Tronox(US:TROX)2021-04-29 13:06Financial Performance - Tronox reported net sales of $891 million for Q1 2021, a 23% increase from $722 million in Q1 2020, driven by higher TiO and Zircon sales volumes and prices [113]. - TiO revenue increased by 20% or $116 million compared to the prior year, primarily due to a $94 million increase in sales volumes and a $3 million rise in average selling prices [114]. - Zircon revenue rose by 89% or $58 million, mainly due to a 91% increase in sales volumes, despite a 2% reduction in average selling prices [114]. - Gross profit for Q1 2021 was $206 million, representing 23% of net sales, compared to 24% in the prior year [112]. - Adjusted EBITDA for Q1 2021 was $225 million, up from $174 million in Q1 2020, with an Adjusted EBITDA margin of 25% [112]. - Net income for Q1 2021 was $26 million, down from $40 million in Q1 2020, representing a 35% decrease [146]. - Adjusted EBITDA for Q1 2021 was $225 million, an increase of 29% from $174 million in Q1 2020 [146]. Liquidity and Debt - Total available liquidity as of March 31, 2021, was $1.2 billion, including $759 million in cash and cash equivalents [109]. - Total debt as of March 31, 2021, was $3.4 billion, with a net debt to trailing-twelve month Adjusted EBITDA ratio of 3.8x [110]. - Long-term debt increased to $3.4 billion as of March 31, 2021, compared to $3.3 billion at December 31, 2020 [138]. - The company issued $1,075 million in senior notes due 2029, using proceeds to redeem $615 million of senior notes due 2026 and $450 million due 2025 [136]. - Working capital decreased to $1.4 billion at March 31, 2021, down from $1.7 billion at December 31, 2020 [126]. - Cash provided by operating activities was $135 million for the three months ended March 31, 2021, a significant improvement from a cash outflow of $28 million in the same period of 2020 [139]. Expenses and Taxation - Interest expense for Q1 2021 increased by $5 million compared to the same period in 2020, primarily due to new Senior Notes issued [117]. - The effective tax rate for Q1 2021 was 19%, compared to 15% in Q1 2020, influenced by various factors including income and losses in jurisdictions with valuation allowances [122]. - Interest expense increased to $50 million in Q1 2021 from $45 million in Q1 2020, reflecting an 11% rise [146]. - The company incurred a loss on extinguishment of debt amounting to $34 million in Q1 2021, with no such loss reported in Q1 2020 [146]. Comprehensive Income and Other Losses - Other comprehensive loss decreased to $34 million in Q1 2021 from $270 million in the prior year, mainly due to improved foreign currency translation adjustments [123]. - The unrealized net gain recorded in "Accumulated other comprehensive loss" was $53 million as of March 31, 2021 [163]. - An unrealized net gain of $53 million was recorded in "Accumulated other comprehensive loss" on the balance sheet as of March 31, 2021 [163]. Customer Concentration - The ten largest third-party customers represented 29% of consolidated net sales for both Q1 2021 and Q1 2020, indicating stable customer concentration [158]. Market and Currency Risk - The company is exposed to currency risk, particularly in South Africa and Australia, where revenues are primarily in U.S. dollars and expenses in local currencies [161]. - The company utilizes various strategies to manage market risk, including passing on higher raw material costs through timely price increases [157]. - The company entered into interest-rate swap agreements for a portion of its Prior Term Loan Facility, converting variable rates to fixed rates, expiring in September 2024 [160]. - A hypothetical 1% increase in interest rates would decrease pre-tax income by approximately $6 million annually, based on Q1 2021 data [159]. - The majority of revenues are earned in U.S. dollars while expenses are incurred in local currencies, leading to currency exposure [161]. - The company may enter into forward contracts as economic hedges for foreign currency transactions [161]. Environmental and Compliance Costs - The company is subject to stringent environmental regulations, which may incur significant compliance costs in the future [154].