Tronox(TROX) - 2025 Q2 - Quarterly Results

Second Quarter 2025 Overview Tronox reported Q2 revenue of $731 million, experiencing declines in both revenue and profitability, resulting in an operating loss and net loss 1.1 Financial Highlights Tronox reported Q2 revenue of $731 million, a 1% sequential and 11% year-over-year decrease, with an operating loss of $35 million, net loss of $85 million, and adjusted EBITDA of $93 million Q2 2025 Financial Highlights: | Metric | Amount/Ratio | | :-------------------------- | :---------- | | Revenue | $731 million | | Revenue Q-o-Q Change | -1% | | Revenue Y-o-Y Change | -11% | | Operating Loss | $35 million | | Net Loss | $85 million | | Adjusted Net Loss (Non-GAAP) | $45 million | | GAAP Diluted Loss Per Share | $0.53 | | Adjusted Diluted Loss Per Share (Non-GAAP) | $0.28 | | Adjusted EBITDA (Non-GAAP) | $93 million | | Adjusted EBITDA Margin (Non-GAAP) | 12.7% | | Capital Expenditures | $83 million | 1.2 Updated Outlook The company updated its full-year 2025 outlook, projecting revenue between $3.0-$3.1 billion, adjusted EBITDA between $410-$460 million, and negative free cash flow of $100-$170 million Full-Year 2025 Outlook: | Metric | Expected Range | | :---------------- | :---------------- | | Revenue | $3.0-$3.1 billion | | Adjusted EBITDA | $410-$460 million | | Free Cash Flow | Use $100-$170 million | | Capital Expenditures | Less than $330 million | - The company cut its dividend by 60% to provide near-term balance sheet flexibility[3] 1.3 Summary of Select Financial Results This section summarizes key financial metrics for Q2 2025 compared to Q2 2024 and Q1 2025, highlighting significant year-over-year and sequential changes in revenue, profitability, and volume/price mix Q2 2025 Select Financial Results: | ($M unless otherwise noted) | Q2 2025 | Q2 2024 | Y-o-Y % ∆ | Q1 2025 | Q-o-Q % ∆ | | :-------------------------- | :------ | :------ | :-------- | :------ | :-------- | | Revenue | $731 | $820 | (11)% | $738 | (1)% | | TiO2 | $587 | $653 | (10)% | $584 | 1% | | Zircon | $68 | $85 | (20)% | $69 | (1)% | | Other products | $76 | $82 | (7)% | $85 | (11)% | | (Loss) Income from operations | $(35) | $76 | n/m | $(61) | n/m | | Net (Loss) Income attributable to Tronox | $(84) | $16 | n/m | $(111) | n/m | | GAAP diluted (loss) earnings per share | $(0.53) | $0.10 | n/m | $(0.70) | n/m | | Adjusted diluted (loss) earnings per share | $(0.28) | $0.07 | n/m | $(0.15) | n/m | | Adjusted EBITDA | $93 | $161 | (42)% | $112 | (17)% | | Adjusted EBITDA Margin % | 12.7% | 19.6% | (690) bps | 15.2% | (250) bps | | Free cash flow | $(55) | $84 | n/m | $(142) | n/m | Volume and Price/Mix Changes (Q2 2025 vs. Q2 2024 / Q1 2025): | Product | Y-o-Y Volume Change | Y-o-Y Price/Mix Change | Q-o-Q Volume Change | Q-o-Q Price/Mix Change | | :--- | :----------- | :---------------- | :----------- | :---------------- | | TiO2 | (11)% | 0% | (2)% | 1% | | Zircon | (10)% | (10)% | 1% | (2)% | CEO's Commentary and Strategic Actions CEO John D. Romano discusses market conditions, Q2 performance, cost management, and capital allocation adjustments, including a dividend cut to enhance balance sheet flexibility 2.1 Market Conditions and Q2 Performance CEO John D. Romano noted Q2 performance was negatively impacted by soft demand across most end markets, leading to a weak coatings season and increased competition - Q2 performance was impacted by soft end-market demand, a weak coatings season, and increased competition[5] - TiO2 volumes decreased by 2% sequentially and 11% year-over-year, reflecting seasonal weakness and macroeconomic pressures[5] - Delayed anti-dumping investigations in Brazil affected sales in that region, while India showed early growth momentum after tariff implementation[5] 2.2 Cost Management and Operational Optimization Tronox is executing a rigorous strategy to address prolonged market softness, with its cost improvement program ahead of schedule in mitigating rising raw material and operating costs - The cost improvement program is ahead of schedule, effectively mitigating rising raw material and operating costs[6] - The company aims to achieve $125 million to $175 million in sustainable, recurring savings by the end of 2026[6] - The company is adjusting operating rates and deploying targeted commercial initiatives to maintain market share[6] 2.3 Capital Allocation Adjustments and Dividend Tronox revised its 2025 financial outlook and adjusted capital allocation priorities, further reducing capital expenditures while ensuring critical investments remain unaffected - The 2025 financial outlook was revised, and capital allocation priorities were adjusted, further reducing capital expenditures[7] - The Board declared a Q3 cash dividend of $0.05 per share, a 60% reduction from the prior dividend, payable on October 3, 2025[7][8] - The dividend cut aims to enhance balance sheet flexibility and will be re-evaluated upon market recovery[7] Detailed Second Quarter 2025 Financial Performance This section provides a detailed breakdown of Tronox's financial performance in Q2 2025, covering revenue by product, net loss, adjusted EBITDA, and operating expenses 3.1 Revenue Breakdown Total revenue for Q2 2025 was $731 million, an 11% year-over-year decrease, primarily driven by lower TiO2 and zircon volumes and reduced zircon average selling prices - Total revenue for Q2 was $731 million, an 11% year-over-year decrease[9] - The decrease was primarily driven by lower TiO2 and zircon volumes and reduced zircon average selling prices[9] 3.1.1 TiO2 Sales TiO2 sales revenue was $587 million, a 10% year-over-year decrease, primarily due to an 11% volume decline, partially offset by a 1% favorable foreign exchange impact - TiO2 revenue was $587 million, a 10% year-over-year decrease[10] - The year-over-year decrease was primarily driven by an 11% volume decline, partially offset by a 1% favorable foreign exchange impact[10] - Sequential sales increased by 1%, positively impacted by average selling prices and foreign exchange, despite a 2% volume decrease[10] 3.1.2 Zircon Sales Zircon revenue decreased by 20% year-over-year to $68 million, mainly due to a 10% volume decline and a 10% decrease in average selling prices - Zircon revenue decreased by 20% year-over-year to $68 million[11] - The year-over-year decrease was primarily driven by a 10% volume decline and a 10% decrease in average selling prices[11] - Sequential zircon revenue decreased by 1%, impacted by lower average selling prices, partially offset by a 1% volume increase[11] 3.1.3 Other Products Sales Other products revenue was $76 million, a 7% year-over-year decrease, primarily due to lower pig iron volumes - Other products revenue was $76 million, a 7% year-over-year decrease[11] - This was primarily due to lower pig iron volumes[11] - Sequential revenue for other products decreased by 11%[11] 3.2 Net Loss and Earnings Per Share In Q2 2025, Tronox reported a net loss attributable to the company of $84 million, or $0.53 diluted loss per share, contrasting with a net income of $16 million ($0.10 diluted EPS) in the prior year - In Q2 2025, net loss attributable to Tronox was $84 million, or $0.53 diluted loss per share[12] - This contrasts with a net income of $16 million, or $0.10 diluted earnings per share, in the prior year period[12] - After non-recurring adjustments of $39 million, adjusted net loss was $45 million, or $0.28 diluted loss per share[12] 3.3 Adjusted EBITDA and Margin Adjusted EBITDA decreased by 42% year-over-year to $93 million, primarily due to lower volumes, higher production and freight costs, and reduced average selling prices, partially offset by favorable foreign exchange and lower corporate costs - Adjusted EBITDA was $93 million, a 42% year-over-year decrease[13] - The year-over-year decrease was primarily due to lower volumes, higher production and freight costs, and reduced average selling prices, partially offset by favorable foreign exchange and lower corporate costs[13] - Adjusted EBITDA margin was 12.7%[13] - Sequential adjusted EBITDA decreased by 17%, mainly due to higher production costs, reduced non-recurring insurance benefits, lower volumes, and increased freight costs[14] 3.4 Operating Expenses Selling, general, and administrative expenses for the quarter were $72 million, a 3% year-over-year decrease, with net interest expense at $44 million and depreciation, depletion, and amortization at $74 million - Selling, general, and administrative expenses were $72 million, a 3% year-over-year decrease[15] - Net interest expense was $44 million[15] - Depreciation, depletion, and amortization expenses were $74 million[15] Balance Sheet, Cash Flow, and Capital Allocation This section reviews Tronox's debt, liquidity, free cash flow, and capital expenditures, highlighting the company's financial position and strategic investments 4.1 Debt and Liquidity As of Q2 2025 end, Tronox's total debt was $3.1 billion, with net debt at $2.9 billion, and a net leverage ratio of 6.1x for the trailing twelve months - As of the end of Q2, total debt was $3.1 billion, and net debt was $2.9 billion[16] - The net leverage ratio for the trailing twelve months was 6.1x[16] - Available liquidity was $397 million, comprising $132 million in cash and cash equivalents and $265 million in revolving credit facility availability[16] - The next significant debt maturity is in 2029, and there are no financial covenants on its term loans or bonds[16] 4.2 Free Cash Flow and Capital Expenditures Free cash flow for Q2 2025 was negative $55 million, with capital expenditures totaling $83 million, including investments in critical projects to replace existing mines and maintain vertical integration - Free cash flow for Q2 was negative $55 million[17] - Capital expenditures were $83 million, including investments for mine replacement and maintaining vertical integration advantages[17] Revised Full-Year 2025 Outlook Tronox adjusted its full-year 2025 guidance, projecting revenue between $3.0-$3.1 billion and adjusted EBITDA between $410-$460 million, reflecting lower-than-expected pigment and zircon volumes and prices Revised FY 2025 Guidance: | Metric | Expected Range | | :---------------- | :---------------- | | Revenue | $3.0-$3.1 billion | | Adjusted EBITDA | $410-$460 million | | Free Cash Flow | Use $100-$170 million | | Capital Expenditures | Less than $330 million | - The guidance adjustment is based on lower-than-expected pigment and zircon volumes and prices, partially offset by strategic sales growth in other products and improved production costs in the second half[18] - The company remains on track to achieve $125 million to $175 million in sustainable, recurring cost improvements by the end of 2026[18] Corporate Information This section provides details on Tronox's webcast conference call and an overview of the company's business as a leading global producer of titanium products 6.1 Webcast Conference Call Details Tronox will host a webcast conference call on July 31, 2025, at 10:00 AM ET to discuss its results, with public access available via its investor relations website - The webcast conference call will be held on July 31, 2025, at 10:00 AM ET[19] - Registration for the live webcast and accompanying slides is available via investor.tronox.com[19] - A replay of the conference call will be available on investor.tronox.com after the call[20] 6.2 About Tronox Holdings plc Tronox Holdings plc is a leading global producer of high-quality titanium products, including TiO2 pigments, specialty-grade TiO2 products, high-purity titanium chemicals, and zircon - Tronox Holdings plc is a leading global producer of high-quality titanium products, including TiO2 pigments, specialty-grade TiO2 products, high-purity titanium chemicals, and zircon[21] - The company operates a vertically integrated business model, mining titanium-bearing mineral sands and operating upgrading facilities to produce high-grade titanium feedstock, pig iron, and other minerals[21] - The company has approximately 6,500 employees and operations across six continents[21] Disclosures and Non-GAAP Information This section outlines cautionary statements regarding forward-looking information and explains the use of non-GAAP financial measures, including their purpose and reconciliation to GAAP results 7.1 Cautionary Statement about Forward-Looking Statements This section warns that non-historical statements in the report are forward-looking and subject to known and unknown risks, uncertainties, and assumptions - Non-historical statements in the report are forward-looking and subject to known and unknown risks, uncertainties, and assumptions[22] - Actual results may differ materially due to factors such as macroeconomic conditions, policy changes, inflation, currency fluctuations, geopolitical events, supply chain disruptions, and market volatility[22] - The company undertakes no obligation to update or revise any forward-looking statements[23] 7.2 Use of Non-GAAP Information Tronox uses non-GAAP financial measures like EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, Free Cash Flow, and Net Leverage Ratio (Trailing Twelve Months) to provide additional information - The company uses non-GAAP financial measures such as EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, Free Cash Flow, and Net Leverage Ratio (Trailing Twelve Months)[24] - These non-GAAP measures supplement, rather than replace, GAAP results and exclude costs and expenses not representative of core operating results[24] - Reconciliations to U.S. GAAP results for non-GAAP financial measures are included in the report[24] Condensed Consolidated Financial Statements (U.S. GAAP) This section presents Tronox's condensed consolidated financial statements under U.S. GAAP, including statements of operations, balance sheets, and cash flows 8.1 Statements of Operations The condensed consolidated statements of operations show a net loss of $85 million for Q2 2025, compared to a net income of $10 million in Q2 2024, with net sales decreasing from $820 million to $731 million Condensed Consolidated Statements of Operations (Three Months Ended June 30): | (Millions of USD) | 2025 | 2024 | | :------------------------- | :--- | :--- | | Net Sales | $731 | $820 | | Cost of Sales | $652 | $670 | | Gross Profit | $79 | $150 | | Restructuring and Other (Income) Expense | $42 | — | | Selling, General and Administrative Expenses | $72 | $74 | | (Loss) Income from Operations | $(35) | $76 | | Net (Loss) Income | $(85) | $10 | | Net (Loss) Income Attributable to Tronox Holdings plc | $(84) | $16 | | Diluted (Loss) Earnings Per Share | $(0.53) | $0.10 | - Capital expenditures for Q2 were $83 million (2025) compared to $76 million (2024)[26] - Depreciation, depletion, and amortization expenses for Q2 were $74 million (2025) compared to $72 million (2024)[26] 8.2 Balance Sheets The condensed consolidated balance sheets show total assets of $6.186 billion as of June 30, 2025, an increase from $6.038 billion on December 31, 2024, with total liabilities rising to $4.507 billion and total equity decreasing to $1.679 billion Condensed Consolidated Balance Sheets (Millions of USD): | Metric | June 30, 2025 | December 31, 2024 | | :---------------- | :------------ | :------------- | | Total Current Assets | $2,238 | $2,155 | | Total Assets | $6,186 | $6,038 | | Total Current Liabilities | $1,068 | $874 | | Total Liabilities | $4,507 | $4,247 | | Total Equity | $1,679 | $1,791 | - Cash and cash equivalents: $132 million (June 30, 2025) compared to $151 million (December 31, 2024)[32] - Short-term debt: $266 million (June 30, 2025) compared to $65 million (December 31, 2024)[32] 8.3 Statements of Cash Flows For the six months ended June 30, 2025, cash used in operating activities was $4 million, a significant decrease from $131 million cash provided in the prior year, while cash used in investing activities increased to $176 million Consolidated Statements of Cash Flows (Six Months Ended June 30): | (Millions of USD) | 2025 | 2024 | | :------------------------------------ | :--- | :--- | | Net Cash (Used in) Provided by Operating Activities | $(4) | $131 | | Net Cash Used in Investing Activities | $(176) | $(136) | | Net Cash Provided by (Used in) Financing Activities | $156 | $(63) | | Net Decrease in Cash, Cash Equivalents, and Restricted Cash | $(19) | $(72) | | Cash, Cash Equivalents, and Restricted Cash at End of Period | $133 | $201 | - Capital expenditures for the six months were $193 million (2025) compared to $152 million (2024)[34] - Dividends paid for the six months were $20 million (2025) compared to $41 million (2024)[34] Reconciliation of Non-U.S. GAAP Financial Measures This section provides detailed reconciliations of non-U.S. GAAP financial measures to their most directly comparable U.S. GAAP financial measures, including adjusted net income, EBITDA, adjusted EBITDA, free cash flow, and trailing twelve-month adjusted EBITDA 9.1 Adjusted Net (Loss) Income Reconciliation The reconciliation shows Tronox's GAAP net loss attributable to the company of $84 million for Q2 2025 was adjusted to a net loss of $45 million after accounting for restructuring and other expenses, tax valuation allowances, and other non-recurring items Net (Loss) Income to Adjusted Net (Loss) Income Reconciliation (Three Months Ended June 30): | (Millions of USD) | 2025 | 2024 | | :---------------------------------------------------- | :--- | :--- | | Net (Loss) Income Attributable to Tronox Holdings plc (U.S. GAAP) | $(84) | $16 | | Restructuring and Other (Income) Expense (a) | $38 | — | | Tax Valuation Allowance (b) | — | $16 | | Sales Royalty Interest (c) | — | $(21) | | Other (d) | $1 | $1 | | Adjusted Net (Loss) Income Attributable to Tronox Holdings plc (Non-U.S. GAAP) | $(45) | $12 | | Diluted Net (Loss) Income Per Share (U.S. GAAP) | $(0.53) | $0.10 | | Adjusted Diluted Net (Loss) Income Per Share Attributable to Tronox Holdings plc (Non-U.S. GAAP) | $(0.28) | $0.07 | - Restructuring and other expenses (a) are related to the Botlek facility idling[28] 9.2 EBITDA and Adjusted EBITDA Reconciliation Q2 2025 EBITDA was $37 million, which, after adjustments for share-based compensation, accrued expenses, accounts receivable securitization programs, foreign currency revaluation, and restructuring costs, resulted in an Adjusted EBITDA of $93 million, a significant decrease from $161 million in Q2 2024 Net (Loss) Income to EBITDA and Adjusted EBITDA Reconciliation (Three Months Ended June 30): | (Millions of USD) | 2025 | 2024 | | :------------------------------------------------------------------------------------------------ | :--- | :--- | | Net (Loss) Income (U.S. GAAP) | $(85) | $10 | | Interest Expense | $45 | $42 | | Provision for Income Taxes | $4 | $45 | | Depreciation, Depletion and Amortization Expense | $74 | $72 | | EBITDA (Non-U.S. GAAP) | $37 | $167 | | Share-based Compensation (a) | $4 | $4 | | Accrued Expenses and Other Adjustments for Asset Retirement Obligations and Environmental Liabilities (b) | $7 | $7 | | Accounts Receivable Securitization Program (c) | $3 | $4 | | Foreign Currency Revaluation (d) | $(2) | $4 | | Restructuring and Other (Income) Expense (f) | $42 | — | | Adjusted EBITDA (Non-U.S. GAAP) | $93 | $161 | - Adjusted EBITDA as a percentage of net sales: 12.7% (2025) compared to 19.6% (2024)[37] - Net debt to trailing twelve months adjusted EBITDA ratio: 6.1x (June 30, 2025) compared to 4.8x (December 31, 2024)[37] 9.3 Free Cash Flow Reconciliation In Q2 2025, cash provided by operating activities was $28 million, but after deducting $83 million in capital expenditures, free cash flow was negative $55 million, with free cash flow for the six months ended June 30, 2025, at negative $197 million Free Cash Flow Reconciliation (Millions of USD): | Metric | Six Months Ended June 30, 2025 | Three Months Ended March 31, 2025 | Three Months Ended June 30, 2025 | | :----------------------------- | :----------------------------- | :-------------------------------- | :------------------------------- | | Net Cash Used in Operating Activities | $(4) | $(32) | $28 | | Capital Expenditures | $(193) | $(110) | $(83) | | Free Cash Flow (Non-U.S. GAAP) | $(197) | $(142) | $(55) | 9.4 Trailing Twelve Month Adjusted EBITDA Reconciliation As of June 30, 2025, trailing twelve-month adjusted EBITDA was $477 million, a decrease from $564 million as of December 31, 2024, with this reconciliation detailing adjustments made to net loss over the past four quarters - As of June 30, 2025, trailing twelve-month adjusted EBITDA was $477 million[37][44] - This represents a decrease from $564 million as of December 31, 2024[37] Trailing Twelve Month Adjusted EBITDA (Millions of USD): | Metric | September 30, 2024 | December 31, 2024 | March 31, 2025 | June 30, 2025 | Trailing Twelve Month Adjusted EBITDA | | :----- | :----------- | :----------- | :----------- | :----------- | :------------------------------------ | | Net Loss (U.S. GAAP) | $(25) | $(30) | $(111) | $(85) | $(251) | | EBITDA (Non-U.S. GAAP) | $110 | $126 | $5 | $37 | $278 | | Adjusted EBITDA (Non-U.S. GAAP) | $143 | $129 | $112 | $93 | $477 |