Tronox(US:TROX)2025-02-19 12:55Market Risks - The company is exposed to various market risks, including fluctuations in titanium dioxide (TiO2) prices, which are expected to vary over the next few years due to changes in ore and pigment prices [425]. - The company operates in a competitive environment, with risks related to geopolitical instability and fluctuations in currency exchange rates [14]. - The company has significant exposure to credit risk in industries affected by cyclical economic fluctuations, with ongoing credit evaluations of customers to mitigate this risk [426]. Financial Performance - For the year ended December 31, 2024, net sales were $3,074 million, an increase of 7.9% compared to $2,850 million in 2023 [458]. - The cost of goods sold for 2024 was $2,559 million, up from $2,388 million in 2023, resulting in a gross profit of $515 million [458]. - Income from operations increased to $219 million in 2024, compared to $186 million in 2023 [458]. - The company reported a net loss of $54 million for 2024, a significant improvement from a net loss of $314 million in 2023 [458]. - Basic and diluted loss per share for 2024 was $0.31, compared to a loss of $2.02 per share in 2023 [458]. - Total comprehensive loss for 2024 was $128 million, compared to a loss of $356 million in 2023 [461]. - Cash provided by operating activities increased to $300 million in 2024, up from $184 million in 2023 [466]. Tax and Deferred Tax Assets - As of December 31, 2024, the company had $960 million in net deferred tax assets, with valuation allowances of $1,951 million [452]. - Deferred tax assets totaled $2,911 million as of December 31, 2024, with a valuation allowance of $1,951 million [531]. - The company recorded a non-cash charge of $16 million for Brazil and $33 million for the Netherlands due to uncertainty in realizing deferred tax assets [533]. - The total tax loss carryforwards amounted to $9,493 million, with significant contributions from the U.S. Federal ($4,245 million) and Australia ($675 million) [539]. Debt and Interest Rates - A hypothetical 1% increase in interest rates would result in a net decrease to pre-tax income of approximately $8 million on an annualized basis, due to the company's exposure to floating rate debt totaling $824 million [427]. - The company entered into interest rate swap agreements to convert variable rates to fixed rates, with a notional value of $200 million maturing in March 2028 [431]. - As of December 31, 2024, the company maintains a total of $950 million in interest rate swaps, with $450 million maturing in March 2028 and $500 million maturing in September 2031 [436]. - Long-term debt, net, was $2,759 million in 2024, slightly down from $2,786 million in 2023 [464]. - The average effective interest rate for the Term Loan Facility was 5.9% for the year ended December 31, 2024, compared to 6.6% in 2023 [566]. Assets and Liabilities - Total assets decreased to $6,038 million in 2024 from $6,134 million in 2023 [464]. - Current liabilities rose to $874 million in 2024, compared to $753 million in 2023 [464]. - The company reported a decrease in inventories to $1,551 million in 2024 from $1,421 million in 2023 [464]. - Property, plant and equipment, net was reported at $1,927 million as of December 31, 2024, up from $1,835 million in 2023 [556]. - Total accrued liabilities increased to $247 million as of December 31, 2024, from $230 million in 2023, primarily due to changes in employee-related costs and sales rebates [563]. Shareholder Equity and Dividends - The total shareholders' equity decreased from $2,403 million at the end of 2022 to $1,980 million at the end of 2024, reflecting a decline of approximately 17.6% [468]. - Tronox's ordinary share dividends remained consistent at $0.50 per share for the years 2022, 2023, and 2024, with total dividends of $80 million each year [468]. - Dividends paid in 2024 amounted to $80 million, compared to $89 million in 2023 [466]. Research and Development - Research and development costs were $14 million in 2024, $12 million in 2023, and $12 million in 2022, indicating a 17% increase from 2023 to 2024 [479]. Currency and Foreign Contracts - The company is exposed to currency risk primarily in jurisdictions such as Australia, Europe, and South Africa, impacting its Adjusted EBITDA [437]. - The company had 516 million Australian dollars (approximately $319 million) in outstanding foreign currency contracts to hedge against currency fluctuations for its Australian subsidiaries [438]. - The notional amount of outstanding foreign currency contracts included 1.4 billion South African Rand (approximately $73 million) and 113 million Australian dollars (approximately $70 million) as of December 31, 2024 [439]. Operational Risks - The company is subject to various risks, including environmental liabilities, production delays, and cybersecurity incidents, which could materially impact financial performance [14]. - The company anticipates that ESG issues and increased regulatory requirements may subject it to additional costs and restrictions [17]. Revenue Generation - The company generates revenue primarily from selling TiO pigment products and related co-products, with contracts typically lasting one year or less [513]. - Revenue from TiO2 products was $2,407 million in 2024, up from $2,248 million in 2023, indicating a growth of 7.1% [522]. - Net sales in North America increased to $796 million in 2024 from $754 million in 2023, while sales in South and Central America rose to $208 million from $159 million [522].