Tronox(US:TROX)2025-11-06 15:17Financial Performance - Net sales for Q3 2025 were $699 million, a decrease of 13% from $804 million in Q3 2024, primarily due to lower sales volumes and average selling prices of TiO2 [119]. - TiO2 revenue decreased by 11% or $66 million compared to the prior year quarter, driven by a $47 million decrease in sales volumes and a $29 million decrease in average selling prices [119]. - Zircon revenue decreased by 20% from Q3 2024 to Q3 2025, primarily due to a 16% decline in average selling prices and a 4% decrease in sales volumes [115]. - Gross profit for Q3 2025 was $52 million, representing a gross margin of 7.4%, down from 15.9% in the prior year [118]. - The company reported a net loss of $100 million for Q3 2025, compared to a net loss of $25 million in Q3 2024, reflecting a significant increase in restructuring charges [118]. - Adjusted EBITDA for Q3 2025 was $74 million, down from $143 million in Q3 2024, with adjusted EBITDA as a percentage of net sales decreasing to 10.6% from 17.8% [118]. - For the nine months ended September 30, 2025, net sales were $2,168 million, a decrease of 10% compared to $2,398 million for the same period in 2024 [128]. - For the nine months ended September 30, 2025, total net sales decreased by 10% to $2,168 million compared to $2,398 million in the prior year [129]. - TiO2 revenue decreased by 8% or $153 million, primarily due to a $126 million decrease in sales volumes and a $41 million decrease in average selling prices [129]. - Gross margin for the nine months ended September 30, 2025 was $230 million, representing 10.6% of net sales, down from 16.6% in the prior year [129]. - Loss from operations was $139 million for the nine months ended September 30, 2025, a decrease of $310 million compared to income from operations of $171 million in the prior year [131]. - Adjusted EBITDA as a percentage of net sales was 12.9% for the nine months ended September 30, 2025, a decrease of 5.2 points from 18.1% in the prior year [137]. - The company reported a net loss of $296 million for the nine months ended September 30, 2025, compared to a net loss of $24 million for the same period in 2024, representing an increase in net loss of $272 million year-over-year [162]. Liquidity and Debt - Total available liquidity as of September 30, 2025, was $664 million, including $185 million in cash and cash equivalents [116]. - Total debt as of September 30, 2025, was $3.2 billion, with a net debt to trailing twelve months adjusted EBITDA ratio of 7.5x [116]. - Cash and cash equivalents increased to $185 million as of September 30, 2025, up from $151 million at December 31, 2024 [140]. - Working capital was $1.5 billion at September 30, 2025, compared to $1.3 billion at December 31, 2024 [141]. - Short-term and long-term debt increased to $3.2 billion as of September 30, 2025, compared to $2.9 billion at December 31, 2024 [155]. - The company’s long-term debt, net, increased to $3,136 million as of September 30, 2025, up from $2,759 million as of December 31, 2024 [172]. - The company’s net debt to trailing twelve months Adjusted EBITDA ratio increased to 7.5x as of September 30, 2025, compared to 4.8x as of December 31, 2024 [172]. - The company issued $400 million of 9.125% senior secured notes due 2030 on September 26, 2025 [153]. Cash Flow - Cash used in operating activities was $61 million for the nine months ended September 30, 2025, a decrease from cash provided by operating activities of $218 million in the prior year, primarily due to a decrease in income-related cash generation [162]. - Net cash used in investing activities increased to $255 million in the nine months ended September 30, 2025, compared to $226 million in the same period of 2024, driven by higher capital expenditures of $273 million [163]. - The company generated net cash provided by financing activities of $345 million for the nine months ended September 30, 2025, compared to cash used in financing activities of $97 million in the prior year, primarily from net proceeds of long-term debt of $379 million [164]. Restructuring and Charges - Restructuring and other charges for Q3 2025 amounted to $25 million, primarily related to the idling of the Botlek plant [119]. - The company incurred restructuring and other charges of $25 million for the three months ended September 30, 2025, and $150 million for the nine months ended September 30, 2025 [183]. - Interest expense for the three months ended September 30, 2025, was $48 million, with a total of $176 million for the trailing twelve months [178]. Environmental and Compliance Costs - The company is subject to significant environmental compliance costs, which are expected to continue to be substantial in the foreseeable future [188]. Currency Risk and Hedging - The company is exposed to currency risk primarily in South Africa and Australia, where revenues are earned in U.S. dollars while expenses are incurred in local currencies [200]. - The company enters into foreign currency contracts to hedge forecasted non-functional currency sales and costs for its subsidiaries in South Africa and Australia [201]. - As of September 30, 2025, the company had notional amounts of 136 million Australian dollars (approximately $90 million) in foreign currency contracts to hedge against fluctuations in currency rates for its Australian subsidiaries' cost of sales [201]. - The company had notional amounts of 975 million South African Rand (approximately $56 million) to reduce exposure of its South African subsidiaries' third-party sales to currency fluctuations [201]. - As of September 30, 2025, the company had outstanding foreign currency contracts totaling 470 million South African Rand (approximately $27 million) and 161 million Australian dollars (approximately $106 million) [202]. - The company utilized a combination of zero-cost collars, put options, and forward contracts to manage currency exposure, designating these as cash flow hedges [201]. - As of September 30, 2025, the company had notional amounts of 61 million Pound Sterling (approximately $82 million) and 40 million Euro (approximately $47 million) in outstanding foreign currency contracts [202]. - A hypothetical 1% increase in interest rates would result in a net decrease to pre-tax income of approximately $7 million on an annualized basis [193]. - The company recorded a net unrealized gain of $1 million related to interest rate swaps as of September 30, 2025 [198]. - The company recorded a net unrealized gain of $6 million recorded in "Accumulated other comprehensive loss" on the balance sheet, expected to be fully recognized in earnings over the next twelve months [201]. - The company recorded a net loss of $14 million in "Accumulated other comprehensive loss" at December 31, 2024 [201].