First Quarter 2024 Financial Highlights
- Revenue: Generated $774 million, marking a 13% increase from the previous quarter and a 9% increase year-over-year.
- Income: Reported $41 million in operating income, with a net loss of $9 million. The adjusted net loss stood at $7 million (non-GAAP).
- Earnings Per Share: GAAP diluted loss per share was $0.06; adjusted diluted loss per share was $0.05 (non-GAAP).
- Adjusted EBITDA: Achieved $131 million, surpassing the guidance range of $100-120 million, with an adjusted EBITDA margin of 16.9%.
- Capital Expenditures: Invested $76 million in capital expenditures.
Second Quarter 2024 Outlook
- TiO2 Volumes: Expected to increase by 7-10% compared to Q1 2024.
- Zircon Volumes: Anticipated to remain relatively flat compared to Q1 2024.
- Adjusted EBITDA: Projected to be between $160-180 million, with an adjusted EBITDA margin around 20%.
This outlook reflects Tronox’s assessment of current global economic conditions and is subject to changes due to macroeconomic factors, global supply chain issues, and inflation-related challenges.
CEO’s Remarks and Outlook
John D. Romano, Chief Executive Officer, commented, “Our stronger-than-expected first quarter was driven by lower production costs, reduced supply chain destocking, and increased demand exceeding typical seasonal levels. Revenue increased by 13% from the prior quarter, with TiO2 and zircon revenue up 20%, excluding other product sales which saw a decrease due to non-recurring sales of ilmenite and rare earth tailings in South Africa. An 18% increase in TiO2 volumes exceeded typical growth for this time of year, indicating the beginning of a recovery. Demand was strong across all regions, particularly in Europe, the Middle East, Africa, and Latin America, where volumes had significantly declined over the past six quarters. Despite muted demand in China, zircon continued to recover from the low volumes of July 2023, driven by strong underlying demand. Pricing for both TiO2 and zircon met our expectations.”
Romano continued, “In 2023, we faced significant costs from operating at low utilization rates due to weak demand. As the market began to turn late last year, we increased our operating rates, leading to improved manufacturing costs in the first quarter compared to both the previous year and quarter. With high-cost inventory moving through our supply chain, cost-reduction investments will help margins return to pre-downturn levels. The first quarter was a turning point, and we expect continued market and cost improvement trends. We are on track for a significant earnings increase, having already processed much of the remaining high-cost inventory.”
Looking ahead to the second quarter, Romano added, “We anticipate a 7-10% increase in TiO2 volumes and stable zircon volumes compared to Q1 2024. As production costs continue to decline from 2023 peaks, we expect better absorption and fewer non-recurring charges in Q2. Consequently, we project an Adjusted EBITDA of $160-180 million and an Adjusted EBITDA margin of around 20%.”
First Quarter 2024 Results
- Revenue: The company recorded $774 million, a 9% increase year-over-year, driven by higher TiO2 and zircon volumes, partially offset by lower pricing.
- TiO2 Sales: Generated $605 million, an 8% increase driven by an 18% volume rise, partially offset by a 10% decrease in average selling prices. Sequentially, sales increased 17%, driven by an 18% volume increase and a 1% price decrease.
- Zircon Revenue: Increased 22% to $88 million due to a 43% volume rise, partially offset by a 21% price decrease. Sequentially, revenue increased 54%, driven by higher volumes, with stable pricing.
- Other Products: Revenue was $81 million, a 7% year-over-year increase. Sequentially, revenue decreased 26%, primarily due to non-recurring sales of ilmenite and rare earth tailings in South Africa in the previous quarter.
- Net Loss: Tronox reported a net loss of $9 million, or $0.06 per diluted share, compared to a net income of $23 million, or $0.15 per diluted share, in the year-ago period. The adjusted net loss (non-GAAP) was $7 million, or $0.05 per diluted share.
- Adjusted EBITDA: $131 million, a 10% decrease year-over-year due to pricing and mix impacts and other company costs, partially offset by higher sales volumes, improved absorption from higher production volumes, favorable exchange rates, and lower freight costs. The adjusted EBITDA margin was 16.9%.
Sequentially, adjusted EBITDA increased 39% due to improved absorption from higher production volumes, the absence of non-recurring charges from the prior quarter, and higher sales volumes, partially offset by pricing and mix impacts, other company costs, exchange rates, and higher freight costs due to Red Sea challenges.
- Expenses: Selling, general, and administrative expenses were $79 million, an 11% increase. Net interest expense was $38 million, and depreciation, depletion, and amortization expenses totaled $72 million.
