and other | $52 | $60 | | **Accrued liabilities** | **$305** | **$283** | Supplemental Non-Cash Information (Six Months Ended June 30) | Item | 2020 | 2019 | | :-------------------------------- | :--- | :--- | | Investing activities- shares issued in the Cristal acquisition | $— | $526 | | Financing activities- debt assumed in the Cristal acquisition | $— | $22 | [Note 13. Debt](index=29&type=section&id=Note%2013.%20Debt) Long-Term Debt, Net (Millions of U.S. dollars) | Debt Instrument | June 30, 2020 | December 31, 2019 | | :-------------------------------- | :------------ | :---------------- | | Term Loan Facility, net | $1,806 | $1,805 | | Senior Notes due 2025 | $450 | $450 | | Senior Notes due 2026 | $615 | $615 | | 6.5% Senior Secured Notes due 2025 | $500 | $— | | Standard Bank Term Loan Facility | $112 | $158 | | Tikon Loan | $16 | $16 | | Finance leases | $12 | $15 | | **Long-term debt, net** | **$3,427** | **$2,988** | - On May 1, 2020, Tronox Incorporated issued **$500 million** of 6.5% senior secured notes due 2025, with proceeds used to repay **$200 million** of outstanding revolver borrowings[84](index=84&type=chunk) Short-Term Debt (Millions of U.S. dollars) | Debt Instrument | June 30, 2020 | December 31, 2019 | | :---------------- | :------------ | :---------------- | | SABB Credit Facility | $13 | $— | | **Short-term debt** | **$13** | **$—** | - The company was in compliance with all financial covenants in its debt facilities at June 30, 2020[86](index=86&type=chunk) - In March 2020, the company drew down **$200 million** from its Wells Fargo, Standard Bank, and Emirates revolvers for liquidity, which was repaid in May 2020[87](index=87&type=chunk) [Note 14. Derivative Financial Instruments](index=30&type=section&id=Note%2014.%20Derivative%20Financial%20Instruments) Fair Value of Derivatives Outstanding (Millions of U.S. dollars) | Category | June 30, 2020 Assets | June 30, 2020 Liabilities | December 31, 2019 Assets | December 31, 2019 Liabilities | | :-------------------------------- | :------------------- | :---------------------- | :----------------------- | :-------------------------- | | Currency Contracts (Cash Flow Hedges) | $33 | $6 | $30 | $— | | Interest Rate Swaps (Cash Flow Hedges) | $— | $62 | $— | $22 | | Currency Contracts (Not Designated) | $1 | $4 | $7 | $— | | **Total Derivatives** | **$34** | **$72** | **$37** | **$22** | Derivatives' Impact on Condensed Consolidated Statement of Operations (Pre-Tax Gain (Loss)) | Category | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2020 | | :-------------------------------- | :------------------------------- | :----------------------------- | | Currency Contracts (Not Designated) | $8 (Other Income, net) | $(8) (Other Income, net) | | Currency Contracts (Cash Flow Hedges) | $(5) (Cost of Goods Sold), $(1) (Other Income, net) | $(6) (Cost of Goods Sold), $(5) (Other Income, net) | - Interest rate swap agreements with a notional value of **$750 million** convert variable rates to fixed rates for a portion of the Term Loan Facility, expiring in September 2024[91](index=91&type=chunk) - Foreign currency contracts hedge forecasted non-functional currency sales for South African subsidiaries and cost of goods sold for Australian subsidiaries, designated as cash flow hedges[93](index=93&type=chunk) - As of June 30, 2020, notional amounts for foreign currency cash flow hedges included **1.4 billion South African rand ($81 million)** and **$507 million Australian dollars ($349 million)**[94](index=94&type=chunk) [Note 15. Fair Value](index=33&type=section&id=Note%2015.%20Fair%20Value) - Fair value is defined as the price to sell an asset or transfer a liability in an orderly transaction, categorized into Level 1 (quoted prices), Level 2 (observable inputs), and Level 3 (unobservable inputs)[96](index=96&type=chunk) Fair Value of Debt and Derivative Contracts (Millions of U.S. dollars) | Item | June 30, 2020 | December 31, 2019 | | :-------------------------------- | :------------ | :---------------- | | Term Loan Facility | $1,740 | $1,820 | | Senior Notes due 2025 | $418 | $459 | | Senior Notes due 2026 | $576 | $636 | | 6.5% Senior Secured Notes due 2025 | $507 | $— | | Interest rate swaps | $62 | $22 | | Foreign currency contracts, net | $24 | $37 | - Fair values for Term Loan Facility, Senior Notes, and 6.5% Senior Secured Notes are determined using **Level 1 inputs** (quoted market prices)[96](index=96&type=chunk) - Fair values for Standard Bank Term Loan, Tikon Loan, Australian Government Loan, foreign currency contracts, and interest rate swaps are determined using **Level 2 inputs** (observable inputs other than quoted prices)[96](index=96&type=chunk)[97](index=97&type=chunk) [Note 16. Asset Retirement Obligations](index=34&type=section&id=Note%2016.%20Asset%20Retirement%20Obligations) - Asset retirement obligations (AROs) primarily cover rehabilitation, restoration, landfill capping, and decommissioning costs[99](index=99&type=chunk) Asset Retirement Obligations (Millions of U.S. dollars) | Metric | June 30, 2020 | December 31, 2019 | | :-------------------------------- | :------------ | :---------------- | | Current portion included in "Accrued liabilities" | $10 | $16 | | Noncurrent portion included in "Asset retirement obligations" | $145 | $142 | | **Asset retirement obligations** | **$155** | **$158** | Changes in Asset Retirement Obligations (Six Months Ended June 30) | Metric | 2020 | 2019 | | :-------------------- | :--- | :--- | | Beginning balance | $158 | $74 | | Accretion expense | $5 | $4 | | Remeasurement/translation | $(9) | $— | | Settlements/payments | $(3) | $(1) | | Transferred in with the acquisition of Cristal | $— | $94 | | **Balance, June 30** | **$155** | **$174** | [Note 17. Commitments and Contingencies](index=35&type=section&id=Note%2017.%20Commitments%20and%20Contingencies) Purchase Commitments (Millions of U.S. dollars) | Year | Amount | | :----- | :----- | | 2020 | $117 | | 2021 | $83 | | 2022 | $67 | | 2023 | $54 | | 2024 | $48 | | Thereafter | $177 | - Outstanding letters of credit and bank guarantees totaled **$73 million** at June 30, 2020 ($34 million letters of credit, $39 million bank guarantees)[102](index=102&type=chunk) - A provision of **$61 million** has been made for remediation of the Hawkins Point Plant, assumed with the Cristal acquisition[103](index=103&type=chunk) - The company is involved in a lawsuit with Venator Materials plc regarding a **$75 million 'Break Fee'** and Tronox's counterclaim for **$400 million in damages** related to the Cristal divestiture[104](index=104&type=chunk) [Note 18. Accumulated Other Comprehensive Loss Attributable to Tronox Holdings plc](index=36&type=section&id=Note%2018.%20Accumulated%20Other%20Comprehensive%20Loss%20Attributable%20to%20Tronox%20Holdings%20plc) Changes in Accumulated Other Comprehensive Loss (Millions of U.S. dollars) - Three Months Ended June 30, 2020 | Component | Balance, March 31, 2020 | Other Comprehensive Income (Loss) | Reclassified Amounts | Balance, June 30, 2020 | | :-------------------- | :---------------------- | :-------------------------------- | :------------------- | :--------------------- | | Cumulative Translation Adjustment | $(644) | $16 | $— | $(628) | | Pension Liability Adjustment | $(103) | $(2) | $1 | $(104) | | Unrealized Gains (Losses) on Hedges | $(82) | $40 | $6 | $(36) | | **Total** | **$(829)** | **$54** | **$7** | **$(768)** | Changes in Accumulated Other Comprehensive Loss (Millions of U.S. dollars) - Six Months Ended June 30, 2020 | Component | Balance, January 1, 2020 | Other Comprehensive Loss | Reclassified Amounts | Balance, June 30, 2020 | | :-------------------- | :----------------------- | :----------------------- | :------------------- | :--------------------- | | Cumulative Translation Adjustment | $(503) | $(125) | $— | $(628) | | Pension Liability Adjustment | $(104) | $(2) | $2 | $(104) | | Unrealized Gains (Losses) on Hedges | $1 | $(48) | $11 | $(36) | | **Total** | **$(606)** | **$(175)** | **$13** | **$(768)** | [Note 19. Share-Based Compensation](index=37&type=section&id=Note%2019.%20Share-Based%20Compensation) - The maximum number of shares for awards under the MEIP was increased by **8,000,000** to **20,781,225 ordinary shares** on June 24, 2020[110](index=110&type=chunk) - In Q1 and Q2 2020, **1,591,511 time-based RSUs** were granted to management (vesting over three years) and **183,374** to Board members[111](index=111&type=chunk) - **1,501,092 performance-based RSUs** were granted in 2020, half vesting based on relative Total Shareholder Return (TSR) and half on company performance metrics (ORONA)[111](index=111&type=chunk) - Unrecognized compensation cost for unvested awards was **$47 million** at June 30, 2020, expected to be recognized over approximately **1.8 years**[112](index=112&type=chunk) - Stock compensation expense was **$2 million** (Q2 2020) and **$11 million** (YTD Q2 2020), including a **$6 million credit** for 2018 performance grants reversal[113](index=113&type=chunk) [Note 20. Pension and Other Postretirement Healthcare Benefits](index=38&type=section&id=Note%2020.%20Pension%20and%20Other%20Postretirement%20Healthcare%20Benefits) Net Periodic Pension Cost (Millions of U.S. dollars) | Component | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Service cost | $2 | $1 | $3 | $1 | | Interest cost | $4 | $6 | $9 | $9 | | Expected return on plan assets | $(5) | $(7) | $(11) | $(10) | | Net amortization of actuarial loss and prior service credit | $1 | $1 | $2 | $1 | | **Total net periodic cost** | **$2** | **$1** | **$3** | **$1** | - Estimated 2020 required contributions to pension plans are **$16 million**, with **$8 million** made through June 30, 2020[116](index=116&type=chunk) [Note 21. Related Parties](index=38&type=section&id=Note%2021.%20Related%20Parties) - Exxaro sold **14 million shares** to Tronox for approximately **$200 million** in May 2019, which were subsequently cancelled[118](index=118&type=chunk) - Tronox completed the redemption of Exxaro's 26% ownership interest in Tronox Sands LLP for approximately **$148 million in cash** in February 2019[119](index=119&type=chunk) - At June 30, 2020, Exxaro still owns approximately **14.7 million shares (10.3% ownership)** of Tronox and a 26% interest in South African operating subsidiaries[120](index=120&type=chunk) - Cristal International Holdings B.V. (a Tasnee subsidiary) owns **37,580,000 shares (26% ownership)** of Tronox at June 30, 2020[121](index=121&type=chunk) - Tronox loaned AMIC **$101 million** for capital expenditures and operational expenses to facilitate the startup of the Jazan Slagger, recorded in 'Other long-term assets'[122](index=122&type=chunk) - An amendment to the Option Agreement in May 2020 gives Tronox the right to acquire 90% of the SPV (Slagger) in exchange for forgiving the Tronox Loan[123](index=123&type=chunk) - Tronox provides technical advice and project management services for the Slagger, receiving a monthly management fee of approximately **$1 million**[125](index=125&type=chunk) - Tronox recorded a net reduction of approximately **$1 million** in 'Selling, general and administrative expenses' for both the three and six months ended June 30, 2020, related to the transition services agreement with Tasnee/Cristal[127](index=127&type=chunk) - Tronox entered an agreement to acquire certain assets co-located at its Yanbu facility (MGT) from Cristal, assuming a **$36 million note payable**[128](index=128&type=chunk) - MGT sales to AMIC were **$7 million** (Q2 2020) and **$13 million** (YTD Q2 2020), recorded in 'Net sales'[129](index=129&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=41&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Tronox's financial condition and operating results for the three and six months ended June 30, 2020 [Overview](index=41&type=section&id=Overview) - Tronox operates titanium-bearing mineral sand mines and smelter operations globally, aiming for **vertical integration** to produce low-cost, high-quality TiO2 pigment[133](index=133&type=chunk) - The company re-domiciled to the UK in March 2019 and completed the acquisition of Cristal's TiO2 business on April 10, 2019, significantly expanding its operations[134](index=134&type=chunk) [Tronox Synergy Savings Program](index=41&type=section&id=Tronox%20Synergy%20Savings%20Program) - The Cristal Transaction aimed to achieve approximately **$220 million in synergies by 2022** through operational enhancements, feedstock initiatives, supply chain savings, and SG&A reductions[135](index=135&type=chunk)[143](index=143&type=chunk) - Restructuring costs of **$24 million** were incurred for employee-related costs from the Cristal Transaction through June 30, 2020[137](index=137&type=chunk) - Total synergies of **$107 million** were delivered during the six months ended June 30, 2020, with **$84 million** reflected in EBITDA[138](index=138&type=chunk) - Synergy targets are **$190 million** for 2020, **$275 million** for 2021, and **$325 million** for 2022[138](index=138&type=chunk) [Business Environment](index=42&type=section&id=Business%20Environment) - Operations were designated as essential during the COVID-19 pandemic[139](index=139&type=chunk) - Q2 2020 revenue **decreased 20% sequentially** due to lower TiO2 volumes, in line with expectations from global GDP decline[140](index=140&type=chunk) - TiO2 selling prices remained flat sequentially, with resilient demand in North American DIY coatings and packaging, but slower demand in South America and India[140](index=140&type=chunk) - Gross margin declined sequentially in Q2 2020 due to unfavorable volume, mix, and cost structures in South Africa (COVID-19 lockdown impacts), partially offset by favorable foreign currency[141](index=141&type=chunk) - Total available liquidity was **$1,123 million** at June 30, 2020, including **$722 million in cash** and **$401 million** available under revolving credit agreements[142](index=142&type=chunk) - Total debt was **$3.5 billion**, with net debt to trailing-twelve month Adjusted EBITDA (pro forma for Cristal) at **4.2x**[142](index=142&type=chunk) [Pro Forma Income Statement Information](index=43&type=section&id=Pro%20Forma%20Income%20Statement%20Information) - Pro forma information is provided to assist with comparability of 2020 and 2019 results, assuming the Cristal merger and related divestitures occurred on January 1, 2018[144](index=144&type=chunk) - Pro forma adjustments include conforming accounting policies, IFRS to U.S. GAAP conversion, elimination of intercompany transactions, incremental expenses from purchase accounting, contract loss recognition, transaction costs, interest expense effects, and related tax/EPS impacts[49](index=49&type=chunk) - The pro forma information does not include the impact of revenue, cost, or other operating synergies prior to the acquisition or related restructuring costs[145](index=145&type=chunk) [Condensed Consolidated Results of Operations from Continuing Operations (Three Months Ended June 30, 2020 compared to the Three Months Ended June 30, 2019)](index=44&type=section&id=Condensed%20Consolidated%20Results%20of%20Operations%20from%20Continuing%20Operations%20(Three%20Months%20Ended%20June%2030,%202020%20compared%20to%20the%20Three%20Months%20Ended%20June%2030,%202019)) Reported Financial Performance (Three Months Ended June 30) | Metric (Millions of U.S. dollars) | 2020 | 2019 | Variance | | :-------------------------------- | :--- | :--- | :------- | | Net sales | $578 | $791 | $(213) | | Gross profit | $129 | $100 | $29 | | Gross Margin | 22% | 13% | 9 pts | | Income (loss) from operations | $49 | $(13) | $62 | | Net (loss) income from continuing operations | $(4) | $(55) | $51 | | Effective tax rate | 167% | (7)% | | | EBITDA | $123 | $76 | $47 | | Adjusted EBITDA | $142 | $195 | $(53) | | Adjusted EBITDA as % of Net Sales | 25% | 25% | 0 pts | Pro Forma Financial Performance (Three Months Ended June 30) | Metric (Millions of U.S. dollars) | 2020 | 2019 | Variance | | :-------------------------------- | :--- | :--- | :------- | | Net sales | $578 | $827 | $(249) | | Gross profit | $129 | $179 | $(50) | | Gross Margin | 22% | 22% | 0 pts | | Income (loss) from operations | $49 | $84 | $(35) | | Net (loss) income from continuing operations | $(4) | $32 | $(36) | | Effective tax rate | 167% | 16% | | | EBITDA | $123 | $176 | $(53) | | Adjusted EBITDA | $142 | $200 | $(58) | | Adjusted EBITDA as % of Net Sales | 25% | 24% | 1 pts | - Reported net sales **decreased by 27% ($213 million)** due to lower TiO2 and Zircon sales volumes (COVID-19 impact) and lower Zircon average selling prices[149](index=149&type=chunk) - Reported TiO2 revenue **decreased 25% ($159 million)**, primarily due to a **$169 million decrease in sales volumes** and a **$7 million decrease in average selling prices**[151](index=151&type=chunk) - Reported gross margin **increased from 13% to 22%** of net sales, driven by the favorable impact of inventory step-up amortization (8 pts), Cristal synergies (4 pts), and contract loss recognition (3 pts)[153](index=153&type=chunk) - Selling, general and administrative expenses **decreased by $23 million (22%)** due to lower professional services, travel, and employee costs[154](index=154&type=chunk) - Reported income from operations **increased by $62 million to $49 million**, driven by higher gross margin and lower SG&A[156](index=156&type=chunk) - Interest expense **decreased by $7 million** due to lower average debt and interest rates[159](index=159&type=chunk) - The effective tax rate was **167% in Q2 2020**, influenced by valuation allowances and jurisdictional income mix[163](index=163&type=chunk) [Condensed Consolidated Results of Operations from Continuing Operations (Six Months Ended June 30, 2020 compared to the Six Months Ended June 30, 2019)](index=50&type=section&id=Condensed%20Consolidated%20Results%20of%20Operations%20from%20Continuing%20Operations%20(Six%20Months%20Ended%20June%2030,%202020%20compared%20to%20the%20Six%20Months%20Ended%20June%2030,%202019)) Reported Financial Performance (Six Months Ended June 30) | Metric (Millions of U.S. dollars) | 2020 | 2019 | Variance | | :-------------------------------- | :--- | :--- | :------- | | Net sales | $1,300 | $1,181 | $119 | | Gross profit | $304 | $183 | $121 | | Gross Margin | 23% | 15% | 8 pts | | Income from operations | $128 | $3 | $125 | | Net (loss) income from continuing operations | $36 | $(85) | $121 | | Effective tax rate | 31% | (2)% | | | EBITDA | $282 | $135 | $147 | | Adjusted EBITDA | $315 | $275 | $40 | | Adjusted EBITDA as % of Net Sales | 24% | 23% | 1 pts | Pro Forma Financial Performance (Six Months Ended June 30) | Metric (Millions of U.S. dollars) | 2020 | 2019 | Variance | | :-------------------------------- | :--- | :--- | :------- | | Net sales | $1,300 | $1,547 | $(247) | | Gross profit | $304 | $320 | $(16) | | Gross Margin | 23% | 21% | 2 pts | | Income from operations | $128 | $130 | $(2) | | Net (loss) income from continuing operations | $36 | $14 | $22 | | Effective tax rate | 31% | 48% | | | EBITDA | $282 | $304 | $(22) | | Adjusted EBITDA | $315 | $341 | $(26) | | Adjusted EBITDA as % of Net Sales | 24% | 22% | 2 pts | - Reported net sales **increased by 10% ($119 million)**, including **$352 million** from Cristal operations in Q1 2020 and early April 2020[167](index=167&type=chunk) - Excluding Cristal revenue, reported revenue **decreased 20%** due to lower TiO2 and Zircon sales volumes (COVID-19 impact) and lower Zircon average selling prices[167](index=167&type=chunk) - Reported gross margin **increased from 15% to 23%** of net sales, driven by Cristal synergies (4 pts), inventory step-up amortization (4 pts), and contract loss recognition (2 pts)[170](index=170&type=chunk) - Reported income from operations **increased by $125 million to $128 million**, primarily due to higher gross margin and lower restructuring charges[172](index=172&type=chunk) - Interest expense **decreased by $11 million (reported)** and **$17 million (pro forma)** due to lower average debt and interest rates[176](index=176&type=chunk) - The effective tax rate was **31% in YTD Q2 2020**, influenced by valuation allowances and jurisdictional income mix[180](index=180&type=chunk) [Other Comprehensive (Loss) Income](index=53&type=section&id=Other%20Comprehensive%20(Loss)%20Income) - Other comprehensive income was **$61 million** for Q2 2020, compared to none in Q2 2019, primarily due to **$46 million in gains on derivative instruments**[181](index=181&type=chunk) - Other comprehensive loss was **$209 million** for YTD Q2 2020, compared to none in YTD Q2 2019, primarily due to unfavorable foreign currency translation adjustments of **$172 million**[182](index=182&type=chunk) [Liquidity and Capital Resources](index=54&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity (Millions of U.S. dollars) | Item | June 30, 2020 | December 31, 2019 | | :-------------------------------- | :------------ | :---------------- | | Cash and cash equivalents | $722 | $302 | | Available under Wells Fargo Revolver | $288 | $209 | | Available under Standard Credit Facility | $58 | $72 | | Available under Emirates Revolver | $50 | $46 | | Available under SABB Facility | $5 | $19 | | **Total** | **$1,123** | **$648** | - The company expects operations and available borrowings to provide sufficient cash for operating expenses, capital expenditures, interest, and debt repayments over the next twelve months[184](index=184&type=chunk) - Working capital increased to **$1.8 billion** at June 30, 2020, from **$1.4 billion** at December 31, 2019[185](index=185&type=chunk) - Non-guarantor subsidiaries represented approximately **15% of total consolidated liabilities** and **31% of total consolidated assets** at June 30, 2020[186](index=186&type=chunk) - Outstanding letters of credit and bank guarantees totaled **$73 million** at June 30, 2020[187](index=187&type=chunk) - Credit ratings changed from **B1 positive to B1 stable (Moody's)** and **B stable to B negative (S&P)** from December 31, 2019, to June 30, 2020[189](index=189&type=chunk) - At June 30, 2020, **$722 million in cash and cash equivalents** were held across various jurisdictions, with **$442 million in the United States**[192](index=192&type=chunk) - The company has made no provision for deferred taxes on undistributed foreign earnings, considering them indefinitely reinvested[193](index=193&type=chunk) - Net debt was **$2.7 billion** at both June 30, 2020, and December 31, 2019[195](index=195&type=chunk) - The acquisition of Tizir Titanium and Iron (TTI) for approximately **$300 million in cash** is anticipated to close before May 13, 2021[197](index=197&type=chunk) [Cash Flows](index=56&type=section&id=Cash%20Flows) Cash Flow from Continuing Operations (Six Months Ended June 30) | Activity (Millions of U.S. dollars) | 2020 | 2019 | | :-------------------------------- | :--- | :--- | | Cash provided by operating activities | $72 | $133 | | Cash used in investing activities | $(92) | $(991) | | Cash provided by (used in) financing activities | $466 | $(417) | | Net increase (decrease) in cash, cash equivalents and restricted cash | $438 | $(1,290) | - Net cash provided by operating activities **decreased to $72 million from $133 million**, primarily due to higher use of cash from working capital, particularly for inventories[198](index=198&type=chunk) - Net cash used in investing activities **decreased significantly to $92 million from $991 million**, mainly due to the Cristal acquisition in the prior year and proceeds from the Ashtabula sale[199](index=199&type=chunk) - Net cash provided by financing activities was **$466 million**, compared to **$417 million used** in the prior year, driven by **$500 million** from new senior secured notes issuance[200](index=200&type=chunk) [Contractual Obligations](index=58&type=section&id=Contractual%20Obligations) Contractual Obligations as of June 30, 2020 (Millions of U.S. dollars) | Obligation | Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | | :-------------------------------- | :---- | :--------------- | :-------- | :-------- | :---------------- | | Long-term debt, net and lease financing (including interest) | $4,389 | $243 | $409 | $2,619 | $1,118 | | Purchase obligations | $545 | $158 | $135 | $94 | $158 | | Operating leases | $97 | $41 | $39 | $10 | $7 | | Asset retirement obligations | $410 | $20 | $68 | $37 | $285 | | **Total** | **$5,441** | **$462** | **$651** | **$2,760** | **$1,568** | [Non-U.S. GAAP Financial Measures](index=58&type=section&id=Non-U.S.%20GAAP%20Financial%20Measures) - **EBITDA** is defined as net income (loss) excluding income taxes, interest expense, interest income, and depreciation, depletion, and amortization[202](index=202&type=chunk) - **Adjusted EBITDA** further excludes nonrecurring items (restructuring, debt extinguishments, impairments, acquisition costs, purchase accounting adjustments, pension settlements) and non-cash items (share-based compensation, pension/postretirement costs, foreign currency remeasurement gains/losses)[202](index=202&type=chunk) - Management uses EBITDA and Adjusted EBITDA for planning, budgeting, evaluating performance, and determining incentive compensation[204](index=204&type=chunk) Reconciliation of Net (Loss) Income to EBITDA and Adjusted EBITDA (Three Months Ended June 30) | Metric (Millions of U.S. dollars) | 2020 | 2019 | | :-------------------------------- | :--- | :--- | | Net (loss) income (U.S. GAAP) | $(4) | $(56) | | Net (loss) income from continuing operations (U.S. GAAP) | $(4) | $(55) | | EBITDA (non-U.S. GAAP) | $123 | $76 | | Adjusted EBITDA (non-U.S. GAAP) | $142 | $195 | Reconciliation of Net (Loss) Income to EBITDA and Adjusted EBITDA (Six Months Ended June 30) | Metric (Millions of U.S. dollars) | 2020 | 2019 | | :-------------------------------- | :--- | :--- | | Net (loss) income (U.S. GAAP) | $36 | $(86) | | Net (loss) income from continuing operations (U.S. GAAP) | $36 | $(85) | | EBITDA (non-U.S. GAAP) | $282 | $135 | | Adjusted EBITDA (non-U.S. GAAP) | $315 | $275 | Pro Forma Reconciliation of Net (Loss) Income to EBITDA and Adjusted EBITDA (Three Months Ended June 30) | Metric (Millions of U.S. dollars) | 2020 | 2019 | | :-------------------------------- | :--- | :--- | | Net (loss) income from continuing operations (U.S. GAAP) | $(4) | $32 | | EBITDA (non-U.S. GAAP) | $123 | $176 | | Adjusted EBITDA (non-U.S. GAAP) | $142 | $200 | Pro Forma Reconciliation of Net (Loss) Income to EBITDA and Adjusted EBITDA (Six Months Ended June 30) | Metric (Millions of U.S. dollars) | 2020 | 2019 | | :-------------------------------- | :--- | :--- | | Net (loss) income from continuing operations (U.S. GAAP) | $36 | $14 | | EBITDA (non-U.S. GAAP) | $282 | $304 | | Adjusted EBITDA (non-U.S. GAAP) | $315 | $341 | [Recent Accounting Pronouncements](index=62&type=section&id=Recent%20Accounting%20Pronouncements) - Refer to Note 1 for details on recently issued accounting pronouncements[215](index=215&type=chunk) [Environmental Matters](index=62&type=section&id=Environmental%20Matters) - The company is subject to various environmental laws and regulations, incurring significant compliance costs[216](index=216&type=chunk) - The company believes it is in compliance with applicable environmental rules and regulations in all material respects[216](index=216&type=chunk) [Supplemental Pro Forma Information](index=63&type=section&id=Supplemental%20Pro%20Forma%20Information) - Supplemental unaudited pro forma information is provided for comparability, assuming the Cristal merger and related divestitures occurred on January 1, 2018[217](index=217&type=chunk) - Pro forma adjustments include accounting policy conformity, IFRS to U.S. GAAP conversion, elimination of intercompany transactions, purchase accounting adjustments, contract loss, interest expense, and tax/EPS effects[222](index=222&type=chunk) - Pro forma information for the three and six months ended June 30, 2020, was the same as the as-reported information[221](index=221&type=chunk) - Pro forma information for the three and six months ended June 30, 2019, was updated to reflect final purchase price allocation adjustments[222](index=222&type=chunk) Pro Forma Statement of Operations Information (Three Months Ended June 30, 2019) | Metric (Millions of U.S. dollars) | Tronox Holdings plc | Cristal (a) | Other Pro Forma Adjustments | Pro Forma | | :-------------------------------- | :------------------ | :---------- | :-------------------------- | :-------- | | Net sales | $791 | $36 | $— | $827 | | Gross profit | $100 | $5 | $74 | $179 | | Income from operations | $(13) | $2 | $95 | $84 | | Net income (loss) from continuing operations attributable to Tronox Holdings plc | $(61) | $2 | $85 | $26 | Pro Forma Statement of Operations Information (Six Months Ended June 30, 2019) | Metric (Millions of U.S. dollars) | Tronox Holdings plc | Cristal (a) | Other Pro Forma Adjustments | Pro Forma | | :-------------------------------- | :------------------ | :---------- | :-------------------------- | :-------- | | Net sales | $1,181 | $379 | $(13) | $1,547 | | Gross profit | $183 | $85 | $52 | $320 | | Income from operations | $3 | $26 | $101 | $130 | | Net income (loss) from continuing operations attributable to Tronox Holdings plc | $(95) | $15 | $83 | $3 | Pro Forma Adjusted EBITDA Information (Three Months Ended June 30, 2019) | Metric (Millions of U.S. dollars) | Tronox Holdings plc | Cristal (1) | Other Pro Forma Adjustments | Pro Forma | | :-------------------------------- | :------------------ | :---------- | :-------------------------- | :-------- | | EBITDA (non-U.S. GAAP) | $76 | $5 | $95 | $176 | | Adjusted EBITDA (non-U.S. GAAP) | $195 | $5 | $— | $200 | Pro Forma Adjusted EBITDA Information (Six Months Ended June 30, 2019) | Metric (Millions of U.S. dollars) | Tronox Holdings plc | Cristal (1) | Other Pro Forma Adjustments | Pro Forma | | :-------------------------------- | :------------------ | :---------- | :-------------------------- | :-------- | | EBITDA (non-U.S. GAAP) | $135 | $67 | $102 | $304 | | Adjusted EBITDA (non-U.S. GAAP) | $275 | $68 | $(2) | $341 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=59&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details Tronox's exposure to various market risks and outlines the strategies employed to manage these exposures [Market Risk](index=69&type=section&id=Market%20Risk) - The company is exposed to commodity price risk as products and raw materials reprice with market supply and demand changes[241](index=241&type=chunk) - Strategies to mitigate market risk include sales contract provisions for passing on raw material costs, formula price contracts, varying contract term lengths, and diverse customer mix[241](index=241&type=chunk) [Credit Risk](index=69&type=section&id=Credit%20Risk) - A significant portion of liquidity is concentrated in trade accounts receivable, with potential impact from industry concentration and economic conditions (e.g., COVID-19)[242](index=242&type=chunk) - The company performs ongoing credit evaluations and maintains allowances for potential credit losses[242](index=242&type=chunk) - The ten largest third-party TiO2 customers represented **33%** of consolidated net sales for the six months ended June 30, 2020[242](index=242&type=chunk) [Interest Rate Risk](index=69&type=section&id=Interest%20Rate%20Risk) - The company is exposed to interest rate risk on its floating rate debt, including the Term Loan Facility and Standard Bank Term Loan Facility[243](index=243&type=chunk) - A hypothetical **1% increase in interest rates** would result in a net decrease to pre-tax income of approximately **$5 million** on an annualized basis[243](index=243&type=chunk) - Interest-rate swap agreements were entered into in 2019 to convert a portion of the Term Loan Facility's variable rate to a fixed rate, expiring in September 2024[244](index=244&type=chunk) [Currency Risk](index=70&type=section&id=Currency%20Risk) - Currency risk arises from fluctuations in foreign exchange rates impacting balance sheets and earnings, particularly in Australia, Brazil, China, South Africa, the Netherlands, and the United Kingdom[246](index=246&type=chunk) - The exposure is more prevalent in South Africa and Australia, where revenues are primarily in U.S. dollars and expenses in local currencies[246](index=246&type=chunk) - Foreign currency contracts are used as cash flow hedges for forecasted non-functional currency sales (South African subsidiaries) and cost of goods sold (Australian subsidiaries)[247](index=247&type=chunk) - As of June 30, 2020, notional amounts for foreign currency cash flow hedges included **1.4 billion South African rand ($81 million)** and **$507 million Australian dollars ($349 million)**[248](index=248&type=chunk) [Item 4. Controls and Procedures](index=60&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of Tronox's disclosure controls and reports no material changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=70&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - Management concluded that the company's disclosure controls and procedures were

PART I – FINANCIAL INFORMATION [Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements, significantly impacted by the Cristal Transaction, for Q1 2020 and 2019 [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Net sales reached $722 million with a net income of $40 million in Q1 2020, a significant improvement driven by the Cristal acquisition Condensed Consolidated Statements of Operations (Unaudited) | | Three Months Ended March 31, | | :--- | :--- | :--- | | | **2020** | **2019** | | **Net sales** | $722M | $390M | | **Gross profit** | $175M | $83M | | **Income from operations** | $79M | $16M | | **Net income (loss)** | $40M | $(30)M | | **Net income (loss) attributable to Tronox Holdings plc** | $32M | $(34)M | | **Diluted Earnings (loss) per share** | $0.22 | $(0.27) | [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased slightly to $5.13 billion, while total liabilities increased to $4.45 billion, leading to a decrease in total equity Condensed Consolidated Balance Sheets (Unaudited) | | March 31, 2020 | December 31, 2019 | | :--- | :--- | :--- | | **Total current assets** | $2,158M | $2,073M | | **Total assets** | $5,130M | $5,268M | | **Total current liabilities** | $911M | $702M | | **Total liabilities** | $4,451M | $4,352M | | **Total equity** | $679M | $916M | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating activities resulted in a $28 million cash outflow, while financing activities provided $193 million, leading to a $118 million net cash increase Condensed Consolidated Statements of Cash Flows (Unaudited) | | Three Months Ended March 31, | | :--- | :--- | :--- | | | **2020** | **2019** | | **Cash (used in) provided by operating activities** | $(28)M | $39M | | **Cash used in investing activities** | $(38)M | $(50)M | | **Cash provided by financing activities** | $193M | $50M | | **Net increase in cash, cash equivalents and restricted cash** | $118M | $38M | [Notes to Unaudited Condensed Consolidated Financial Statements](index=16&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Detailed notes explain financial statements, emphasizing the Cristal acquisition's impact, revenue disaggregation, debt structure, and ongoing litigation - The company is a **vertically integrated producer** of titanium-bearing mineral sands and TiO2 pigment, with operations across multiple continents, and completed the acquisition of **Cristal's TiO2 business** on April 10, 2019[29](index=29&type=chunk)[30](index=30&type=chunk) - The Cristal acquisition was valued at approximately **$2.2 billion**, consisting of **$1.675 billion** in cash and 37,580,000 ordinary shares, with Tronox divesting Cristal's North American TiO2 business to INEOS for **$701 million** as a condition[39](index=39&type=chunk)[40](index=40&type=chunk) Net Sales by Geographic Area (Q1 2020 vs Q1 2019) | Geographic Area | Q1 2020 | Q1 2019 | | :--- | :--- | :--- | | North America | $178M | $138M | | South and Central America | $40M | $13M | | Europe, Middle-East and Africa | $292M | $130M | | Asia Pacific | $212M | $109M | | **Total net sales** | **$722M** | **$390M** | Net Sales by Product (Q1 2020 vs Q1 2019) | Product | Q1 2020 | Q1 2019 | | :--- | :--- | :--- | | TiO2 | $580M | $277M | | Zircon | $65M | $64M | | Feedstock and other products | $77M | $49M | | **Total net sales** | **$722M** | **$390M** | - In March 2020, the company drew down **$200 million** from its revolvers to increase liquidity, resulting in total short-term debt of **$212 million** at March 31, 2020, compared to zero at year-end 2019[85](index=85&type=chunk) - The company is involved in a lawsuit with Venator Materials plc, which alleges Tronox owes a **$75 million** 'Break Fee', while Tronox has counterclaimed for **$400 million** in damages, alleging Venator breached an Exclusivity Agreement[103](index=103&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=39&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, highlighting the Cristal acquisition and COVID-19 impact, with improved pro forma gross margin and Adjusted EBITDA due to synergies [Business Environment and Synergy Program](index=39&type=section&id=Business%20Environment%20and%20Synergy%20Program) Operations remained essential during COVID-19, with Q1 revenue up 4% sequentially, and the company delivered **$45 million** in synergies, on track for **$190 million** annually - During the COVID-19 pandemic, operations were designated as **essential**, with all sites running at planned levels except for a temporary shutdown of ilmenite mining in South Africa, which has since resumed full capacity[129](index=129&type=chunk) - The company delivered **$45 million** in total synergies in Q1 2020, with **$38 million** reflected in EBITDA, and maintains synergy targets of **$190 million** for 2020, **$275 million** for 2021, and **$325 million** for 2022[128](index=128&type=chunk) [Results of Operations](index=41&type=section&id=Results%20of%20Operations) Reported net sales grew 85% to $722 million due to Cristal, while pro forma results showed flat sales but improved gross margin and Adjusted EBITDA Pro Forma Results of Operations (Q1 2020 vs Q1 2019) | | Q1 2020 | Q1 2019 (Pro Forma) | Variance | | :--- | :--- | :--- | :--- | | **Net sales** | $722M | $720M | $2M | | **Gross profit** | $175M | $141M | $34M | | **Gross Margin** | 24% | 20% | 4 pts | | **Income from operations** | $79M | $46M | $33M | | **Adjusted EBITDA** | $174M | $141M | $33M | - On a pro forma basis, Q1 2020 TiO2 revenue increased **2%** due to higher volumes, while Zircon revenue declined **21%** due to lower prices and volumes[141](index=141&type=chunk) - The increase in pro forma gross margin was primarily driven by a **4-point** favorable impact from production cost reductions and a **3-point** favorable impact from foreign currency on cost of goods sold[149](index=149&type=chunk) [Liquidity and Capital Resources](index=45&type=section&id=Liquidity%20and%20Capital%20Resources) Total liquidity stood at $570 million with $3.2 billion in debt, and a $28 million cash outflow from operations in Q1 2020 Liquidity Position | | March 31, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Cash and cash equivalents | $420M | $302M | | Available under Revolvers | $150M | $346M | | **Total Liquidity** | **$570M** | **$648M** | - On May 1, 2020, a subsidiary issued **$500 million** of 6.5% senior secured notes due 2025, with a portion of the proceeds used to repay **$200 million** of borrowings under its revolvers[133](index=133&type=chunk)[170](index=170&type=chunk) - Net cash used in operating activities was **$28 million** in Q1 2020, a decrease from **$39 million** provided in Q1 2019, primarily due to a higher use of cash for accounts receivable and accounts payable[171](index=171&type=chunk)[172](index=172&type=chunk) [Non-U.S. GAAP Financial Measures](index=49&type=section&id=Non-U.S.%20GAAP%20Financial%20Measures) This section reconciles Net Income (Loss) to non-GAAP EBITDA and Adjusted EBITDA, with Q1 2020 Adjusted EBITDA at **$174 million** Reconciliation of Net Income (Loss) to Adjusted EBITDA (Reported) | | Three Months Ended March 31, | | :--- | :--- | :--- | | | **2020** | **2019** | | **Net income (loss) (U.S. GAAP)** | **$40M** | **$(30)M** | | Interest expense | $45M | $49M | | Income tax provision | $7M | $2M | | Depreciation, depletion and amortization | $71M | $47M | | **EBITDA (non-U.S. GAAP)** | **$160M** | **$59M** | | Adjustments (Share-based comp, transaction costs, restructuring, etc.) | $14M | $21M | | **Adjusted EBITDA (non-U.S. GAAP)** | **$174M** | **$80M** | Reconciliation of Net Income (Loss) to Adjusted EBITDA (Pro Forma) | | Three Months Ended March 31, | | :--- | :--- | :--- | | | **2020** | **2019** | | **Net income (loss) (U.S. GAAP)** | **$40M** | **$(18)M** | | Interest expense | $45M | $55M | | Income tax provision | $7M | $7M | | Depreciation, depletion and amortization | $71M | $87M | | **EBITDA (non-U.S. GAAP)** | **$160M** | **$128M** | | Adjustments (Share-based comp, restructuring, etc.) | $14M | $13M | | **Adjusted EBITDA (non-U.S. GAAP)** | **$174M** | **$141M** | [Quantitative and Qualitative Disclosures About Market Risk](index=56&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company manages market, credit, interest rate, and currency risks, with significant exposure to its top ten customers and foreign exchange fluctuations - The company faces credit risk from its customers, with the **ten largest third-party customers** representing **29%** of consolidated net sales for the three months ended March 31, 2020[208](index=208&type=chunk) - A hypothetical **1% increase** in interest rates would result in a net decrease to pre-tax income of approximately **$10 million** on an annualized basis as of March 31, 2020[209](index=209&type=chunk) - The company is exposed to currency fluctuations, particularly the South African rand and Australian dollar, and uses foreign currency contracts to hedge these exposures, with notional amounts of **2.9 billion ZAR** and **691 million AUD** outstanding as of March 31, 2020[212](index=212&type=chunk)[214](index=214&type=chunk) [Controls and Procedures](index=57&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2020, with no material changes to internal control over financial reporting - Based on an evaluation as of March 31, 2020, management concluded that the company's disclosure controls and procedures were **effective**[216](index=216&type=chunk) - There were **no changes** in internal control over financial reporting during the quarter ended March 31, 2020, that have materially affected, or are reasonably likely to materially affect, internal controls[218](index=218&type=chunk) PART II – OTHER INFORMATION [Legal Proceedings](index=58&type=section&id=Item%201.%20Legal%20Proceedings) Information on legal proceedings, including ongoing litigation with Venator Materials plc, is incorporated by reference from Note 16 of the financial statements - Information regarding legal proceedings is incorporated by reference from Note 16, "Commitments and Contingencies," in the financial statements section of this Form 10-Q[221](index=221&type=chunk) [Risk Factors](index=58&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors were reported, except for a COVID-19 related factor filed separately on Form 8-K - There have been **no material changes** from the risk factors disclosed in the company's Annual Report on Form 10-K, other than a COVID-related risk factor filed on Form 8-K on April 23, 2020[222](index=222&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=59&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities were reported during the period - **None reported**[224](index=224&type=chunk) [Defaults Upon Senior Securities](index=59&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported during the period - **None reported**[225](index=225&type=chunk) [Mine Safety Disclosures](index=59&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company for the current reporting period - **Not applicable**[226](index=226&type=chunk) [Other Information](index=59&type=section&id=Item%205.%20Other%20Information) Mr. Robert Loughran, VP and Corporate Controller, will depart, with CFO Timothy Carlson assuming the Principal Accounting Officer role - Mr. Robert Loughran, Vice President and Corporate Controller, will be leaving the company effective June 5, 2020, and the CFO, Timothy Carlson, will assume the role of Principal Accounting Officer[227](index=227&type=chunk) [Exhibits](index=59&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with Form 10-Q, including CEO/CFO certifications, the May 2020 notes indenture, and iXBRL data files - The exhibits filed include CEO/CFO certifications (31.1, 31.2, 32.1, 32.2), the indenture for the new senior secured notes (4.1), and financial statements formatted in iXBRL (101 series)[228](index=228&type=chunk)

PART I [Item 1. Business](index=6&type=section&id=Item%201.%20Business) Tronox is a leading global vertically integrated TiO2 pigment manufacturer, significantly expanding its operations and product portfolio through the 2019 Cristal acquisition - Tronox is the world's leading vertically integrated manufacturer of **TiO2 pigment**, with operations spanning Australia, South Africa, and Brazil, pursuing a long-term strategy of full vertical integration[22](index=22&type=chunk) Revenue by Geographic Region (2019) | Region | Percentage of Revenue | | :--- | :--- | | Europe, Middle East & Africa | 36% | | Asia Pacific | 31% | | North America | 27% | | South & Central America | 6% | Revenue by Product (2019) | Product | Percentage of Revenue | | :--- | :--- | | TiO2 | 78% | | Feedstock and Other | 11% | | Zircon | 11% | - On April 10, 2019, Tronox completed the acquisition of Cristal's TiO2 business, divesting Cristal's North American TiO2 business to INEOS for approximately **$701 million** to secure regulatory approval[28](index=28&type=chunk)[29](index=29&type=chunk) - On March 27, 2019, the company re-domiciled from Australia to the United Kingdom, becoming **Tronox Holdings plc**[31](index=31&type=chunk) - As of December 31, 2019, the company employed approximately **6,660** people globally[73](index=73&type=chunk) [Item 1A. Risk Factors](index=18&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant market, operational, integration, financial, and regulatory risks, including volatile prices, intense competition, South African operational challenges, and the EU's TiO2 carcinogen classification - Market conditions and economic downturns significantly impact demand for TiO2 and zircon, with a prolonged downturn in China, accounting for approximately **50% of global zircon demand**, posing a material business risk[88](index=88&type=chunk)[89](index=89&type=chunk) - The company faces intense competition from global producers, including expanding Chinese manufacturers improving quality and adopting chloride technology, potentially increasing substitution risk[93](index=93&type=chunk) - Concentrated ownership by **Cristal (26%)** and **Exxaro (10%)** may influence corporate decisions and create potential conflicts of interest[98](index=98&type=chunk) - South African mining operations are subject to onerous regulations, including Mining Charter III, requiring a **30% Black Economic Empowerment (BEE)** shareholding for new or renewed mining rights[101](index=101&type=chunk)[102](index=102&type=chunk) - The company may not fully realize anticipated benefits and synergies from the Cristal Transaction due to potential difficulties in integrating operations, systems, and cultures[105](index=105&type=chunk)[107](index=107&type=chunk) - Operational risks in South Africa include reliance on the sole, unreliable state-owned power supplier **Eskom**, potential water restrictions, and dependence on state-owned rail and port services[112](index=112&type=chunk)[115](index=115&type=chunk)[116](index=116&type=chunk) - The ability to use approximately **$4.1 billion** of Net Operating Losses (NOLs) and **$1.1 billion** of interest expense carryforwards could be limited by an "ownership change" under Section 382 of the U.S. tax code[126](index=126&type=chunk) - In February 2020, the European Commission classified powder TiO2 as a **Category 2 Carcinogen** by inhalation, potentially leading to more stringent regulations, inhibited marketing, and increased costs[149](index=149&type=chunk) [Item 1B. Unresolved Staff Comments](index=33&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments - Not applicable[184](index=184&type=chunk) [Item 2. Properties](index=33&type=section&id=Item%202.%20Properties) Tronox operates five mining-mineral processing chains and nine TiO2 pigment production facilities globally with a total capacity of **1,078,000 metric tons per year**, holding significant mineral reserves of **78.1 million metric tons** of in-place THM as of December 31, 2019 TiO2 Production Facilities and Capacity | Facility Location | Capacity (metric tons/year) | Process | | :--- | :--- | :--- | | Hamilton, Mississippi, USA | 225,000 | Chloride | | Kwinana, Western Australia | 150,000 | Chloride | | Kemerton, Western Australia | 110,000 | Chloride | | Botlek, the Netherlands | 90,000 | Chloride | | Stallingborough, England, UK | 165,000 | Chloride | | Yanbu, Saudi Arabia | 200,000 | Chloride | | Salvador, Bahia, Brazil | 60,000 | Sulphate | | Fuzhou, Jiangxi Province, China | 46,000 | Sulphate | | Thann, Alsace, France | 32,000 | Sulphate | Mineral Processing Capacities (metric tons per year) | Product | Namakwa Sands RSA (metric tons) | KZN Sands RSA (metric tons) | Northern Ops W.A. (metric tons) | Southern Ops W.A. (metric tons) | Eastern Ops NSW (metric tons) | Total (metric tons) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Rutile | 30,000 | 25,000 | 35,000 | 10,000 | 70,000 | 170,000 | | Synthetic rutile | — | — | 220,000 | — | — | 220,000 | | Titanium slag | 190,000 | 220,000 | — | — | — | 410,000 | | Pig Iron | 100,000 | 120,000 | — | — | — | 220,000 | | Zircon | 125,000 | 55,000 | 40,000 | 9,000 | 65,000 | 294,000 | Global Heavy Mineral Reserves Summary (as of Dec 31, 2019) | Reserve Category | Ore (million metric tons) | Avg. Grade (% THM) | In Place THM (million metric tons) | | :--- | :--- | :--- | :--- | | **Total Global Reserves** | **1,648** | **4.7%** | **78.1** | - The company's total heavy mineral reserves increased from **66.1 million metric tons** in 2018 to **78.1 million metric tons** in 2019, primarily due to the inclusion of reserves from the Cristal acquisition[261](index=261&type=chunk) [Item 3. Legal Proceedings](index=47&type=section&id=Item%203.%20Legal%20Proceedings) Information regarding legal proceedings is incorporated by reference from Note 20 of the Notes to Consolidated Financial Statements - Information required by this item is incorporated by reference to **Note 20 - Commitments and Contingencies**[262](index=262&type=chunk) [Item 4. Mine Safety Disclosures](index=47&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The company reports no mine safety disclosures - None[263](index=263&type=chunk) PART II [Item 5. Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities](index=48&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Shareholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Tronox's ordinary shares are traded on the New York Stock Exchange under the ticker symbol "TROX." As of January 31, 2020, there were approximately 56 holders of record - The company's ordinary shares trade on the New York Stock Exchange under the symbol **TROX**[266](index=266&type=chunk) - As of January 31, 2020, there were approximately **56** holders of record of ordinary shares, excluding those held in "street-name" accounts[266](index=266&type=chunk) [Item 6. Selected Financial Data](index=48&type=section&id=Item%206.%20Selected%20Financial%20Data) Selected financial data for 2019 shows significant revenue growth to **$2.64 billion** due to the Cristal acquisition, but also a net loss of **$109 million**, with comparability impacted by acquisition-related adjustments Selected Financial Data (2015-2019) | (In millions USD) | 2019 | 2018 | 2017 | 2016 | 2015 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Net sales** | $2,642 | $1,819 | $1,698 | $1,309 | $1,510 | | **Income (loss) from operations** | $95 | $200 | $141 | $(53) | $(199) | | **Net (loss) income attributable to Tronox** | $(109) | $(7) | $(285) | $(61) | $(329) | | **Total assets** | $5,268 | $4,642 | $4,864 | $3,293 | $3,337 | | **Total debt, net** | $3,026 | $3,161 | $3,147 | $3,054 | $3,076 | - Comparability of financial results is impacted by significant items, including a **$98 million** inventory step-up charge in 2019, Cristal acquisition transaction costs, and a **$31 million** impairment loss in 2018[268](index=268&type=chunk)[269](index=269&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=51&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Tronox's 2019 financial performance was significantly shaped by the Cristal acquisition, boosting reported revenues to **$2.6 billion** but resulting in a **$102 million** net loss from continuing operations due to purchase accounting adjustments, while pro forma revenues declined **10%** to **$3.0 billion** - The acquisition of Cristal's TiO2 business was completed on April 10, 2019, for approximately **$2.2 billion**, enhancing Tronox's position as a vertically integrated global producer[275](index=275&type=chunk) - The company targets approximately **$325 million** in operating synergies by 2022 from the Cristal acquisition, with **$89 million** delivered by year-end 2019[285](index=285&type=chunk)[287](index=287&type=chunk) - On a reported basis, 2019 net sales increased **45%** to **$2.64 billion** due to Cristal's inclusion, though gross margin decreased from **27%** to **18%** primarily due to a **$98 million** inventory step-up charge[295](index=295&type=chunk)[298](index=298&type=chunk) - On a pro forma basis, 2019 net sales decreased **10%** to **$3.01 billion** from **$3.34 billion** in 2018, driven by lower TiO2 and zircon sales volumes and prices[293](index=293&type=chunk)[297](index=297&type=chunk) - Total liquidity decreased by **$635 million** during 2019 to **$648 million**, comprising **$302 million** in cash and **$346 million** in available revolver capacity[320](index=320&type=chunk) - Net cash provided by operating activities increased to **$412 million** in 2019 from **$170 million** in 2018, driven by Cristal's inclusion and working capital initiatives[335](index=335&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=74&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Tronox faces market risks including commodity price volatility, credit risk, interest rate risk on floating-rate debt, and significant currency risk, which it mitigates through hedging strategies, with a **1%** interest rate increase potentially raising pre-tax loss by **$9 million** annually - The company is exposed to credit risk, with its ten largest TiO2 customers representing **31%** of consolidated net sales in 2019, and no single customer accounting for **10%** of sales[403](index=403&type=chunk) - Tronox is exposed to interest rate risk on its floating-rate debt, where a hypothetical **1%** increase in interest rates would result in an approximate **$9 million** increase to pre-tax loss annually[404](index=404&type=chunk) - The company faces significant currency risk, particularly in South Africa and Australia where revenues are largely in U.S. dollars but expenses are in local currencies, mitigated through economic hedges like forward contracts[405](index=405&type=chunk) - As of December 31, 2019, the company held foreign currency contracts with notional amounts of **3.7 billion South African rands** and **486 million Australian dollars** to hedge sales and cost of sales[407](index=407&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=76&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) The 2019 consolidated financial statements reflect the significant impact of the Cristal acquisition, with total assets increasing to **$5.3 billion** but a net loss of **$97 million** primarily due to acquisition-related costs and purchase accounting adjustments Consolidated Statement of Operations Highlights (2019 vs 2018) | (In millions USD) | 2019 | 2018 | | :--- | :--- | | Net sales | $2,642 | $1,819 | | Gross profit | $464 | $498 | | Income from operations | $95 | $200 | | Net (loss) income from continuing operations | $(102) | $30 | | Net loss attributable to Tronox Holdings plc | $(109) | $(7) | Consolidated Balance Sheet Highlights (as of Dec 31) | (In millions USD) | 2019 | 2018 | | :--- | :--- | | Total current assets | $2,073 | $2,544 | | Total assets | $5,268 | $4,642 | | Total current liabilities | $702 | $300 | | Long-term debt, net | $2,988 | $3,139 | | Total liabilities | $4,352 | $3,780 | | Total equity | $916 | $862 | Consolidated Statement of Cash Flows Highlights (2019 vs 2018) | (In millions USD) | 2019 | 2018 | | :--- | :--- | | Net cash provided by operating activities | $412 | $170 | | Net cash used in investing activities | $(1,185) | $(174) | | Net cash used in financing activities | $(638) | $(46) | [Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=146&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with accountants on accounting and financial disclosure - None[706](index=706&type=chunk) [Item 9A. Controls and Procedures](index=147&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2019, though the assessment excluded the Cristal business, which represented **38%** of total assets and **39%** of net sales - Management concluded that the company's disclosure controls and procedures were effective as of **December 31, 2019**[707](index=707&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of **December 31, 2019**, based on the COSO framework[709](index=709&type=chunk) - The assessment of internal control over financial reporting excluded the Cristal business, acquired on April 10, 2019, which represented **38%** of consolidated assets and **39%** of net sales[712](index=712&type=chunk) [Item 9B. Other Information](index=148&type=section&id=Item%209B.%20Other%20Information) The company reports no other information - None[716](index=716&type=chunk) PART III [Item 10. Directors, Executive Officers and Corporate Governance](index=149&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information required by this item will be included in the company's definitive proxy statement for its 2020 annual general meeting of shareholders and is incorporated herein by reference - Information regarding directors, executive officers, corporate governance, and Section 16(a) compliance is incorporated by reference from the company's **2020 proxy statement**[719](index=719&type=chunk)[720](index=720&type=chunk) [Item 11. Executive Compensation](index=149&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive officer and director compensation will be included in the company's definitive proxy statement for its 2020 annual general meeting of shareholders and is incorporated herein by reference - Information regarding executive compensation is incorporated by reference from the company's **2020 proxy statement**[721](index=721&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters](index=149&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Shareholder%20Matters) Information regarding security ownership and related matters will be included in the company's definitive proxy statement for its 2020 annual general meeting of shareholders and is incorporated herein by reference - Information regarding security ownership is incorporated by reference from the company's **2020 proxy statement**[722](index=722&type=chunk) Equity Compensation Plan Information (as of Dec 31, 2019) | Plan Category | Securities to be issued upon exercise | Weighted-average exercise price (USD) | Securities remaining available for future issuance | | :--- | :--- | :--- | :--- | | Equity compensation plans approved by security holders | 6,818,561 | $16.36 | 4,770,192 | [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=149&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding certain relationships, related transactions, and director independence will be included in the company's definitive proxy statement for its 2020 annual general meeting of shareholders and is incorporated herein by reference - Information regarding related transactions and director independence is incorporated by reference from the company's **2020 proxy statement**[725](index=725&type=chunk) [Item 14. Principal Accounting Fees and Services](index=149&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information regarding principal accounting fees and services will be included in the company's definitive proxy statement for its 2020 annual general meeting of shareholders and is incorporated herein by reference - Information regarding principal accounting fees and services is incorporated by reference from the company's **2020 proxy statement**[726](index=726&type=chunk) PART IV [Item 15. Exhibits, Financial Statement Schedules](index=150&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists documents filed as part of the Annual Report on Form 10-K, including consolidated financial statements and various exhibits, with all financial statement schedules omitted as inapplicable or redundant - This item lists the consolidated financial statements and exhibits filed with the **Form 10-K**[728](index=728&type=chunk) - All financial statement schedules have been omitted because they are either not applicable or the necessary information is already included in the financial statements or notes[728](index=728&type=chunk) [Item 16. Form 10-K Summary](index=152&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company provides no Form 10-K summary - None[732](index=732&type=chunk)

[PART I – FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) [Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Unaudited financial statements for Q3 2019 reflect the significant impact of the Cristal acquisition Condensed Consolidated Statements of Operations (in millions) | | Three Months Ended Sep 30, | Nine Months Ended Sep 30, | | :--- | :--- | :--- | | | **2019** | **2018** | **2019** | **2018** | | **Net sales** | $768 | $456 | $1,949 | $1,390 | | **Gross profit** | $133 | $121 | $316 | $380 | | **Income from operations** | $48 | $53 | $51 | $132 | | **Net (loss) income from continuing operations** | $(12) | $15 | $(97) | $24 | | **Net (loss) income attributable to Tronox Holdings plc** | $(13) | $6 | $(109) | $(2) | | **Net (loss) income per share, diluted** | $(0.09) | $0.05 | $(0.78) | $(0.01) | Condensed Consolidated Balance Sheet Highlights (in millions) | | Sep 30, 2019 | Dec 31, 2018 | | :--- | :--- | :--- | | **ASSETS** | | | | Cash and cash equivalents | $305 | $1,034 | | Inventories, net | $1,035 | $479 | | Total current assets | $2,053 | $2,544 | | Property, plant and equipment, net | $1,710 | $1,004 | | **Total assets** | **$5,157** | **$4,642** | | **LIABILITIES AND EQUITY** | | | | Total current liabilities | $629 | $300 | | Long-term debt, net | $3,067 | $3,139 | | **Total liabilities** | **$4,333** | **$3,780** | | **Total equity** | **$824** | **$862** | | **Total liabilities and equity** | **$5,157** | **$4,642** | Cash Flow Summary for Nine Months Ended Sep 30 (in millions) | | **2019** | **2018** | | :--- | :--- | :--- | | Cash provided by operating activities | $237 | $143 | | Cash used in investing activities | $(1,120) | $(121) | | Cash used in financing activities | $(517) | $(34) | | Net (decrease) increase in cash | $(1,380) | $(33) | - On April 10, 2019, the company completed the acquisition of Cristal's TiO2 business for **$1.675 billion in cash** and 37,580,000 ordinary shares, valued at approximately $2.2 billion in total[43](index=43&type=chunk) - To gain regulatory approval, Tronox divested Cristal's North American TiO2 business to INEOS for approximately **$708 million** and the 8120 paper laminate grade to Venator[28](index=28&type=chunk)[44](index=44&type=chunk)[47](index=47&type=chunk) - The company repurchased 14 million shares from Exxaro for approximately **$200 million** and redeemed Exxaro's 26% interest in Tronox Sands for approximately **$148 million**[31](index=31&type=chunk)[33](index=33&type=chunk) - As of September 30, 2019, total long-term debt, net of discounts and issuance costs, was approximately **$3.1 billion**[106](index=106&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=40&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) MD&A focuses on the financial impact of the Cristal acquisition, including pro forma results and synergy programs - The Cristal acquisition, completed on April 10, 2019, significantly expanded operations, making Tronox a **fully vertically integrated producer of TiO2 pigment**[160](index=160&type=chunk)[161](index=161&type=chunk) - The company is targeting **$220 million in operating synergies by 2022** from the Cristal acquisition and has raised its 2019 synergy target to $65 million[170](index=170&type=chunk)[173](index=173&type=chunk) - Q3 2019 revenue was impacted by **lower TiO2 and Zircon volumes sequentially**, with softening demand in EMEA, Asia, and Latin America[174](index=174&type=chunk) - Reported Q3 gross margin was negatively impacted by **5 percentage points** due to the step-up in value of acquired Cristal inventory and assets[187](index=187&type=chunk)[195](index=195&type=chunk) - Pro forma Q3 TiO2 revenue declined due to lower selling prices, while **Zircon revenue declined 35%** due to a 32% drop in sales volumes[183](index=183&type=chunk) - Proceeds from the **$708 million sale** of Cristal's North American operations were used for a $200 million share repurchase and a $195 million debt prepayment[237](index=237&type=chunk) - Net cash provided by operating activities for the first nine months of 2019 was **$237 million**, an increase of $94 million from the prior year[252](index=252&type=chunk) Adjusted EBITDA Reconciliation (Non-GAAP) | | Three Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2019 | | :--- | :--- | :--- | | **Net (loss) income (U.S. GAAP)** | $(6)M | $(92)M | | **EBITDA (non-U.S. GAAP)** | $121M | $256M | | Adjustments (Inventory step-up, transaction costs, etc.) | $63M | $203M | | **Adjusted EBITDA (non-U.S. GAAP)** | **$184M** | **$459M** | Q3 2019 vs Q3 2018 Pro Forma Results (in millions) | | Q3 2019 (Pro Forma) | Q3 2018 (Pro Forma) | Variance | | :--- | :--- | :--- | :--- | | **Net sales** | $768 | $832 | $(64) | | **Gross profit** | $173 | $212 | $(39) | | **Income from operations** | $88 | $115 | $(27) | | **Adjusted EBITDA** | $184 | $215 | $(31) | Total Liquidity (in millions) | | Sep 30, 2019 | Dec 31, 2018 | | :--- | :--- | :--- | | Cash and cash equivalents | $305 | $1,034 | | Available under Revolvers | $356 | $249 | | **Total** | **$661** | **$1,283** | [Quantitative and Qualitative Disclosures About Market Risk](index=58&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market, credit, interest rate, and currency risks from its global operations and debt structure - A hypothetical **1% increase in interest rates** would result in a net increase to pre-tax loss of approximately **$10 million** on an annualized basis[306](index=306&type=chunk) - The company uses **interest-rate swaps** to convert a portion of its variable-rate Term Loan Facility to a fixed rate, mitigating interest rate exposure[307](index=307&type=chunk) - To manage currency risk, the company entered into **foreign currency contracts** to hedge non-functional currency sales and costs[309](index=309&type=chunk) [Controls and Procedures](index=59&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls were deemed effective, excluding the recently acquired Cristal business pending integration - Management concluded that **disclosure controls and procedures were effective** as of September 30, 2019[312](index=312&type=chunk) - The assessment of internal controls over financial reporting **excluded the newly acquired Cristal business**, which constituted 54% of total assets[312](index=312&type=chunk) - The company is in the process of incorporating Cristal's internal controls, expected to be completed for the **December 31, 2020 assessment**[314](index=314&type=chunk) [PART II – OTHER INFORMATION](index=60&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) [Legal Proceedings](index=60&type=section&id=Item%201.%20Legal%20Proceedings) The company is in a legal dispute with Venator over a break fee, with a counterclaim for damages - Venator Materials plc sued Tronox for a **$75 million "Break Fee"** related to a preliminary agreement for the sale of Cristal's North American operations[127](index=127&type=chunk) - Tronox has counterclaimed against Venator for **$400 million in damages**, alleging Venator's breach of contract led to a lower sale price[127](index=127&type=chunk) [Risk Factors](index=60&type=section&id=Item%201A.%20Risk%20Factors) A key risk involves integrating the acquired Cristal business into the public company's internal control framework - The company identifies a **significant risk in integrating the acquired Cristal business** into its internal control over financial reporting as required by the Sarbanes-Oxley Act[320](index=320&type=chunk) - Failure to properly integrate Cristal's controls could lead to increased compliance costs and **potentially result in material weaknesses**[320](index=320&type=chunk)[321](index=321&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=61&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company executed a partial share repurchase program in Q3 2019, limited by NOL-related restrictions - The share repurchases were made under a **$100 million program** authorized on June 3, 2019, which was not fully completed due to NOL-related restrictions[325](index=325&type=chunk)[326](index=326&type=chunk) Issuer Purchases of Equity Securities (Q3 2019) | Period | Total Shares Purchased | Average Price Paid Per Share | Approx. Dollar Value Remaining in Program | | :--- | :--- | :--- | :--- | | July 1 - July 31, 2019 | 2,496,293 | $12.24 | $13,647,254 |

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________to ___________ 1-35573 (Commission file number) TRONOX HOLDINGS PLC (Exact Name of Registrant as Specified in its Charter) extended transition period ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________to ___________ 1-35573 (Commission file number) TRONOX HOLDINGS PLC (Exact Name of Registrant as Specified in its Charter) extended transition perio ...

TABLE OF CONTENTS UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Year ended December 31, 2018 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to 1-35573 (Commission file number) TRONOX LIMITED (ACN 153 348 111) (Exact name of registrant as specified in its charter) Western Australia, Australia ...