Tronox (TROX) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue reached $820 million, up 6% sequentially and 3% year-over-year, driven by higher TiO2 volumes despite lower pricing and mix; net income was $16 million, reversing a $269 million loss in Q2 2023.

• Adjusted EBITDA was $161 million (19.6% margin), down 4% year-over-year but up 23% sequentially, impacted by higher costs from operational ramp-up; free cash flow was $84 million.

• Operational challenges during pigment plant ramp-up led to higher costs and lower utilization in Q2, but these were resolved by July, with utilization rates reaching 80%.

• Sustainability efforts advanced, including publication of the 2023 report, progress on carbon emissions reduction, and renewable energy contracts in South Africa.

• $41 million was returned to shareholders via dividends in Q2; capital allocation remains focused on strategic investments, liquidity, debt paydown, and dividends.

Financial highlights

• Revenue was $820 million, up 3% year-over-year and 6% sequentially, driven by 16% higher TiO2 volumes; zircon revenue fell 11% due to lower prices.

• Net income attributable was $16 million, aided by a one-time $28 million royalty sale; adjusted diluted EPS was $0.07.

• Adjusted EBITDA margin was 19.6%, down from 21.2% a year ago but up 270 bps sequentially.

• CapEx for Q2 was $76 million; free cash flow was $84 million; total available liquidity was $680 million, including $201 million in cash.

• Interest expense increased year-over-year due to higher rates and average debt balances.

Outlook and guidance

• Q3 2024 Adjusted EBITDA expected between $145–$165 million, with margins in the high teens; TiO2 volumes expected to decline 2–4% sequentially but remain up high teens year-over-year.

• Zircon volumes projected to be flat sequentially and up ~160% year-over-year; TiO2 prices anticipated to increase marginally, zircon pricing to remain stable.

• Full-year CapEx expected at $395 million; net cash interest ~$140 million; working capital expected to be a tailwind.

• Management expects sufficient cash from operations to cover expenses, capex, interest, and debt repayments over the next 12 months.