Release Date: February 13, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Tronox Holdings PLC (NYSE:TROX) delivered solid fourth-quarter results in line with expectations despite continued macroeconomic weakness.
• The company achieved stronger TiO2 commercial performance in Asia Pacific and Latin America, which helped mitigate lagging demand in Europe.
• Sales of Zircon exceeded previous guidance due to strong execution from the commercial group.
• Operational cost improvements were realized, driven by consistent and reliable operational performance.
• Tronox reduced total recordable injuries by 23% in 2024, highlighting a strong focus on safety.

Negative Points

• Tronox reported a net loss attributable to the company of $48 million for the full year.
• Free cash flow for the year was a use of $70 million, indicating cash flow challenges.
• Fourth-quarter revenue decreased by 1% compared to the prior year, driven by lower average selling prices and unfavorable product mix.
• The company faced higher mining production costs due to transitioning out of older mines, impacting financial performance.
• Working capital was a use of $103 million for 2024, driven by higher finished goods inventory levels due to slowing market demand.

Q & A Highlights

• Warning! GuruFocus has detected 4 Warning Signs with TROX.

Q: Can you explain the softer pricing environment in the first half of the year despite tariffs being in place? A: John Romano, CEO: The pricing environment is influenced by competitive activity in certain regions. While tariffs are in place, the market recovery is gradual. We are seeing some price increases in Europe due to duties, and expect further opportunities for price movement as the market picks up, particularly in the second half of the year.

Q: Regarding the cost-cutting initiatives, how much is reliant on volumes versus efficiency moves? A: John Srivasal, CFO: The cost improvement program focuses primarily on cost efficiencies rather than volume. We expect to achieve $125 to $175 million in cost improvements by 2026, with about $25 to $30 million realized in 2025. The program involves leveraging technology and operational excellence to drive efficiencies.

Q: What is the impact of mining costs on 2025, and will these costs revert in 2026? A: John Romano, CEO: The $50 to $60 million impact from mining costs is expected to naturally revert in 2026 as we transition to richer ore bodies. This transition is part of our cost improvement program, which aims to optimize operations and integrated business planning.

Q: How does the new cost program relate to Project Neutron? A: John Romano, CEO: Project Neutron focused on volume improvements, while the new cost program targets operational efficiencies across the business. This includes technology-driven processes and optimizing supply chain and vertical integration, aiming for $125 to $175 million in sustainable cost improvements by 2026.

Q: What volume growth assumptions are included in the 2025 guidance for TIO2 and Zircon? A: John Romano, CEO: We expect high single-digit volume growth for both TIO2 and Zircon. The guidance also assumes some market share recovery, particularly from Chinese competitors, due to anti-dumping duties in regions like Europe, Brazil, and potentially India.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.