STAMFORD, Conn., July 29, 2020 /PRNewswire/ --
Second Quarter 2020
Financial Highlights:
|
|
|
•
|
Revenue of $578
million
|
•
|
Income from
operations of $49 million; Net loss of $4 million
|
•
|
Adjusted EBITDA of
$142 million; Adjusted EBITDA margin of 25 percent
(Non-GAAP)
|
•
|
Total Cristal
acquisition synergies year-to-date of $107 million, with $84
million reflected in Adjusted EBITDA (Non-GAAP) and $23 million in
taxes and other synergies; maintaining FY2020 total synergy target
of $190 million, $140 million within EBITDA
|
•
|
GAAP diluted loss per
share of $0.03; Adjusted diluted EPS of $0.03 (Non-GAAP)
|
•
|
Due to the impacts of
COVID-19, TiO2 sales volumes declined 19 percent,
consistent with previously issued Q2 outlook, and selling prices
were level sequentially
|
•
|
Zircon sales volumes
increased 2 percent sequentially as a result of shipment timing,
and selling prices increased 2 percent driven by favorable product
mix
|
•
|
Feedstock and other
products sales decreased 43 percent sequentially, primarily due to
the lack of mandated shipments of CP slag in the quarter and lower
sales volumes of pig iron
|
|
|
|
Balance Sheet and
Cash Flow:
|
|
|
•
|
Over $1.1 billion of
available liquidity including $722 million in cash and cash
equivalents, excluding restricted cash of $27 million that includes
$18 million held in escrow related to the TTI
acquisition
|
•
|
$56 million in Free
Cash Flow for the second quarter driven by reductions in working
capital
|
•
|
Debt was $3.5 billion
and debt, net of cash and cash equivalents was $2.8
billion
|
•
|
No maturities on our
term loan or notes until 2024
|
|
|
|
Strategic
Developments:
|
|
|
•
|
Signed a definitive
agreement to acquire the TiZir Titanium and Iron ("TTI") business
from Eramet S.A. for approximately $300 million or a
synergy-adjusted multiple of ~5.2x FY 2019 Adjusted
EBITDA
|
|
–
|
Expected to achieve
$15-20 million in run-rate synergies by year three
|
|
–
|
Remains subject to
certain customary closing conditions including regulatory
approvals
|
•
|
Entered into an
amended Jazan Technical Services Agreement ("TSA") under which
Tronox will provide more comprehensive consulting and advisory
services on the project
|
Tronox Holdings plc (NYSE:TROX) ("Tronox" or the "Company"), the
world's leading integrated manufacturer of titanium dioxide
pigment, today reported its financial results for the quarter
ending June 30, 2020, as follows:
Summary of Financial Results for the Quarter Ending
June 30, 2020
Reported Basis
(Millions of
dollars)
|
Q2
2020
|
Q2
2019
|
Y-o-Y %
∆
|
Q1
2020
|
Q-o-Q %
∆
|
Revenue
|
$
578
|
$
791
|
(27%)
|
$
722
|
(20%)
|
TiO2
|
466
|
625
|
(25%)
|
580
|
(20%)
|
Zircon
|
68
|
88
|
(23%)
|
65
|
5%
|
Feedstock and other
products
|
44
|
78
|
(44%)
|
77
|
(43%)
|
Net Income (Loss)
from Continuing Ops
|
$
(4)
|
$
(55)
|
n/m
|
$
40
|
n/m
|
Adjusted
EBITDA
|
$
142
|
$
195
|
(27%)
|
$
174
|
(18%)
|
Adjusted EBITDA
Margin %
|
25%
|
25%
|
-
|
24%
|
1
pt
|
|
|
|
|
|
|
|
Y-o-Y %
∆
|
|
Q-o-Q %
∆
|
|
Volume
|
Price
|
|
Volume
|
Price
|
TiO2
|
(23%)
|
(3%)
|
|
(19%)
|
0%
|
Local Currency
Basis
|
-
|
(2%)
|
|
-
|
0%
|
Zircon
|
(11%)
|
(13%)
|
|
2%
|
2%
|
Pro Forma Basis
(Millions of
dollars)
|
Q2
2020
|
Q2
2019
|
Y-o-Y %
∆
|
Q1
2020
|
Q-o-Q %
∆
|
Revenue
|
$
578
|
$
827
|
(30%)
|
$
722
|
(20%)
|
TiO2
|
466
|
657
|
(29%)
|
580
|
(20%)
|
Zircon
|
68
|
89
|
(24%)
|
65
|
5%
|
Feedstock and other
products
|
44
|
81
|
(46%)
|
77
|
(43%)
|
Net Income
(Loss) from Continuing Ops
|
$
(4)
|
$
32
|
n/m
|
$
40
|
n/m
|
Adjusted
EBITDA
|
$
142
|
$
200
|
(29%)
|
$
174
|
(18%)
|
Adjusted EBITDA
Margin %
|
25%
|
24%
|
1
pt
|
24%
|
1
pt
|
|
|
|
|
|
|
|
Y-o-Y %
∆
|
|
Q-o-Q %
∆
|
|
Volume
|
Price
|
|
Volume
|
Price
|
TiO2
|
(27%)
|
(3%)
|
|
(19%)
|
0%
|
Local Currency
Basis
|
-
|
(2%)
|
|
-
|
0%
|
Zircon
|
(12%)
|
(13%)
|
|
2%
|
2%
|
CEO Commentary
Jeffry N. Quinn, chairman and
chief executive officer, commented, "Tronox delivered solid
financial results in the quarter despite the significant reduction
in demand and other challenges associated with the COVID-19
pandemic. Our results were consistent with the outlook provided at
the time of our first quarter earnings release. TiO2
volumes declined 19 percent quarter over quarter, and
TiO2 pricing was sequentially flat. Zircon sales volumes
and price were both up by 2 percent sequentially owing to
shipment timing and favorable product mix. We delivered Adjusted
EBITDA of $142 million and an
Adjusted EBITDA margin of 25 percent, once again benefitting from
the resiliency of our vertically integrated business model and
synergies from the Cristal acquisition, as well as focused cost
reduction actions that we implemented at the outset of the
pandemic. I am pleased with our delivery of these results given the
ongoing macroeconomic environment and the challenges the men and
women of Tronox overcame in the quarter. As an organization, we
have remained relentlessly focused on the health and safety of our
employees, managing our ongoing operations, and preparing for the
future. The efforts of our people to proactively implement
stringent and prudent access protocols and other safeguards at all
our worldwide locations preserved our ability to operate and
continue to meet our customers' needs.
"During the quarter, we also signed a definitive agreement with
Eramet S.A. to purchase TiZir's TTI facility. This highly strategic
acquisition will further our vertical integration strategy by
increasing our titanium feedstock production capacity, thereby
enabling our ability to meet our internal feedstock requirements
and better serve our pigment customers. The addition of the
facility to our portfolio will reduce our costs by reducing our
reliance on third party feedstock suppliers and presenting an
opportunity for cost and operating synergies. We continue to work
through customary closing conditions and regulatory
approvals. As for Jazan, the amendment of the Jazan TSA will
allow Tronox to increase technical and managerial resources devoted
to the project as it continues to advance towards sustainable
operations late in 2021.
"As we look to the third quarter, we are encouraged by the
momentum carried forward from June, the strongest month of the
second quarter. While the timing of re-opening of economies across
the globe remains uncertain and subject to week-by-week
developments, as of today, we anticipate TiO2 volumes to
continue to improve in the third quarter relative to the second
quarter and for the zircon market to remain relatively stable as
compared to the last several quarters.
"We are utilizing our integrated business planning capabilities
to ensure we continue to satisfy our customers' needs, providing
the same high level of service our customers have grown to expect
from Tronox, while prudently managing working capital. As a result
of the successful implementation of cost savings and disciplined
management of our capital expenditures, we are confident in our
ability to generate strong free cash flow for the year. Available
liquidity of over $1.1 billion is
more than sufficient to fund the TTI acquisition and support our
business."
Mr. Quinn concluded, "I am very pleased that we have continued
to deliver on our commitments, especially considering the
challenges presented by the continued global macroeconomic
uncertainty due to COVID-19. Our ability to confront these
challenges and protect our people and our business, all while
delivering reliable, high-quality product for our customers is a
demonstration of our capabilities as a leading TiO2
producer and the value of our vertically integrated business
model."
Financial Summary for the Quarter Ending June 30, 2020
Tronox reported revenue of $578
million for the second quarter 2020, a decrease of 30
percent compared to second quarter 2019 revenues of $827 million on a pro forma basis. Income
from operations of $49 million
compared to $84 million in the
year-ago quarter on a pro forma basis. Net loss attributable
to Tronox was $4 million, or
$0.03 per diluted share, compared to
a net income from continuing operations attributable to Tronox of
$26 million, or $0.17 per diluted share, in the year-ago quarter
on a pro forma basis. Net loss attributable to Tronox in the
second quarter 2020 included transaction costs related to the
acquisition of TTI, integration costs related to the Cristal
acquisition, and a tax valuation allowance that totaled
$9 million or $0.06 per diluted share. Excluding these
items, adjusted net income attributable to Tronox (Non-GAAP) was
$5 million, or $0.03 per diluted share. Adjusted EBITDA of
$142 million decreased 29 percent
compared to $200 million on a pro
forma basis in the prior-year quarter.
Note: Since Tronox and Cristal combined their respective
businesses on April 10, 2019 and to
assist in the following discussion of second quarter 2020
performance compared to the second quarter 2019, we have provided
the results on both a pro forma basis and a reported basis.
Second Quarter 2020 vs. Second Quarter 2019
Reported Basis
- Revenue of $578 million decreased
27 percent compared to $791
million
- TiO2 sales of $466
million, including revenue from the acquired Cristal
operations, decreased 25 percent compared to $625 million
- Zircon sales of $68 million,
including revenue from the acquired Cristal operations, decreased
23 percent from $88 million
- Feedstock and other products sales of $44 million, including revenue from the acquired
Cristal operations, decreased 44 percent from $78 million
- Adjusted EBITDA of $142 million
decreased 27 percent compared to $195
million
- Selling, general and administrative ("SG&A") expenses were
$80 million compared to $103 million
- Interest expense of $47 million
decreased from $54 million in the
year-ago quarter
Pro Forma Basis
- Revenue of $578 million decreased
30 percent compared to $827 million
in the year-ago quarter, driven by impacts to sales volumes due to
COVID-19
- TiO2 sales of $466
million were 29 percent lower compared to $657 million; sales volumes decreased 27 percent;
selling prices were 2 percent lower on a local currency basis and 3
percent lower on a U.S. dollar basis
- Zircon sales of $68 million were
24 percent lower than $89 million in
the year-ago quarter; sales volumes were 12 percent lower and
selling prices were 13 percent lower
- Feedstock and other products sales of $44 million decreased 46 percent from
$81 million
- Adjusted EBITDA of $142 million
was 29 percent lower than $200
million in the year-ago quarter, driven primarily by lower
sales volumes due to COVID-19, absence of deferred margin benefit,
increased costs, and one-time costs related to our South African
mining and beneficiation operations during the countrywide
lockdown; this was partially offset by synergies, favorable foreign
exchange rates, and improved ore grades at our Australian mine
sites
- SG&A expenses were $80
million compared to $85
million
- Interest expense of $47 million
decreased from $54 million in the
year-ago quarter
Second Quarter 2020 vs. First Quarter 2020
Reported Basis
- Revenue of $578 million decreased
20 percent compared to $722
million
- TiO2 sales of $466
million were 20 percent lower than $580 million; sales volumes decreased 19 percent
– driven by impacts from regional lockdowns due to COVID-19 – and
selling prices were level sequentially
- Zircon sales of $68 million
increased 5 percent from $65 million,
driven by a 2 percent increase in sales volumes that was a result
of a benefit from shipment timing and a 2 percent increase in
selling prices due to favorable product mix
- Feedstock and other products sales of $44 million decreased 43 percent compared to
$77 million, due to a lack of
mandated shipments of CP slag, lower sales volumes of pig iron, and
an opportunistic sale of excess ilmenite in Q1 that did not repeat
in Q2
- Adjusted EBITDA of $142 million
decreased 18 percent compared to $174
million, driven primarily by lower TiO2 sales
volumes due to COVID-19, lower feedstock and other product volumes,
increased costs, and one-time costs related to our South African
mining and beneficiation operations during the countrywide
lockdown; this was partially offset by synergies, favorable foreign
exchange rates, and improved ore grades at our Australian mine
sites
- SG&A expenses were $80
million compared to $94
million, due to cost reductions
- Interest expense of $47 million
increased from $45 million in the
previous quarter, due to new debt issuance
Other Financial Information
- As of June 30, 2020, debt was
$3.5 billion and debt, net of cash
and cash equivalents was $2.8
billion
- Liquidity was over $1.1 billion
as of June 30, 2020, comprised of
cash and cash equivalents of $722
million and $401 million
available under revolving credit agreements
- Restricted cash of $27 million
includes $18 million held in escrow
related to the TTI acquisition
- In the second quarter 2020, capital expenditures were
$44 million and depreciation,
depletion and amortization expense was $72
million
- Free Cash Flow for the quarter was $56
million, primarily due to working capital improvements
Webcast Conference Call
Tronox will conduct a webcast conference call on Thursday, July 30, 2020 at 8:30 a.m. ET (New
York). The live call is open to the public via
internet broadcast and telephone.
Internet Broadcast:
https://investor.tronox.com
Dial-in Telephone Numbers:
United States: +1.866.270.1533
International: +1.412.317.0797
Conference Call Presentation Slides will be used during
the conference call and will be available on our investor relations
website: https://investor.tronox.com
Conference Call Replay: Available via the internet
and telephone beginning on July 30,
2020, 1:00 p.m. ET
(New York), until August 4, 2020, 1:00 p.m.
ET (New York)
Internet Replay:
https://investor.tronox.com
Replay Dial-in Telephone Numbers:
United States: +1.877.344.7529
International: +1.412.317.0088
Replay Access Code: 10145759
Upcoming Conferences
During the third quarter 2020, a member of management is
scheduled to present at the following conferences:
- Jefferies Virtual Industrials Conference, August 5, 2020
- Credit Suisse 33rd Annual Virtual Basic Materials
Conference, September 16 – 17,
2020
Accompanying conference and meeting materials will be available
at http://investor.tronox.com
About Tronox
Tronox Holdings plc is one of the world's leading producers of
high-quality titanium products, including titanium dioxide pigment,
specialty-grade titanium dioxide products and high-purity titanium
chemicals; and zircon. We mine titanium-bearing mineral sands and
operate upgrading facilities that produce high-grade titanium
feedstock materials, pig iron and other minerals. With nearly 7,000
employees across six continents, our rich diversity, unmatched
vertical integration model, and unparalleled operational and
technical expertise across the value chain,
position Tronox as the preeminent titanium dioxide
producer in the world. For more information about how our products
add brightness and durability to paints, plastics, paper and other
everyday products, visit tronox.com.
Forward Looking Statements
Statements in this release that are not historical are
forward-looking statements within the meaning of the U.S. Private
Securities Litigation Reform Act of 1995. These forward-looking
statements, which are subject to known and unknown risks,
uncertainties and assumptions about us, may include projections of
our future financial performance including the effects of the
COVID-19 pandemic and anticipated synergies based on our growth and
other strategies and anticipated trends in our business. These
statements are only predictions based on our current expectations
and projections about future events. There are important factors
that could cause our actual results, level of activity,
performance, actual synergies, or achievements to differ materially
from the results, level of activity, performance, anticipated
synergies or achievements expressed or implied by the
forward-looking statements. Significant risks and uncertainties may
relate to, but are not limited to, the risk that a regulatory
approval that may be required for the TTI transaction is delayed,
is not obtained or is obtained subject to conditions that are not
anticipated; the risk that the TTI transaction does not close or
that the related transaction agreement is terminated; the risk that
expected synergies, operating efficiencies and other benefits
expected from the TTI transaction will not be realized or will not
be realized within the expected time period; business and market
disruptions related to the COVID-19 pandemic, market conditions and
price volatility for titanium dioxide, zircon and other feedstock
materials, as well as global and regional economic downturns,
including as a result of the COVID-19 pandemic, that adversely
affect the demand for our end-use products; disruptions in
production at our mining and manufacturing facilities; and other
financial, economic, competitive, environmental, political, legal
and regulatory factors. These and other risk factors are discussed
in the Company's filings with the Securities and Exchange
Commission (SEC).
Moreover, we operate in a very competitive and rapidly changing
environment. New risks and uncertainties emerge from time to time,
and it is not possible for our management to predict all risks and
uncertainties, nor can management assess the impact of all factors
on our business or the extent to which any factor, or combination
of factors, may cause actual results to differ materially from
those contained in any forward-looking statements. Although we
believe the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results,
level of activity, performance, synergies or achievements. Neither
we nor any other person assumes responsibility for the accuracy or
completeness of any of these forward-looking statements. You should
not rely upon forward-looking statements as predictions of future
events. Unless otherwise required by applicable laws, we undertake
no obligation to update or revise any forward-looking statements,
whether because of new information or future
developments.
Use of Non-U.S. GAAP Financial Information
To provide investors and others with additional information
regarding the financial results of Tronox Holdings plc, we have
disclosed in this press release certain non-U.S. GAAP operating
performance measures of EBITDA, Adjusted EBITDA, Adjusted EBITDA
margin and Adjusted net loss attributable to Tronox, including its
presentation on a per share basis, and a non-U.S. GAAP liquidity
measure of Free Cash Flow. These non-U.S. GAAP financial
measures are a supplement to and not a substitute for or superior
to, the Company's results presented in accordance with U.S.
GAAP. The non-U.S. GAAP financial measures presented by the
Company may be different from non-U.S. GAAP financial measures
presented by other companies. Specifically, the Company believes
the non-U.S. GAAP information provides useful measures to investors
regarding the Company's financial performance by excluding certain
costs and expenses that the Company believes are not indicative of
its core operating results. The presentation of these
non-U.S. GAAP financial measures is not meant to be considered in
isolation or as a substitute for results or guidance prepared and
presented in accordance with U.S. GAAP. A reconciliation of
the non-U.S. GAAP financial measures to U.S. GAAP results is
included herein.
Management believes these non-U.S. GAAP financial measures:
- Reflect the ongoing business of Tronox Holdings plc in a manner
that allows for meaningful period-to-period comparison and analysis
of trends in its business, as they exclude income and expense that
are not reflective of ongoing operating results;
- Provide useful information to investors and others in
understanding and evaluating the operating results and future
prospects of Tronox Holdings plc;
- Provide an additional view of the operating performance of the
Company by adding interest expense & income, income taxes,
depreciation, depletion and amortization to the net income. Further
adjustments due to gain (loss) on extinguishment of debt,
stock-based compensation charges, transaction costs associated with
acquisitions, integration costs, purchase accounting adjustments,
foreign currency re-measurements, impairments, settlements of
pension and postretirement plans, impacts of tax settlements on
non-income related taxes, severance expense, and noncash pension
and postretirement expense and accretion expense are made to
exclude items that are either non-cash or unusual in nature;
- Adjusted EBITDA is one of the primary measures management uses
for planning and budgeting processes and to monitor and evaluate
financial and operating results. Adjusted EBITDA is not a
recognized term under U.S. GAAP and does not purport to be an
alternative to measures of our financial performance as determined
in accordance with U.S. GAAP, such as net income (loss). Because
other companies may calculate EBITDA and Adjusted EBITDA
differently than Tronox, EBITDA may not be, and Adjusted EBITDA as
presented in this release is not, comparable to similarly titled
measures reported by other companies; and
- We believe that the non-U.S. GAAP financial measure "Adjusted
net income (loss) attributable to Tronox Holdings plc" and its
presentation on a per share basis provide useful information about
our operating results to investors and securities analysts. We also
believe that excluding the effects of these items from operating
results allows management and investors to compare more easily the
financial performance of our underlying businesses from period to
period.
Unaudited Pro Forma Financial Information
On April 10, 2019, we announced
the completion of the acquisition of the TiO2 business
of Cristal which impacts the comparability of the reported results
for the second quarter of 2020 compared to the second quarter of
2019. Since Tronox and Cristal have combined their respective
businesses effective with the merger date of April 10, 2019, the three and six months ended
June 30, 2020 reflect the results of
the combined business, while the three and six months ended
June 30, 2019 reflect the results of
the combined business from April 10,
2019. To assist with a discussion of the second quarter of
2020 and the second quarter of 2019 results on a comparable basis,
certain supplemental unaudited pro forma income statement and
Adjusted EBITDA information is provided on a consolidated basis and
is referred to as "pro forma information." The pro forma
information has been prepared on a basis consistent with Article 11
of Regulation S-X, assuming the merger and merger-related
divestitures of Cristal's North American TiO2 business
and the 8120 paper laminate grade had been consummated on
January 1, 2018. In preparing this
pro forma information, the historical financial information has
been adjusted to give effect to pro forma adjustments that are (i)
directly attributable to the business combination and other
transactions presented herein, such as the merger-related
divestitures, (ii) factually supportable, and (iii) expected to
have a continuing impact on the combined entity's consolidated
results. The pro forma information is based on management's
assumptions and is presented for illustrative purposes and does not
purport to represent what the results of operations would actually
have been if the business combination and merger-related
divestitures had occurred as of the dates indicated or what the
results would be for any future periods. Also, the pro forma
information does not include the impact of any revenue, cost or
other operating synergies in the periods prior to the acquisition
that may result from the business combination or any related
restructuring costs.
Media Contact: Melissa Zona
+1.636.751.4057
Investor Contact: Jennifer
Guenther
+1.646.960.6598
TRONOX HOLDINGS
PLC
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (U.S. GAAP)
|
(UNAUDITED)
|
(Millions of U.S.
dollars, except share and per share data)
|
|
|
|
Three Months
Ended
June 30,
|
Six Months
Ended
June 30,
|
|
2020
|
2019
|
2020
|
2019
|
Net
sales
|
$
578
|
$
791
|
$ 1,300
|
$ 1,181
|
Cost of goods
sold
|
449
|
672
|
996
|
979
|
Contract
loss
|
-
|
19
|
-
|
19
|
Gross
profit
|
129
|
100
|
304
|
183
|
Selling, general and
administrative expenses
|
80
|
103
|
174
|
170
|
Restructuring
|
-
|
10
|
2
|
10
|
Income (loss) from
operations
|
49
|
(13)
|
128
|
3
|
Interest
expense
|
(47)
|
(54)
|
(92)
|
(103)
|
Interest
income
|
2
|
3
|
5
|
12
|
Loss on
extinguishment of debt
|
-
|
-
|
-
|
(2)
|
Other income,
net
|
2
|
5
|
11
|
3
|
Income (loss) from
continuing operations before income taxes
|
6
|
(59)
|
52
|
(87)
|
Income tax
(provision) benefit
|
(10)
|
4
|
(16)
|
2
|
Net (loss) income
from continuing operations
|
(4)
|
(55)
|
36
|
(85)
|
Net loss from
discontinued operations, net of tax
|
-
|
(1)
|
-
|
(1)
|
Net (loss)
income
|
(4)
|
(56)
|
36
|
(86)
|
Net income
attributable to noncontrolling interest
|
-
|
6
|
8
|
10
|
Net (loss) income
attributable to Tronox Holdings plc
|
$
(4)
|
$
(62)
|
$
28
|
$
(96)
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
per share, basic:
|
|
|
|
|
Continuing
operations
|
$
(0.03)
|
$
(0.41)
|
$
0.19
|
$
(0.69)
|
Discontinued
operations
|
$
-
|
$
-
|
$
-
|
$
-
|
Net (loss) income
per share, basic
|
$
(0.03)
|
$
(0.41)
|
$
0.19
|
$
(0.69)
|
|
|
|
|
|
Net (loss) income
per share, diluted:
|
|
|
|
|
Continuing
operations
|
$
(0.03)
|
$
(0.41)
|
$
0.19
|
$
(0.69)
|
Discontinued
operations
|
$
-
|
$
-
|
$
-
|
$
-
|
Net (loss) income
per share, diluted
|
$
(0.03)
|
$
(0.41)
|
$
0.19
|
$
(0.69)
|
|
|
|
|
|
Weighted average
shares outstanding, basic (in thousands)
|
143,465
|
150,686
|
143,080
|
137,569
|
Weighted average
shares outstanding, diluted (in thousands)
|
143,465
|
150,686
|
143,644
|
137,569
|
|
|
|
|
|
Other Operating
Data:
|
|
|
|
|
Capital
expenditures
|
44
|
56
|
82
|
81
|
Depreciation,
depletion and amortization expense
|
72
|
84
|
143
|
131
|
TRONOX HOLDINGS
PLC
|
RECONCILIATION OF
NON-U.S. GAAP FINANCIAL MEASURES
|
(UNAUDITED)
|
(Millions of U.S.
dollars, except share and per share data)
|
|
RECONCILIATION OF
NET (LOSS) INCOME FROM CONTINUING OPERATIONS
|
ATTRIBUTABLE TO
TRONOX HOLDINGS PLC (U.S. GAAP)
|
TO ADJUSTED NET
INCOME (LOSS) FROM CONTINUING OPERATIONS
|
ATTRIBUTABLE TO
TRONOX HOLDINGS PLC (NON-U.S. GAAP)
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
June 30,
|
|
Six Months
Ended
June 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
Net (loss) income
attributable to Tronox Holdings plc (U.S. GAAP)
|
$
(4)
|
|
$
(62)
|
|
$
28
|
|
$
(96)
|
Net income from
discontinued operations, net of tax (U.S. GAAP)
|
-
|
|
(1)
|
|
-
|
|
(1)
|
Net (loss) income
from continuing operations attributable to Tronox Holdings plc
(U.S. GAAP)
|
$
(4)
|
|
$
(61)
|
|
$
28
|
|
$
(95)
|
Inventory step-up
(a)
|
-
|
|
50
|
|
-
|
|
50
|
Contract loss
(b)
|
-
|
|
14
|
|
-
|
|
14
|
Transaction costs
(c)
|
4
|
|
21
|
|
4
|
|
29
|
Restructuring
(d)
|
-
|
|
10
|
|
2
|
|
10
|
Integration costs
(e)
|
3
|
|
4
|
|
10
|
|
4
|
Loss on
extinguishment of debt (f)
|
-
|
|
-
|
|
-
|
|
2
|
Tax valuation
allowance (g)
|
2
|
|
-
|
|
2
|
|
-
|
Charge for capital
gains tax payment to Exxaro (h)
|
-
|
|
1
|
|
-
|
|
2
|
Adjusted net income
from continuing operations attributable to Tronox Holdings plc
(non-U.S. GAAP) (1)
|
$
5
|
|
$
39
|
|
$
46
|
|
$
16
|
|
|
|
|
|
|
|
|
Diluted net (loss)
income per share from continuing operations (U.S. GAAP)
|
$
(0.03)
|
|
$
(0.41)
|
|
$
0.19
|
|
$
(0.69)
|
|
|
|
|
|
|
|
|
Inventory step-up,
per share
|
-
|
|
0.33
|
|
-
|
|
0.36
|
Contract loss, per
share
|
-
|
|
0.09
|
|
-
|
|
0.10
|
Transaction costs,
per share
|
0.03
|
|
0.14
|
|
0.03
|
|
0.21
|
Restructuring, per
share
|
-
|
|
0.07
|
|
0.01
|
|
0.07
|
Integration costs,
per share
|
0.02
|
|
0.03
|
|
0.07
|
|
0.03
|
Loss on
extinguishment of debt, per share
|
-
|
|
-
|
|
-
|
|
0.02
|
Tax valuation
allowance, per share
|
0.01
|
|
-
|
|
0.01
|
|
-
|
Charge for capital
gains tax payment to Exxaro, per share
|
-
|
|
0.01
|
|
-
|
|
0.02
|
Diluted adjusted net
income per share from continuing operations attributable to Tronox
Holdings plc (non-U.S. GAAP)
|
$
0.03
|
|
$
0.26
|
|
$
0.31
|
|
$
0.12
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding, diluted (in thousands)
|
143,754
|
|
151,538
|
|
143,644
|
|
138,915
|
|
(1) Only the
restructuring, inventory step-up and contract loss amounts have
been tax impacted. No income tax impacts have been given to
other items as they were recorded in jurisdictions with full
valuation allowances.
|
|
|
|
|
(a) Represents a
net-of-tax charge related to the recognition of a step-up in value
of inventories as a result of purchase accounting.
|
(b) Represents a
net-of-tax charge for the estimated losses we expect to incur under
the supply agreement with Venator which was recorded in "Contract
loss" in our Consolidated Statements of
Operations.
|
(c) Represents
transaction costs primarily associated with the Cristal Transaction
in 2019 and TTI Transaction in 2020 which were recorded in
"Selling, general and administrative expenses" in the unaudited
Condensed Consolidated Statements of Operations.
|
(d) Represents
amounts for employee-related costs, including severance, net of
tax.
|
(e) Represents
Integration costs associated with the Cristal acquisition after the
acquisition which were recorded in "Selling, general and
administrative expenses" in the unaudited Condensed Consolidated
Statements of Operations.
|
(f) 2019 amounts
represent the loss in connection with the modification of the Wells
Fargo Revolver and termination of the ABSA Revolver and a voluntary
prepayment made on the Term Loan Facility.
|
(g) Represents the
valuation allowance established against the deferred tax assets
within our Saudi Arabia jurisdiction.
|
(h) Represents
the expected payment to Exxaro for capital gains tax on the
disposal of its ordinary shares in Tronox Holding plc included in
"Other expense, net" in the unaudited Condensed Consolidated
Statements of Operations.
|
TRONOX HOLDINGS
PLC
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(UNAUDITED)
|
(Millions of U.S.
dollars, except share and per share data)
|
|
|
|
|
|
|
|
June 30,
2020
|
December 31,
2019
|
ASSETS
|
|
|
Current
Assets
|
|
|
Cash and cash
equivalents
|
$
722
|
$
302
|
Restricted
cash
|
27
|
9
|
Accounts receivable
(net of allowance for credit losses of $4 million and $5 million as
of June 30, 2020 and December 31, 2019, respectively)
|
439
|
482
|
Inventories,
net
|
1,174
|
1,131
|
Prepaid and other
assets
|
135
|
143
|
Income taxes
receivable
|
10
|
6
|
Total current
assets
|
2,507
|
2,073
|
|
|
|
Noncurrent
Assets
|
|
|
Property, plant and
equipment, net
|
1,642
|
1,762
|
Mineral leaseholds,
net
|
778
|
852
|
Intangible assets,
net
|
195
|
208
|
Lease right of use
assets, net
|
86
|
101
|
Deferred tax
assets
|
103
|
110
|
Other long-term
assets
|
171
|
162
|
Total
assets
|
$
5,482
|
$
5,268
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
Current
Liabilities
|
|
|
Accounts
payable
|
$
322
|
$
342
|
Accrued
liabilities
|
305
|
283
|
Short-term lease
liabilities
|
37
|
38
|
Short-term
debt
|
13
|
-
|
Long-term debt due
within one year
|
46
|
38
|
Income taxes
payable
|
4
|
1
|
Total current
liabilities
|
727
|
702
|
|
|
|
Noncurrent
Liabilities
|
|
|
Long-term debt,
net
|
3,427
|
2,988
|
Pension and
postretirement healthcare benefits
|
151
|
160
|
Asset retirement
obligations
|
145
|
142
|
Environmental
liabilities
|
70
|
65
|
Long-term lease
liabilities
|
48
|
62
|
Deferred tax
liabilities
|
145
|
184
|
Other long-term
liabilities
|
41
|
49
|
Total
liabilities
|
4,754
|
4,352
|
|
|
|
Commitments and
Contingencies
|
-
|
-
|
Shareholders'
Equity
|
|
|
Tronox Holdings plc
ordinary shares, par value $0.01 — 143,523,476 shares issued and
outstanding at June 30, 2020 and 141,900,459 shares issued and
outstanding at December 31, 2019
|
1
|
1
|
Capital in excess of
par value
|
1,854
|
1,846
|
Accumulated
deficit
|
(485)
|
(493)
|
Accumulated other
comprehensive loss
|
(768)
|
(606)
|
Total Tronox
Holdings plc shareholders' equity
|
602
|
748
|
Noncontrolling
interest
|
126
|
168
|
Total
equity
|
728
|
916
|
Total liabilities
and equity
|
$
5,482
|
$
5,268
|
TRONOX HOLDINGS
PLC
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(UNAUDITED)
|
(Millions of U.S.
dollars)
|
|
|
|
|
|
|
|
Six Months
Ended
June 30,
|
|
2020
|
2019
|
Cash Flows from
Operating Activities:
|
|
|
Net income
(loss)
|
$
36
|
$
(86)
|
Net income from
discontinued operations, net of tax
|
-
|
$
(1)
|
Net income (loss)
from continuing operations
|
$
36
|
$
(85)
|
Adjustments to
reconcile net income (loss) from continuing operations to net cash
provided by operating activities, continuing operations:
|
|
|
Depreciation,
depletion and amortization
|
143
|
131
|
Deferred income
taxes
|
6
|
(13)
|
Share-based
compensation expense
|
11
|
15
|
Amortization of
deferred debt issuance costs and discount on debt
|
5
|
4
|
Loss on
extinguishment of debt
|
-
|
2
|
Contract
loss
|
-
|
19
|
Acquired inventory
step-up recognized in earnings
|
-
|
55
|
Other non-cash items
affecting net (loss) income from continuing operations
|
31
|
17
|
Changes in assets and
liabilities:
|
|
|
(Increase) decrease
in accounts receivable, net of allowance for credit
losses
|
25
|
(43)
|
(Increase) decrease
in inventories, net
|
(117)
|
31
|
Increase in prepaid
and other assets
|
(18)
|
(8)
|
(Decrease) increase
in accounts payable and accrued liabilities
|
(16)
|
32
|
Net changes in income
tax payables and receivables
|
(3)
|
(8)
|
Changes in other
non-current assets and liabilities
|
(31)
|
(16)
|
Cash provided by
operating activities - continuing operations
|
72
|
133
|
|
|
|
Cash Flows from
Investing Activities:
|
|
|
Capital
expenditures
|
(82)
|
(81)
|
Cristal
Acquisition
|
-
|
(1,603)
|
Proceeds from sale of
Ashtabula
|
-
|
707
|
Insurance
proceeds
|
1
|
10
|
Loans
|
(12)
|
(25)
|
Proceeds from sale of
assets
|
1
|
1
|
Cash used in
investing activities - continuing operations
|
(92)
|
(991)
|
|
|
|
Cash Flows from
Financing Activities:
|
|
|
Repayments of
long-term debt
|
(15)
|
(215)
|
Proceeds from
long-term debt
|
500
|
222
|
Proceeds from
short-term debt
|
13
|
-
|
Repurchase of common
stock
|
-
|
(252)
|
Acquisition of
noncontrolling interest
|
-
|
(148)
|
Call premium
paid
|
-
|
-
|
Debt issuance
costs
|
(9)
|
(4)
|
Proceeds from the
exercise of options and warrants
|
-
|
-
|
Dividends
paid
|
(20)
|
(14)
|
Restricted stock and
performance-based shares settled in cash for withholding
taxes
|
(3)
|
(6)
|
Cash provided by
(used in) financing activities - continuing operations
|
466
|
(417)
|
|
|
|
Discontinued
Operations:
|
|
|
Cash used in
operating activities
|
-
|
(15)
|
Cash used in
investing activities
|
-
|
(1)
|
Net cash flows
used by discontinued operations
|
-
|
(16)
|
|
|
|
Effects of
exchange rate changes on cash and cash equivalents and restricted
cash
|
(8)
|
1
|
|
|
|
Net increase
(decrease) in cash, cash equivalents and restricted
cash
|
438
|
(1,290)
|
Cash, cash
equivalents and restricted cash at beginning of
period
|
311
|
1,696
|
Cash, cash
equivalents and restricted cash at end of period
|
$
749
|
$
406
|
TRONOX HOLDINGS
PLC
|
RECONCILIATION OF
NET LOSS TO EBITDA AND ADJUSTED EBITDA (NON-U.S.
GAAP)
|
(UNAUDITED)
|
(Millions of U.S.
dollars)
|
|
|
|
Three Months
Ended
June 30,
|
|
Six Months
Ended
June 30,
|
|
2020
|
2019
|
|
2020
|
2019
|
|
|
|
|
|
Net (loss) income
(U.S. GAAP)
|
$
(4)
|
$ (56)
|
|
$ 36
|
$ (86)
|
Income from
discontinued operations, net of tax (U.S. GAAP)
|
-
|
(1)
|
|
-
|
(1)
|
Net (loss) income
from continuing operations (U.S. GAAP)
|
(4)
|
(55)
|
|
36
|
(85)
|
Interest
expense
|
47
|
54
|
|
92
|
103
|
Interest
income
|
(2)
|
(3)
|
|
(5)
|
(12)
|
Income tax provision
(benefit)
|
10
|
(4)
|
|
16
|
(2)
|
Depreciation,
depletion and amortization expense
|
72
|
84
|
|
143
|
131
|
EBITDA (non-U.S.
GAAP)
|
123
|
76
|
|
282
|
135
|
Inventory step-up
(a)
|
-
|
55
|
|
-
|
55
|
Contract loss
(b)
|
-
|
19
|
|
-
|
19
|
Share-based
compensation (c)
|
2
|
7
|
|
11
|
15
|
Transaction costs
(d)
|
4
|
21
|
|
4
|
29
|
Restructuring
(e)
|
-
|
10
|
|
2
|
10
|
Integration costs
(f)
|
3
|
4
|
|
10
|
4
|
Loss on
extinguishment of debt (g)
|
-
|
-
|
|
-
|
2
|
Foreign currency
remeasurement (h)
|
2
|
(3)
|
|
(8)
|
(4)
|
Charge for capital
gains tax payment to Exxaro (i)
|
-
|
1
|
|
-
|
2
|
Other items
(j)
|
8
|
5
|
|
14
|
8
|
Adjusted EBITDA
(non-U.S. GAAP)
|
$142
|
$195
|
|
$315
|
$275
|
|
(a) 2019 amount
represents a pre-tax charge related to the recognition of a step-up
in value of inventories as a result of purchase
accounting.
|
(b) 2019 amount
represents a pre-tax charge for the estimated losses we expect to
incur under the supply agreement with Venator.
|
(c) Represents
non-cash share-based compensation.
|
(d) 2020 and
2019 amounts represent transaction costs associated with the TTI
Transaction and Cristal Transaction, respectively, which were
recorded in "Selling, general and administrative expenses" in the
unaudited Condensed Consolidated Statements of
Operations.
|
(e) Represents
amounts for employee-related costs, including
severance.
|
(f) Represents
integration costs associated with the Cristal acquisition after the
acquisition which were recorded in "Selling, general and
administrative expenses" in the unaudited Condensed Consolidated
Statements of Operations.
|
(g) 2019 amount
represents the loss in connection with the modification of the
Wells Fargo Revolver and termination of the ABSA
Revolver.
|
(h) Represents
realized and unrealized gains and losses associated with foreign
currency remeasurement related to third-party and intercompany
receivables and liabilities denominated in a currency other than
the functional currency of the entity holding them, which are
included in "Other income (expense), net" in the unaudited
Condensed Consolidated Statements of Operations.
|
(i) Represents
the payment owed to Exxaro for capital gains tax on the disposal of
its ordinary shares in Tronox Holdings plc included in and "Other
income (expense), net" in the unaudited Condensed Consolidated
Statements of Operations.
|
(j) Includes
noncash pension and postretirement costs, asset write-offs,
accretion expense and other items included in "Selling general and
administrative expenses", "Cost of goods sold" and "Other income
(expense), net" in the unaudited Condensed Consolidated Statements
of Operations.
|
TRONOX HOLDINGS
PLC
|
FREE CASH FLOW
(NON-U.S. GAAP)
|
(UNAUDITED)
|
(Millions of U.S.
dollars)
|
|
|
|
|
|
|
The following table
reconciles cash used in operating activities to free cash flow for
the six months ended June 30, 2020:
|
|
|
|
|
|
Consolidated
|
Cash provided by
operating activities - continuing operations
|
|
$
72
|
Capital
expenditures
|
|
(82)
|
Free cash flow (non-U.S. GAAP)
|
|
$
(10)
|
TRONOX HOLDINGS
PLC
|
PRO FORMA
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (U.S.
GAAP)
|
(UNAUDITED)
|
(Millions of U.S.
dollars, except share and per share data)
|
|
|
|
|
|
|
|
|
Proforma
amounts
|
Proforma
amounts
|
|
June
30,
|
Six Months
Ended
June
30,
|
|
2020
|
|
2019
|
2020
|
|
2019
|
Net
sales
|
$
578
|
|
$
827
|
$ 1,300
|
|
$ 1,547
|
Cost of goods
sold
|
449
|
|
648
|
996
|
|
1,227
|
Gross
profit
|
129
|
|
179
|
304
|
|
320
|
Selling, general and
administrative expenses
|
80
|
|
85
|
174
|
|
180
|
Restructuring
|
-
|
|
10
|
2
|
|
10
|
Income from
operations
|
49
|
|
84
|
128
|
|
130
|
Interest
expense
|
(47)
|
|
(54)
|
(92)
|
|
(109)
|
Interest
income
|
2
|
|
3
|
5
|
|
6
|
Loss on
extinguishment of debt
|
-
|
|
-
|
-
|
|
(2)
|
Other expense,
net
|
2
|
|
5
|
11
|
|
2
|
Income from
continuing operations before income taxes
|
6
|
|
38
|
52
|
|
27
|
Income tax
(provision) benefit
|
(10)
|
|
(6)
|
(16)
|
|
(13)
|
Net (loss) income
from continuing operations
|
(4)
|
|
32
|
36
|
|
14
|
Net income
attributable to noncontrolling interest
|
-
|
|
6
|
8
|
|
11
|
Net (loss) income
from continuing operations attributable to Tronox Holdings
plc
|
$
(4)
|
|
$
26
|
$
28
|
|
$
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
from continuing operations per share, diluted
|
$
(0.03)
|
|
$
0.17
|
$
0.19
|
|
$
0.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding, diluted (in thousands)
|
143,465
|
|
155,254
|
143,644
|
|
159,470
|
TRONOX HOLDINGS
PLC
|
PRO FORMA
RECONCILIATION OF NON-U.S. GAAP FINANCIAL MEASURES
|
(UNAUDITED)
|
(Millions of U.S.
dollars, except share and per share data)
|
|
RECONCILIATION OF
PRO FORMA NET (LOSS) INCOME FROM CONTINUING
OPERATIONS
|
ATTRIBUTABLE TO
TRONOX HOLDINGS PLC (U.S. GAAP)
|
TO ADJUSTED NET
INCOME (LOSS) FROM CONTINUING OPERATIONS
|
ATTRIBUTABLE TO
TRONOX HOLDINGS PLC (NON-U.S. GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proforma
amounts
|
|
Proforma
amounts
|
|
Three Months
Ended
June 30,
|
|
Six Months
Ended
June 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net (loss) income
from continuing operations attributable to Tronox Holdings
plc (U.S. GAAP)
|
$
(4)
|
|
$
26
|
|
$
28
|
|
$
3
|
Transaction
costs
|
4
|
|
-
|
|
4
|
|
-
|
Restructuring
|
-
|
|
10
|
|
2
|
|
10
|
Integration
costs
|
3
|
|
4
|
|
10
|
|
4
|
Separation costs
related to divested business
|
-
|
|
-
|
|
-
|
|
-
|
Loss on
extinguishment of debt
|
-
|
|
-
|
|
-
|
|
2
|
Tax valuation
allowance
|
2
|
|
-
|
|
2
|
|
-
|
Charge for capital
gains tax payment to Exxaro
|
-
|
|
1
|
|
-
|
|
2
|
Adjusted net income
attributable to Tronox Holdings plc (non-U.S.
GAAP)
|
$
5
|
|
$
41
|
|
$
46
|
|
$
21
|
|
|
|
|
|
|
|
|
Diluted net (loss)
income per share from continuing operations (U.S. GAAP)
|
$
(0.03)
|
|
$
0.17
|
|
$
0.19
|
|
$
0.02
|
|
|
|
|
|
|
|
|
Transaction costs,
per share
|
0.03
|
|
-
|
|
0.03
|
|
-
|
Restructuring, per
share
|
-
|
|
0.06
|
|
0.01
|
|
0.06
|
Integration costs,
per share
|
0.02
|
|
0.03
|
|
0.07
|
|
0.03
|
Loss on
extinguishment of debt, per share
|
-
|
|
-
|
|
-
|
|
0.01
|
Tax valuation
allowance, per share
|
0.01
|
|
-
|
|
0.01
|
|
-
|
Charge for capital
gains tax payment to Exxaro, per share
|
-
|
|
0.01
|
|
-
|
|
0.01
|
Diluted adjusted net
income per share attributable to Tronox Holdings plc (non-U.S.
GAAP)
|
$
0.03
|
|
$
0.27
|
|
$
0.31
|
|
$
0.13
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding, diluted (in thousands)
|
143,754
|
|
155,254
|
|
143,644
|
|
159,470
|
TRONOX HOLDINGS
PLC
|
PRO FORMA
RECONCILIATION OF NET INCOME (LOSS) TO EBITDA AND ADJUSTED EBITDA
(NON-U.S. GAAP)
|
(UNAUDITED)
|
(Millions of U.S.
dollars)
|
|
|
|
|
Pro Forma
Three Months Ended
June 30,
|
|
Pro Forma
Six Months Ended
June 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
Net (loss) income
from continuing operations (U.S. GAAP)
|
$
(4)
|
|
$ 32
|
|
$ 36
|
|
$ 14
|
Interest
expense
|
47
|
|
54
|
|
92
|
|
109
|
Interest
income
|
(2)
|
|
(3)
|
|
(5)
|
|
(6)
|
Income tax
provision
|
10
|
|
6
|
|
16
|
|
13
|
Depreciation,
depletion and amortization expense
|
72
|
|
87
|
|
143
|
|
174
|
EBITDA (non-U.S.
GAAP)
|
123
|
|
176
|
|
282
|
|
304
|
Share-based
compensation
|
2
|
|
7
|
|
11
|
|
15
|
Transaction
costs
|
4
|
|
-
|
|
4
|
|
-
|
Restructuring
|
-
|
|
10
|
|
2
|
|
10
|
Integration
costs
|
3
|
|
4
|
|
10
|
|
4
|
Loss on
extinguishment of debt
|
-
|
|
-
|
|
-
|
|
2
|
Foreign currency
remeasurement
|
2
|
|
(3)
|
|
(8)
|
|
(4)
|
Charge for capital
gains tax payment to Exxaro
|
-
|
|
1
|
|
-
|
|
2
|
Other
items
|
8
|
|
5
|
|
14
|
|
8
|
Adjusted EBITDA
(non-U.S. GAAP)
|
$142
|
|
$200
|
|
$315
|
|
$341
|
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SOURCE Tronox Holdings plc