Tronox (TROX) Q4 2023 earnings summary

Executive summary

• Q4 revenue rose 6% YoY to $686M; adjusted EBITDA fell 17% to $94M as lower prices, Botlek delays and unplanned downtime pressured results.

• FY 2023 revenue declined 17% to $2.85B and adjusted EBITDA fell 40% to $524M; GAAP net loss was $316M, including a tax valuation allowance.

Financial highlights

• Q4 operating income was $8M vs. $36M YoY; net loss attributable was $56M, or $0.36 per diluted share, and adjusted net loss was $60M, or $0.38 per diluted share.

• FY operating income was $186M vs. $458M; adjusted net loss was $24M, or $0.15 per diluted share, vs. adjusted EPS of $1.98 in 2022.

• Q4 free cash flow was $51M, improving $88M QoQ; FY free cash flow was a $77M use vs. $170M generated in 2022.

• FY GAAP results included a $293M tax valuation allowance, primarily related to Australian deferred tax assets; adjusted net loss included $292M of non-recurring adjustments.

Outlook and guidance

• Q1 2024 adjusted EBITDA guidance is $100M–$120M, with adjusted EBITDA margin in the mid-teens.

• Q1 TiO2 volumes are expected to rise 12%–16% and zircon volumes 15%–30% vs. Q4 2023; TiO2 pricing is expected to remain relatively flat QoQ.

• February and March order books were tracking above strong January sales; higher utilization is expected to lower operating costs, partly offset by non-repeating other-product sales and higher-cost inventory.

• FY 2024 outlook includes net cash interest expense of ~ $145M, net cash taxes below $10M and capital expenditures of ~ $395M; working capital is expected to support positive free cash flow.