STAMFORD, Conn., Nov. 5, 2018 /PRNewswire/ --
Third Quarter Highlights:
- Results demonstrate benefits of vertical integration with solid
performance realized across the board in pigment, feedstock and
co-products and all assets in full operation
- Revenue of $456 million up 5
percent versus prior year driven primarily by higher pigment and
zircon selling prices
- Income from operations of $53
million up 13 percent versus prior year; adjusted EBITDA of
$128 million up 8 percent versus
prior year (Non-GAAP)
- GAAP diluted EPS of $0.05;
adjusted diluted EPS of $0.17
(Non-GAAP)
- Operating cash flow of $112
million; free cash flow of $84
million (1)
- TiO2 income from operations of $80 million up 7 percent versus prior year;
TiO2 adjusted EBITDA of $150
million up 10 percent and TiO2 adjusted EBITDA
margin of 33 percent up nearly 200 basis points versus prior year
(Non-GAAP)
- TiO2 operating cash flow of $148 million; TiO2 free cash flow of
$120 million (1)
Cristal TiO2 Acquisition:
- Tronox continues discussions regarding potential divestiture of
Cristal's Ashtabula, Ohio
TiO2 facility to enable completion of Cristal
acquisition
1)
|
Free cash flow equals
cash flow provided by (used in) operating activities less capital
expenditures (Non-GAAP)
|
Tronox Limited (NYSE:TROX) reported revenue of $456 million for the third quarter 2018 up 5
percent from $435 million in the
third quarter 2017 and compared to $492
million in the second quarter 2018. Income from
operations of $53 million increased
13 percent from $47 million in the
year-ago quarter and compared to $65
million in the prior quarter. Net income from
continuing operations attributable to Tronox Limited of
$6 million, or $0.05 per diluted share, improved from a net loss
from continuing operations attributable to Tronox Limited of
$34 million, or ($0.28) per diluted share, in the year-ago
quarter and compared to net income from continuing operations
attributable to Tronox Limited of $36
million, or $0.29 per diluted
share in the prior quarter. Net income from continuing
operations attributable to Tronox Limited in the third quarter 2018
included transaction costs primarily related to the Cristal
acquisition, an impairment loss and a settlement gain that,
combined, totaled $15 million or
$0.12 per diluted share.
Excluding these items, adjusted net income attributable to Tronox
Limited (Non-GAAP) was $21 million,
or $0.17 per diluted share.
Adjusted EBITDA of $128 million
increased 8 percent from $118 million
in the year-ago quarter and compared to $147
million in the prior quarter.
Jeffry Quinn, president and chief
executive officer of Tronox said: "Our results in the third quarter
once again clearly demonstrated the benefits of our vertical
integration with solid performance realized across the board in
pigment, feedstock and co-products and all our assets in full
operation. Our TiO2 adjusted EBITDA margin of 33
percent, a nearly 200 basis point increase over last year,
reflected this broad-based contribution and was achieved despite
lower sales volumes in pigment and zircon. As we anticipated,
pigment sales volumes in the third quarter were impacted by
transient inventory builds in certain sales channels in
Europe and Asia as customers met pigment needs in part by
de-stocking these inventories. We anticipate a return to
normal demand and inventory levels as this de-stocking runs its
course. In addition, we are working successfully with our
pigment customers on margin stability initiatives with the intent
to dampen margin volatility across the cycle.
In zircon, we continued to see favorable market conditions as a
result of a tight global supply-demand balance and benefited from
higher selling prices in the quarter, which more than offset lower
sales volumes due to shipment timing. Demand for our pig iron
products remains strong, especially for foundry grade
material. The market for high-grade feedstock remains tight
as a result of industry supply disruptions in the first half 2018
and declining production at other industry producers' existing
operations. As a vertically integrated producer in a rising
high-grade feedstock price environment, we expect to derive
significant and differentiating benefits relative to non-integrated
pigment producers."
Quinn continued, "We continue to progress toward closing the
Cristal TiO2 acquisition. During the quarter, we
received final approval from the European Commission to close
the Cristal acquisition conditioned upon divesting our 8120
paper-laminate product grade to Venator Materials PLC.
Consummation of this divestiture will occur following approval of
the Cristal acquisition by U.S. regulatory authorities. We
continue discussions with the Federal Trade Commission regarding
the potential divestiture of Cristal's Ashtabula, OH TiO2 complex as a
settlement and potential remedy to enable completion of the Cristal
acquisition."
Third Quarter 2018
Tronox TiO2
TiO2 revenue of $456
million increased 5 percent compared to $435 million in the year-ago quarter driven by
higher selling prices for pigment, zircon, CP slag and pig
iron. The revenue gain was partially offset by lower pigment
sales volumes and the timing of zircon shipments. Pigment
sales of $315 million compared to
$316 million in the year-ago quarter,
as average selling prices increased 7 percent (7 percent on a local
currency basis) while sales volumes were 6 percent lower. The
lower sales volumes were the result of transient inventory builds
in certain sales channels in Europe and Asia as customers met their pigment needs in
part by de-stocking these inventories. Pigment selling prices
were higher in all regions. Translation of the Euro was a
$1 million headwind in the third
quarter.
Titanium feedstock and co-products sales of $131 million increased 21 percent from
$108 million in the year-ago quarter,
driven by higher zircon, CP slag and pig iron selling prices.
Zircon sales of $72 million increased
36 percent from $53 million in the
year-ago quarter driven by 50 percent higher selling prices that
more than offset 9 percent lower sales volumes due to the timing of
shipments. Pig iron sales of $23
million increased 28 percent from $18
million in the year-ago quarter, as selling prices increased
8 percent and sales volumes increased 17 percent. Feedstock
and other products sales of $36
million compared to $37
million in the year-ago driven by 22 percent higher selling
prices for CP slag, which were offset by no ilmenite sales in the
third quarter compared to $4 million
of ilmenite sales in the year-ago quarter.
Compared sequentially, TiO2 revenue of $456 million decreased 7 percent from
$492 million in the second quarter,
as higher zircon and pig iron selling prices were more than offset
by lower pigment sales volumes and the timing of zircon
shipments. Pigment sales of $315
million were 11 percent lower than $354 million in the prior quarter. Selling
prices were 1 percent lower on a U.S. dollar basis and level on a
local currency basis. Sales volumes were 10 percent lower
driven by the normal seasonal decline coupled with transient
inventory builds in certain sales channels in Europe and Asia as customers met their pigment needs in
part by de-stocking these inventories. Translation of the
Euro was a $2 million headwind on
pigment sales in the third quarter.
Titanium feedstock and co-products sales of $131 million increased 7 percent from
$123 million in the prior quarter,
driven primarily by higher selling prices for zircon, CP slag and
pig iron. Zircon sales of $72
million were 8 percent lower than $78
million in the second quarter, as 15 percent higher selling
prices were more than offset by 19 percent lower sales volumes due
to shipment timing. Pig iron sales of $23 million increased 15 percent from
$20 million in the prior quarter, as
selling prices increased 7 percent and sales volumes increased 7
percent. Feedstock and other products sales of $36 million increased 44 percent from
$25 million in the prior quarter
driven primarily by higher sales of CP slag and slag fines.
There were no ilmenite sales in the current or prior quarter as we
are not actively selling ilmenite in the market in preparation for
our increased internal requirements following the anticipated
closing of the Cristal acquisition.
TiO2 adjusted EBITDA of $150
million increased 10 percent from $136 million in the year-ago quarter, driven
primarily by higher selling prices for pigment and zircon and, to a
lesser extent, favorable foreign exchange on costs. Partially
offsetting the increase were lower pigment and zircon sales volumes
coupled with higher production costs, primarily for petroleum coke,
anthracite and electrodes. Compared sequentially,
TiO2 adjusted EBITDA of $150
million decreased 11 percent from $169 million in the prior quarter, as higher
selling prices and favorable foreign exchange on costs were more
than offset by lower sales volumes and higher production costs,
primarily for process chemicals and energy. TiO2
income from operations of $80 million
increased from $75 million in the
year-ago quarter and decreased from $108
million in the prior quarter. TiO2
delivered free cash flow of $120
million in the third quarter, as cash provided by operating
activities was $148 million and
capital expenditures were $28
million.
Consolidated
Selling, general and administrative expenses were $62 million compared to $59 million in the year-ago quarter and
$79 million in the prior
quarter. Selling, general and administrative expenses
primarily attributable to the Cristal acquisition were $12 million in the third quarter 2018 compared to
$13 million in the year-ago quarter
and $27 million in the prior
quarter. Interest expense of $47
million was the same as in the year-ago quarter and compared
to $48 million in the prior
quarter. On September 30, 2018,
debt was $3,165 million and debt, net
of cash and cash equivalents, was $1,429
million, including $659
million of cash restricted for the Cristal
transaction. Liquidity was $2,007
million comprised of cash and cash equivalents of
$1,736 million, including
$659 million of restricted cash, and
$271 million available under
revolving credit agreements. In the third quarter 2018,
capital expenditures were $28 million
and depreciation, depletion and amortization expense was
$48 million.
Webcast Conference Call
Tronox will conduct a webcast conference call on Tuesday, November 6, 2018, at 10:30 a.m. ET (New
York). The live call is open to the public via
internet broadcast and telephone.
Internet Broadcast: tronox.com
Dial-in Telephone Numbers:
U.S. / Canada: +1.877.831.3840
International: +1.224.633.1393
Conference ID: 2648037
Conference Call Presentation Slides will be used during
the conference call and are available on our website:
tronox.com
Conference Call Replay: Available via the internet and
telephone beginning on November 6,
2018, at 1:30 p.m. ET
(New York), until November 12, 2018, 1:30
p.m. ET (New York).
Internet Replay: tronox.com
Replay Dial-in Telephone Numbers:
U.S. / Canada: +1.855.859.2056
International: +1.404.537.3406
Conference ID: 2648037
Upcoming Conferences and Investor Meetings
During the fourth quarter 2018 a member of management is
scheduled to present at the following conferences and hold investor
meetings in the following cities:
- Citi Basic Materials Conference, New
York, November 27, 2018
- Investor meetings in Chicago
and Toronto, November 28 and 29, 2018
- Investor meetings in San
Francisco and Los Angeles,
December 4 and 5, 2018
- Bank of America Merrill Lynch Leveraged Finance Conference,
Boca Raton, FL, December 4 and 5, 2018
Accompanying conference and meeting materials will be available
at http://investor.tronox.com
About Tronox
Tronox Limited is a vertically integrated mining and
inorganic chemical business. The Company mines and processes
titanium ore, zircon and other minerals, and manufactures titanium
dioxide pigments that add brightness and durability to paints,
plastics, paper, and other everyday products. For more information,
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 based on our growth 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 or achievements to
differ materially from the results, level of activity, performance
or achievements expressed or implied by the forward-looking
statements. These and other risk factors are discussed in the
company's filings with the Securities and Exchange Commission
(SEC), including those under the heading entitled "Risk Factors" in
our Annual Report on Form 10-K for the year ended December 31, 2017.
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 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 Tronox Limited's financial results, 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 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 Tronox Limited's ongoing business 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 Tronox Limited's operating results and
future prospects;
- Provide additional view of the operating performance of the
company by adding interest expenses, taxes, depreciation, depletion
and amortization to the net income. Further adjustments due to gain
(loss) on extinguishment of debt and stock-based compensation
charges are made to exclude items that are either non-cash or
unusual in nature;
- Assist investors to assess the company's compliance with
financial covenants under its debt instruments;
- 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 Limited" 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.
Media Contact: Melissa Zona
+1.636.751.4057
Investor Contact: Brennen
Arndt
+1.203.705.3730
TRONOX
LIMITED
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (U.S. GAAP)
|
(UNAUDITED)
|
(Millions of U.S.
dollars, except share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
2017
(1)
|
|
2018
|
|
2017
|
Net
sales
|
$
456
|
|
$
435
|
|
$
1,390
|
|
$
1,234
|
Cost of goods
sold
|
335
|
|
329
|
|
1,010
|
|
970
|
Gross
profit
|
121
|
|
106
|
|
380
|
|
264
|
Selling, general, and
administrative expenses
|
(62)
|
|
(59)
|
|
(217)
|
|
(184)
|
Restructuring
|
-
|
|
-
|
|
-
|
|
1
|
Impairment
loss
|
(6)
|
|
-
|
|
(31)
|
|
-
|
Income from
operations
|
53
|
|
47
|
|
132
|
|
81
|
Interest
expense
|
(47)
|
|
(47)
|
|
(144)
|
|
(140)
|
Interest
income
|
8
|
|
3
|
|
23
|
|
5
|
Loss on
extinguishment of debt
|
-
|
|
(28)
|
|
(30)
|
|
(28)
|
Other income
(expense), net
|
7
|
|
8
|
|
27
|
|
(3)
|
Income (loss) from
continuing operations before income taxes
|
21
|
|
(17)
|
|
8
|
|
(85)
|
Income tax benefit
(provision)
|
(6)
|
|
(11)
|
|
16
|
|
(10)
|
Net income (loss)
from continuing operations
|
15
|
|
(28)
|
|
24
|
|
(95)
|
Loss from
discontinued operations, net of tax
|
-
|
|
(213)
|
|
-
|
|
(179)
|
Net income
(loss)
|
15
|
|
(241)
|
|
24
|
|
(274)
|
Net income
attributable to noncontrolling interest
|
9
|
|
6
|
|
26
|
|
11
|
Net income (loss)
attributable to Tronox Limited
|
$
6
|
|
$
(247)
|
|
$
(2)
|
|
$
(285)
|
|
|
|
|
|
|
|
|
|
Net income (loss)
per share, basic:
|
|
|
|
|
|
|
|
Continuing
operations
|
$
0.05
|
|
$
(0.28)
|
|
$
(0.01)
|
|
$
(0.89)
|
Discontinued
operations
|
$
-
|
|
$
(1.79)
|
|
$
-
|
|
$
(1.51)
|
Net income (loss)
per share, basic
|
$
0.05
|
|
$
(2.07)
|
|
$
(0.01)
|
|
$
(2.40)
|
|
|
|
|
|
|
|
|
|
Net income (loss)
per share, diluted:
|
|
|
|
|
|
|
|
Continuing
operations
|
$
0.05
|
|
$
(0.28)
|
|
$
(0.01)
|
|
$
(0.89)
|
Discontinued
operations
|
$
-
|
|
$
(1.79)
|
|
$
-
|
|
$
(1.51)
|
Net income (loss)
per share, diluted
|
$
0.05
|
|
$
(2.07)
|
|
$
(0.01)
|
|
$
(2.40)
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding, basic (in thousands)
|
123,121
|
|
119,405
|
|
122,850
|
|
118,908
|
Weighted average
shares outstanding, diluted (in thousands)
|
126,302
|
|
119,405
|
|
122,850
|
|
118,908
|
|
|
|
|
|
|
|
|
|
Other Operating
Data:
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
$
28
|
|
$
23
|
|
$
83
|
|
$
63
|
|
Depreciation,
depletion and amortization expense
|
$
48
|
|
$
45
|
|
$
145
|
|
$
136
|
|
(1) During the third
quarter of 2017, we completed the sale of our wholly owned
subsidiary, Tronox Alkali Corporation ("Alkali"), to Genesis
Energy, L.P. As part of the calculation of the loss on the sale,
during the third quarter of 2017 we reclassified $5 million of
Alkali transactional expenses that we had incurred in the six
months ended June 30, 2017 from continuing operations and included
such amounts in the loss on sale calculation within the results of
discontinued operations. Although the Condensed Consolidated
Statement of Operations for the nine months ended September 30,
2017 is not impacted, when the results were restated in the third
quarter of 2017 to present Alkali as discontinued operations for
the previous periods, the $5 million in transactional expenses
should have been included in the results of discontinued operations
in the periods incurred rather than reclassified into discontinued
operations upon the sale in the third quarter. Due to this
revision, the results of our third quarter of 2017 have been
adjusted as follows:
• Income from operations decreased from a $52 million to $47
million;
• Net loss from continuing operations increased from $25 million to
$28 million;
• Loss from discontinued operations, net of tax decreased from $216
million to $213 million;
• Basic and diluted net loss per share from continuing operations
increased from $0.26 to $0.28; and
• Basic and diluted net loss per share from discontinued operations
decreased from $1.81 to $1.79.
|
TRONOX
LIMITED
|
RECONCILIATION OF
NON-U.S. GAAP FINANCIAL MEASURES
|
(UNAUDITED)
|
(Millions of U.S.
dollars, except share and per share data)
|
|
RECONCILIATION OF
NET INCOME (LOSS)
|
ATTRIBUTABLE TO
TRONOX LIMITED (U.S. GAAP)
|
TO ADJUSTED NET
INCOME (LOSS) FROM CONTINUING OPERATIONS
|
ATTRIBUTABLE TO
TRONOX LIMITED (NON-U.S. GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to Tronox Limited (U.S. GAAP)
|
$
6
|
|
$
(247)
|
|
$
(2)
|
|
$
(285)
|
Loss from
discontinued operations, net of tax (U.S. GAAP)
|
-
|
|
(213)
|
|
-
|
|
(179)
|
Net income (loss)
from continuing operations attributable to Tronox Limited
(U.S. GAAP)
|
$
6
|
|
$
(34)
|
|
$
(2)
|
|
$
(106)
|
Impairment loss
(a)
|
6
|
|
-
|
|
31
|
|
-
|
Transaction costs
(b)
|
12
|
|
13
|
|
59
|
|
33
|
Restructuring
(c)
|
-
|
|
-
|
|
-
|
|
(1)
|
Tax valuation
allowance reversal (d)
|
-
|
|
-
|
|
(48)
|
|
-
|
Share-based
compensation modification (e)
|
-
|
|
-
|
|
(6)
|
|
-
|
Settlement gain
(f)
|
(3)
|
|
-
|
|
(3)
|
|
-
|
Loss on
extinguishment of debt (g)
|
-
|
|
28
|
|
30
|
|
28
|
Adjusted net income
(loss) from continuing operations attributable to Tronox Limited
(non-U.S. GAAP) (h)
|
$
21
|
|
$
7
|
|
$
61
|
|
$
(46)
|
|
|
|
|
|
|
|
|
Diluted net income
(loss) per share from continuing operations (U.S. GAAP)
|
$
0.05
|
|
$
(0.28)
|
|
$
(0.01)
|
|
$
(0.89)
|
|
|
|
|
|
|
|
|
Impairment loss, per
share
|
0.05
|
|
-
|
|
0.24
|
|
-
|
Transaction costs,
per share
|
0.09
|
|
0.11
|
|
0.47
|
|
0.28
|
Restructuring, per
share
|
-
|
|
-
|
|
-
|
|
(0.02)
|
Tax valuation
allowance reversal
|
-
|
|
-
|
|
(0.38)
|
|
-
|
Share-based
compensation modification
|
-
|
|
-
|
|
(0.05)
|
|
-
|
Settlement
gain
|
(0.02)
|
|
-
|
|
(0.02)
|
|
-
|
Loss on debt
extinguishment, per share
|
-
|
|
0.23
|
|
0.24
|
|
0.24
|
Diluted adjusted net
income (loss) from continuing operations per share attributable to
Tronox Limited (non-U.S. GAAP)
|
$
0.17
|
|
$
0.06
|
|
$
0.49
|
|
$
(0.39)
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding, diluted (in thousands)
|
126,302
|
|
124,519
|
|
125,871
|
|
118,908
|
|
(a) Represents a
pre-tax charge for the impairment and expected loss on sale of the
assets of our Tronox Electrolytic Operations which was recorded in
"Impairment loss" in the unaudited Condensed Consolidated
Statements of Operations.
|
(b) Represents
transaction costs primarily associated with the Cristal Transaction
which were recorded in "Selling, general and administrative
expenses" in the unaudited Condensed Consolidated Statements of
Operations.
|
(c) Represents the
reversal of restructuring expense pursuant to the settlement of
claims previously filed relating to a prior restructure which was
recorded in "Restructuring" in the unaudited Condensed Consolidated
Statements of Operations.
|
(d) Represents the
reversal of the tax valuation allowance attributable to our
operating subsidiary in the Netherlands.
|
(e) Represents the
reversal of previously recorded expense related to the modification
of the Integration Incentive Award.
|
(f) Represents
settlement gain related to the U.S. postretirement medical
plan.
|
(g) Represents debt
extinguishment costs of $30 million including a call premium of $22
million associated with the issuance of the 2026 Senior Notes
and redemption of our Senior Notes due 2022.
|
(h) No income tax
impact given full valuation allowance.
|
TRONOX
LIMITED
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(UNAUDITED)
|
(Millions of U.S.
dollars, except share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September
30,
|
|
December
31
|
|
|
|
2018
|
|
2017
|
ASSETS
|
|
|
|
Current
Assets
|
|
|
|
|
Cash and cash
equivalents
|
$
1,077
|
|
$
1,116
|
|
Restricted
cash
|
659
|
|
653
|
|
Accounts receivable,
net of allowance for doubtful accounts
|
326
|
|
329
|
|
Inventories,
net
|
475
|
|
473
|
|
Prepaid and other
assets
|
59
|
|
60
|
|
Income taxes
receivable
|
8
|
|
8
|
|
|
Total current
assets
|
2,604
|
|
2,639
|
|
|
|
|
|
|
Noncurrent
Assets
|
|
|
|
|
Property, plant and
equipment, net
|
1,014
|
|
1,115
|
|
Mineral leaseholds,
net
|
809
|
|
885
|
|
Intangible assets,
net
|
182
|
|
198
|
|
Inventories,
net
|
-
|
|
3
|
|
Deferred tax
assets
|
43
|
|
1
|
|
Other long-term
assets
|
62
|
|
23
|
|
|
Total
assets
|
$
4,714
|
|
$
4,864
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
Current
Liabilities
|
|
|
|
|
Accounts
payable
|
$
155
|
|
$
165
|
|
Accrued
liabilities
|
154
|
|
163
|
|
Long-term debt due
within one year
|
22
|
|
22
|
|
Income taxes
payable
|
15
|
|
3
|
|
|
Total current
liabilities
|
346
|
|
353
|
|
|
|
|
|
|
Noncurrent
Liabilities
|
|
|
|
|
Long-term debt,
net
|
3,143
|
|
3,125
|
|
Pension and
postretirement healthcare benefits
|
91
|
|
103
|
|
Asset retirement
obligations
|
75
|
|
79
|
|
Long-term deferred
tax liabilities
|
162
|
|
171
|
|
Other long-term
liabilities
|
18
|
|
18
|
|
|
Total
liabilities
|
3,835
|
|
3,849
|
|
|
|
|
|
|
Commitments and
Contingencies
|
|
|
|
Shareholders'
Equity
|
|
|
|
|
Tronox Limited Class
A ordinary shares, par value $0.01 — 94,282,967 shares issued
and 94,201,511 shares outstanding at September 30, 2018 and
92,717,935 shares issued and 92,541,463 shares
outstanding at December 31, 2017
|
1
|
|
1
|
|
Tronox Limited Class
B ordinary shares, par value $0.01 — 28,729,280 shares issued and
outstanding at September 30, 2018 and December 31, 2017.
|
-
|
|
-
|
|
Capital in excess of
par value
|
1,574
|
|
1,558
|
|
Accumulated
deficit
|
(346)
|
|
(327)
|
|
Accumulated other
comprehensive loss
|
(522)
|
|
(403)
|
|
|
Total Tronox
Limited shareholders' equity
|
707
|
|
829
|
|
Noncontrolling
interest
|
172
|
|
186
|
|
|
Total
equity
|
879
|
|
1,015
|
|
|
Total liabilities
and equity
|
$
4,714
|
|
$
4,864
|
TRONOX
LIMITED
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(UNAUDITED)
|
(Millions of U.S.
dollars)
|
|
|
|
|
|
|
|
|
|
Nine Months
Ended
September 30,
|
|
2018
|
|
2017
|
Cash Flows from
Operating Activities:
|
|
|
|
Net income
(loss)
|
$
24
|
|
$
(274)
|
Loss from
discontinued operations, net of tax
|
-
|
|
(179)
|
Net income (loss)
from continuing operations
|
$
24
|
|
$
(95)
|
Adjustments to
reconcile net income (loss) from continuing operations to net cash
provided by operating activities, continuing operations:
|
|
|
|
Depreciation,
depletion and amortization
|
145
|
|
136
|
Deferred income
taxes
|
(29)
|
|
8
|
Share-based
compensation expense
|
16
|
|
26
|
Amortization of
deferred debt issuance costs and discount on debt
|
9
|
|
9
|
Pension and
postretirement healthcare benefit expense
|
2
|
|
2
|
Loss on debt
extinguishment
|
30
|
|
28
|
Impairment
loss
|
31
|
|
-
|
Other non-cash
affecting net loss
|
(1)
|
|
19
|
Contributions to
employee pension and postretirement plans
|
(14)
|
|
(18)
|
Changes in assets and
liabilities:
|
|
|
|
Increase in accounts
receivable, net
|
(20)
|
|
(29)
|
(Increase) decrease
in inventories, net
|
(38)
|
|
46
|
Increase in prepaid
and other assets
|
(1)
|
|
(16)
|
Decrease in accounts
payable and accrued liabilities
|
(15)
|
|
(27)
|
Increase in income
taxes payable
|
12
|
|
-
|
Other,net
|
(8)
|
|
5
|
Cash provided by
operating activities, continuing operations
|
143
|
|
94
|
|
|
|
|
Cash Flows from
Investing Activities:
|
|
|
|
Capital
expenditures
|
(83)
|
|
(63)
|
Proceeds from the
sale of business
|
1
|
|
1,325
|
Loans
|
(39)
|
|
-
|
Cash used in
investing activities, continuing operations
|
(121)
|
|
1,262
|
|
|
|
|
Cash Flows from
Financing Activities:
|
|
|
|
Repayments of
long-term debt
|
(600)
|
|
(2,342)
|
Repayments of
short-term debt
|
-
|
|
(150)
|
Proceeds from
long-term debt
|
615
|
|
2,589
|
Call premium
paid
|
(22)
|
|
(14)
|
Debt issuance
costs
|
(10)
|
|
(36)
|
Proceeds from the
exercise of options and warrants
|
6
|
|
1
|
Dividends
paid
|
(17)
|
|
(17)
|
Restricted stock and
performance-based shares settled in cash for withholding
taxes
|
(6)
|
|
(11)
|
Cash used in
financing activities, continuing operations
|
(34)
|
|
20
|
|
|
|
|
Discontinued
Operations:
|
|
|
|
Cash provided by
operating activities
|
-
|
|
107
|
Cash used in
investing activities
|
-
|
|
(25)
|
Net cash flows
provided by discontinued operations
|
-
|
|
82
|
|
|
|
|
Effects of
exchange rate changes on cash, cash equivalents and restricted
cash
|
(21)
|
|
2
|
Net (decrease)
increase in cash and cash equivalents
|
(33)
|
|
1,460
|
Cash, cash
equivalents and restricted cash at beginning of
period
|
1,769
|
|
251
|
Cash, cash
equivalents and restricted cash at end of period, continuing
operations
|
$1,736
|
|
$1,711
|
TRONOX
LIMITED
|
SEGMENT
INFORMATION
|
RECONCILIATION OF
NET INCOME (LOSS) TO EBITDA AND ADJUSTED EBITDA (NON-U.S.
GAAP)
|
(UNAUDITED)
|
(Millions of U.S.
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
Net income (loss)
(U.S. GAAP)
|
$
15
|
|
$(241)
|
|
$
24
|
|
$(274)
|
Income from
discontinued operations, net of tax (U.S. GAAP)
|
-
|
|
(213)
|
|
-
|
|
(179)
|
Net income (loss)
from continuing operations (U.S. GAAP)
|
15
|
|
(28)
|
|
24
|
|
(95)
|
|
Interest
expense
|
47
|
|
47
|
|
144
|
|
140
|
|
Interest
income
|
(8)
|
|
(3)
|
|
(23)
|
|
(5)
|
|
Income tax provision
(benefit)
|
6
|
|
11
|
|
(16)
|
|
10
|
|
Depreciation,
depletion and amortization expense
|
48
|
|
45
|
|
145
|
|
136
|
EBITDA (non-U.S.
GAAP)
|
108
|
|
72
|
|
274
|
|
186
|
|
Impairment loss
(a)
|
6
|
|
-
|
|
31
|
|
-
|
|
Share-based
compensation (b)
|
7
|
|
5
|
|
16
|
|
26
|
|
Transaction costs
(c)
|
12
|
|
13
|
|
59
|
|
33
|
|
Restructuring
(d)
|
-
|
|
-
|
|
-
|
|
(1)
|
|
Loss on
extinguishment of debt (e)
|
-
|
|
28
|
|
30
|
|
28
|
|
Foreign currency
remeasurement (f)
|
(4)
|
|
(5)
|
|
(28)
|
|
1
|
|
Settlement gain
(g)
|
(3)
|
|
|
|
(3)
|
|
|
|
Other items
(h)
|
2
|
|
5
|
|
9
|
|
12
|
Adjusted EBITDA
(non-U.S. GAAP)
|
$128
|
|
$
118
|
|
$388
|
|
$
285
|
|
(a)
|
Represents a pre-tax
charge for the impairment and expected loss on sale of the assets
of our Tronox Electrolytic Operations which was recorded in
"Impairment loss" in the unaudited Condensed Consolidated
Statements of Operations.
|
(b)
|
Represents non-cash
share-based compensation.
|
(c)
|
Represents
transaction costs primarily associated with the Cristal Transaction
which were recorded in "Selling, general and administrative
expenses" in the unaudited Condensed Consolidated Statements of
Operations.
|
(d)
|
Represents the
reversal of restructuring expense pursuant to the settlement of
claims previously filed relating to a prior restructure which was
recorded in "Restructuring" in the unaudited Condensed Consolidated
Statements of Operations.
|
(e)
|
2018 amounts
represent debt extinguishment costs of $30 million including a call
premium of $22 million associated with the issuance of the 2026
Senior Notes and redemption of our Senior Notes due 2022. 2017
amounts represent debt extinguishment costs associated with the
repayment of our Prior Term Loan Facility, termination of our UBS
revolver and the redemption of our Senior Notes due
2020.
|
(f)
|
Represents foreign
currency remeasurement comprised of all unrealized gains and losses
as well as realized gains or losses associated with nonfunctional
currency intercompany receivables and payables and related
derivative instruments. These amounts are included in "Other income
(expense), net" in the unaudited Condensed Consolidated Statements
of Operations.
|
(g)
|
Represents settlement
gain related to U.S. postretirement medical plan.
|
(h)
|
Includes non-cash
pension and postretirement costs, severance expense, 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
LIMITED
|
SEGMENT
INFORMATION
|
OPERATING INCOME
AND ADJUSTED EBITDA (NON-U.S. GAAP)
|
AND
|
FREE CASH FLOW
(NON-U.S. GAAP)
|
(UNAUDITED)
|
(Millions of U.S.
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table
reconciles income from operations:
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
TiO2segment
|
$
80
|
|
$
75
|
|
$ 240
|
|
$
168
|
Unallocated
Corporate
|
(27)
|
|
(28)
|
|
(108)
|
|
(87)
|
Income from
operations (U.S. GAAP)
|
$
53
|
|
$
47
|
|
$ 132
|
|
$
81
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table
provides Adjusted EBITDA for TiO2segment and Corporate
for the periods presented:
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
TiO2segment
|
$ 150
|
|
$
136
|
|
$ 457
|
|
$
344
|
Unallocated
Corporate
|
(22)
|
|
(18)
|
|
(69)
|
|
(59)
|
Adjusted EBITDA
(non-U.S. GAAP)
|
$ 128
|
|
$
118
|
|
$ 388
|
|
$
285
|
Adjusted EBITDA as
a % of Net Sales (non-U.S. GAAP)
|
28%
|
|
27%
|
|
28%
|
|
23%
|
TiO2Adjusted EBITDA as a
% of Net Sales (non-U.S. GAAP)
|
33%
|
|
31%
|
|
33%
|
|
28%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table
provides a reconciliation of TiO2income from operations
to Adjusted EBITDA for our TiO2segment:
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
TiO2segment operating income
(1)
|
$
80
|
|
$
75
|
|
$ 240
|
|
$
168
|
Depreciation,
depletion and amortization expense
|
46
|
|
44
|
|
140
|
|
132
|
Other income
(expense), net
|
9
|
|
30
|
|
32
|
|
(19)
|
TiO2 EBITDA
(non-U.S. GAAP)
|
135
|
|
149
|
|
412
|
|
281
|
Nonrecurring and
other items (1)
|
15
|
|
(13)
|
|
45
|
|
63
|
TiO2Adjusted EBITDA
(non-U.S. GAAP)
|
$ 150
|
|
$
136
|
|
$ 457
|
|
$
344
|
|
(1) TiO2 segment
operating income includes an allocation of costs managed by
Corporate. Nonrecurring and other items added back to TiO2 EBITDA
includes an add back for the allocation of costs managed by
Corporate, as well as the impairment loss, foreign currency losses
(gains) and share-based compensation.
|
The following table
reconciles Cash provided by (used in) operating activities,
continuing operations, the comparable measure for segment reporting
under U.S. GAAP, to free cash flow by segment for the periods
presented:
|
|
Three Months
Ended
September 30, 2018
|
|
Nine Months
Ended
September 30, 2018
|
|
TiO2
|
Corporate
|
Consolidated
|
|
TiO2
|
Corporate
|
Consolidated
|
Cash provided by
(used in) operating activities, continuing operations
|
$ 148
|
$
(36)
|
$
112
|
|
$ 347
|
$
(204)
|
$
143
|
Capital
expenditures
|
(28)
|
-
|
(28)
|
|
(82)
|
(1)
|
(83)
|
Free cash flow (non-U.S. GAAP)
|
$ 120
|
$
(36)
|
$
84
|
|
$ 265
|
$
(205)
|
$
60
|
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SOURCE Tronox Limited