Tronox Shares Trade Up 25% on Preliminary Q1 Financial Results

Source: Streetwise Reports 04/17/2020

Shares of Tronox Holdings traded higher after the company released preliminary Q1/20 earnings data and provided an update on its ongoing operations.

This morning prior to the opening of U.S. markets, Tronox Ltd. (TROX:NYSE) announced some selected preliminary unaudited financial results for Q1/20 ending March 31, 2020. The company additionally provided an update on its current business operations.

Tronox highlighted that for Q1/20 it expects that revenue will come in at $722 million. The company further expects Q1/20 non-GAAP adjusted EBITDA of $172 million, a 22% increase over $141 million in Q1/19 and that Q1/20 non-GAAP adjusted EPS will be between $0.20 and $0.26. The firm added that it believes its balance sheet is solid with $419 million available in cash and cash equivalents, allowing it broad flexibility in managing cash flow. The firm noted that it has an additional $151 million available under its revolving credit agreements if needed.

The company’s Chairman and CEO Jeffry N. Quinn commented, “I am very pleased with Tronox’s strong Q1/20 results which came in above consensus and our previously issued guidance despite the onset of the COVID-19 pandemic in the latter part of the quarter…We will report our full financial results as planned in early May.”

Quinn continued, “We continue to prioritize the safety, health and well-being of our employees and their families while preserving and protecting our business. Our operations have been designated as essential to support the continued manufacturing of products such as food and medical packaging, medical equipment, pharmaceuticals, and personal protective gear…In the coming days, we expect to restart our mines and concentrators.”

According to CEO Quinn, titanium dioxide (TiO2) demand in North America has been quite resilient and the firm is benefiting from its exposure to do-it-yourself coatings and packaging applications. The company mentioned that there are signs of certain markets picking back up in areas of Europe, though Asia Pacific remains somewhat mixed with the China market showing some strength while India is lagging.

CEO Quinn advised that the firm expects Q2/20 TiO2 volumes to be only 4-7% below Q1/20 volumes. The company indicated that the demand for Zircon also remains mixed, with demand stronger in China offset by weaker European demand.

Tronox Holdings is based in Stamford, Conn., and states that “it 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.” The company employs around 7,000 people over 6 continents. Tronox mines titanium-bearing mineral sands and operates processing facilities that produce high-grade titanium feedstock materials along with pig iron and other minerals. TiO2 is used in a range of products in the manufacturing of paint, coatings, plastics, paper, inks, fibers, rubber, food, cosmetics and pharmaceuticals.

Tronox started the day with a market capitalization of around $704.3 million with approximately 142.4 million shares outstanding and a short interest of about 4.3%. TROX shares opened almost 21% higher today at $6.00 (+$1.04, +20.97%) over yesterday’s $4.96 closing price. The stock has traded today between $5.80 and $6.53 per share and is currently trading at $6.27 (+$1.31, +26.41%).

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