Tronox reported higher third-quarter revenue and adjusted EBITDA, but remained loss-making as weaker demand and Middle East-related supply disruptions pushed up costs. The titanium dioxide and mineral-products producer also lowered its full-year cash-flow outlook, while expecting further price gains in the fourth quarter to partly offset seasonal volume declines.
The company said it is also advancing a rare-earths strategy with Japan’s JX Advanced Metals, with the partners planning to share the cost of studies and pilot work for potential facilities in Australia and the United States.
Third-quarter performance
- Revenue was $827 million, up 18% from a year earlier but down 5% from the second quarter. Titanium dioxide revenue rose 19% year over year to $653 million, while zircon revenue increased 58% to $93 million.
- Tronox posted $12 million in operating income, compared with operating losses in both the year-earlier quarter and the second quarter.
- The company recorded a $55 million net loss attributable to Tronox, or 34 cents per diluted share. Adjusted net loss was $54 million, also 34 cents per share.
- Adjusted EBITDA was $101 million, up 36% year over year and 38% sequentially. The adjusted EBITDA margin improved to 12.2%, from 10.6% a year earlier and 8.4% in the second quarter.
- Free cash flow was positive $5 million, compared with negative $137 million a year earlier and positive $60 million in the prior quarter. Capital expenditures were $57 million.
- Sales volumes and pricing both contributed to year-over-year growth. Titanium dioxide volume and price/mix each rose 10% and 9%, respectively; zircon volume increased 49%, with price/mix up 9%. Compared with the second quarter, volumes fell 11% for titanium dioxide and 13% for zircon, while price/mix rose 4% and 9%, respectively.
Outlook and operating conditions
- For the fourth quarter, Tronox expects titanium dioxide volumes to decline by a high-single-digit to low-double-digit percentage sequentially, mainly because of seasonal patterns. Zircon volumes are expected to soften moderately, primarily because of inventory availability.
- The company expects titanium dioxide pricing gains achieved in the third quarter to hold in the fourth quarter, and zircon prices to rise by a mid-single-digit percentage sequentially.
- Tronox forecasts fourth-quarter adjusted EBITDA of $80 million to $90 million and positive free cash flow of $20 million to $45 million. Even with that expected fourth-quarter cash generation, it now anticipates using $25 million to $50 million of free cash flow for full-year 2026.
- The company attributed the lower full-year cash-flow outlook primarily to the prolonged Middle East conflict, which it said contributed to higher-than-expected raw-material costs and weaker sales volumes. Natural gas, sulfur and sulfuric acid were among the inputs affected.
- Tronox said sales prices remained resilient despite the weaker demand backdrop. It also cited the reinstatement of anti-dumping duties in India and the launch of an anti-absorption investigation in the European Union as steps toward a more level competitive environment in key markets.
- Operations at the Yanbu pigment facility in Saudi Arabia were affected by unplanned downtime after a temporary closure of the country’s East-West natural gas pipeline. The site has since resumed operations. Tronox also said it ramped up its Namakwa furnace and West Mine, in part to improve future zircon inventory availability.
- The company said its cost-improvement program remains on track to deliver more than $175 million in annualized savings by the end of 2026, above the high end of its original target.
Rare-earths cooperation
- Tronox and JX Advanced Metals plan to fund about $32 million in total on a 50-50 basis for development work: a definitive feasibility study for a proposed Australian cracking and leaching facility, a pre-feasibility study for a proposed U.S. refinery, and a U.S.-based pilot facility intended to produce initial quantities of high-purity rare-earth oxides.
- The partnership combines Tronox’s mining, mineral-separation and chemical-processing capabilities with JX Advanced Metals’ refining and advanced-materials experience as the companies evaluate a more integrated rare-earths platform.
The near-term picture combines improved adjusted EBITDA and stronger realized pricing with continuing losses and a newly projected full-year free-cash-flow outflow. The JX Advanced Metals work is an investment in evaluating potential rare-earths facilities; the announced funding is for studies and pilot development, not a commitment to build the proposed commercial facilities.