Tronox Holdings Plc · NYSE:TROX
Tronox — Non-Deal Roadshow (November 2022)
34 slides from Tronox's roadshow presentation, Nov 10, 2022
Slide 1: Tronox Holdings plc
Tronox Holdings plc November 10, 2022 Tronox Holdings plc | tronox.com | Confidential & Proprietary | © 2022 1
Slide 2: Safe Harbor Statement and Non-U.S. GAAP Financial Terms
Safe Harbor Statement and Non-U.S. GAAP Financial Terms Cautionary Statement about Forward-Looking Statements Statements in this presentation that are not historical are forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking
Slide 3: Tronox Team
Tronox Team • Timothy Carlson John Srivisal Jennifer Guenther Senior Vice President, Senior Vice President, Vice President, Chief Financial Officer Business Development and Finance Investor Relations Tronox Holdings plc | tronox.com | Confidential & Proprietary | © 2022 3
Slide 4: Tronox Overview
Tronox Overview Tronox Holdings plc | tronox.com | Confidential & Proprietary | © 2022 4
Slide 5: Tronox: Clearly Differentiated
Tronox: Clearly Differentiated 1 2 3 4 5 Executing as Demonstrating Strengthening Outperforming Investing for a World-class a Track Record Competitive and Enabling Profitable Operator of Execution Differentiators Success Growth Delivering strong, Significant Deepening vertical Unwavering in our Retu
Slide 6: Tronox – A Diversified, Vertically Integrated Titanium Industry Leader
Tronox – A Diversified, Vertically Integrated Titanium Industry Leader TROX $3.6B $947M 85% ~6,500 ~1,200 NYSE 2021 Revenue 2021 Adj. EBITDA Feedstock Integration Global Employees Customers • Vertically integrated mining and inorganic chemical Sales by Sales by TiO2 Sales Volume company Region1 Prod
Slide 7: Transformation to a Larger, More Diversified, More Stable Company
Transformation to a Larger, More Diversified, More Stable Company Pre Cristal Acquisition1 2021 ∆ Mines | Upgrading | Pigment Facilities 3|5|3 6|5|9 +3 | - | +6 Nameplate TiO2 Pigment Capacity 465K tons 1.1M tons +613K tons Chloride / Sulfate Technology 100% / 0% 87% / 13% +13% Sulfate Zircon Proces
Slide 8: Our Strategy Differentiates Us
Our Strategy Differentiates Us Advantaged global TiO2 leader Foundational Our Distinct Advantage Enabling 1 Competitive TiO2 2 3 4 Pigment Costs Feedstock Integration Leading Global Footprint TiO2 Technology Leader • Low-cost operator • Profit contribution from zircon • Effectively serve most attrac
Slide 9: Preserving our Privilege to Operate
Preserving our Privilege to Operate Achieve Carbon Zero Waste to Achieve Zero Harm Foster & Build a Neutrality by 2050 External Dedicated by Building Workplace that Landfills Capacity in our Reflects the 2050 2050 People, Plants and Communities in 100% Carbon Zero Waste Neutrality Reduce waste to Pr
Slide 10: The TiO2 Landscape Has Changed
The TiO2 Landscape Has Changed What changed during the 2020 – 2022 COVID-19 pandemic period • Increased % of sales under contract following Chinese product shortages in 2020 • Higher input costs including energy • Higher freight costs and duties result in higher delivered costs • Minimal growth in C
Slide 11: Focused on Long-term Value Creation for Shareholders
Focused on Long-term Value Creation for Shareholders • Initiated enhanced commercial approach with customers in 2018 to proactively stabilize margin volatility and enable cash generation across all scenarios Delivered 22 • Producing valuable co-products, such as zircon and pig iron, that contribute
Slide 12: Differentiated, Vertically Integrated Business Model
Differentiated, Vertically Integrated Business Model Clearly differentiated from peers 2021A EBITDA Margin1 26.5% Strong balance sheet and ample liquidity to 11 support our vertically integrated operations 19.4% 20.3% 13.5% 85% vertical integration provides annualized 22 feedstock cost savings of $3
Slide 13: Executing Our Strategy and Delivering Results
Executing Our Strategy and Delivering Results Pro Forma Revenue Pro Forma Adjusted EBITDA Free Cash Flow1 ~48% CAGR $468 ~9% CAGR $3,572 ~18% CAGR $947 $3,008 $2,758 $681 $668 $214 $160 2019 2020 2021 2019 2020 2021 2019 2020 2021 Adjusted EBITDA Margin FCF Conversion2 ($M) 23% 24% 27% 71% 71% 71% N
Slide 14: Introduced New 2025 Financial Milestone Goals At Investor Day
Introduced New 2025 Financial Milestone Goals At Investor Day 2021A 2025E Commentary • Market growth driven by GDP Adj. EBITDA ($) $947M $1.3B – $1.5B • Absorption benefits and newTRON savings, partly offset by inflation in labor, ore, direct materials and Adj. EBITDA Margin (%) 26.5% 30%+ energy co
Slide 15: Resilience Across Economic Scenarios
Resilience Across Economic Scenarios Flexibility to lever inventory, working capital and capital expenditures GDP GDP Recession Case Upside Case Adj. EBITDA $800M – $1B $1.5B – $1.7B Adj. EBITDA Margin 24% – 26%+ 32% – 34%+ Free Cash Flow $300M – $400M $850M – $1B Upside & Recession • TiO2 volumes d
Slide 16: Capital Allocation Strategy
Capital Allocation Strategy • Elevated 2022E capital requirements driven by newTRON and vertical integration investments – return threshold of 25% – newTRON 2022E capital: $90M Capital Expenditures – Vertical integration 2022E capital: $150M – $175M • Normalized estimated CapEx of $250M – $300M in 2
Slide 17: Third Quarter 2022
Third Quarter 2022 Tronox Holdings plc | tronox.com | Confidential & Proprietary | © 2022 17
Slide 18: Key Messages from the Quarter
Key Messages from the Quarter Continued strong margin performance enabled by vertically integrated portfolio despite difficult market conditions • Generated Adjusted EBITDA of $247M, Adjusted EBITDA margin of 27.6% – 22nd consecutive quarter with Adjusted EBITDA margins >20% • Invested $314M year-to
Slide 19: Third Quarter 2022 Financial Highlights
Third Quarter 2022 Financial Highlights Continued strong margin performance despite increasing production costs Q3 ’22 Q3 ’21 YoY % ∆ Q2 ’22 QoQ % ∆ • Revenue increased 3% YoY driven by higher TiO2, zircon Revenue $ 895 $ 870 3% $ 945 (5)% and pig iron pricing and higher pig iron volumes • Income fr
Slide 20: Commercial Performance
Commercial Performance Improved pricing supporting commercial performance Price Q3 ’22 Q3 ’21 YoY % ∆ Q2 ’22 QoQ % ∆ • Improved pricing in TiO2 across all geographies, driven by Revenue $ 895 $ 870 3% $ 945 (5)% the continuation of regional pricing initiatives TiO2 673 682 (1)% 769 (12)% • Pricing m
Slide 21: Operational Performance
Operational Performance Higher average selling prices partially offset by higher costs to serve customers Production Mix Q3 ’22 Q3 ’21 YoY % ∆ Q2 ’22 QoQ % ∆ • Higher pig iron sales drove higher EBITDA, though Adjusted EBITDA $ 247 $ 252 (2)% $ 275 (10)% unfavorably impacted margins in Q3 vs. Q2 Adj
Slide 22: Liquidity, Capital Expenditures & Free Cash Flow
Liquidity, Capital Expenditures & Free Cash Flow Delivering value to our stakeholders and continuing to invest in our business • Achieved 2.5x net leverage on TTM basis • Invested $314M in the business in CapEx YTD – $2.6B in total debt as of September 30, 2022 – $112M invested in Q3 in key capital
Slide 23: Taking Actions to Navigate the Current Landscape
Taking Actions to Navigate the Current Landscape Reducing Costs Managing Working Lowering CapEx • Planning for a variety of Capital • Implemented plans to economic scenarios significantly reduce our • The need to replenish planned annual capital • Executing our cost reduction critically low levels o
Slide 24: 2022 Outlook as of October 27, 2022
2022 Outlook as of October 27, 2022 Metric 2021A 2022E Adjusted EBITDA $947M $902-$932M • Expect Q4 2022 Adj. EBITDA to be $140-170M ‒ Assumes TiO2 volumes decline 25-30% sequentially Adjusted Diluted EPS $2.29 $2.29-$2.42 driven by customer destocking in Q4 and one-time cost impacts due to reduced
Slide 25: Appendix
Appendix © 2022 Tronox Holdings plc. | All rights reserved. | tronox.com 25
Slide 26: Consolidated Statements of Income (U.S. GAAP)
Consolidated Statements of Income (U.S. GAAP) TRONOX HOLDINGS PLC CONDENSED CONSOLIDATED STATEMENTS OF INCOME (U.S. GAAP) (UNAUDITED) (Millions of U.S. dollars, except share and per share data) Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Net sales $ 895 $ 870
Slide 27: Reconciliation of Non-U.S. GAAP Financial Measures
Reconciliation of Non-U.S. GAAP Financial Measures TRONOX HOLDINGS PLC RECONCILIATION OF NON-U.S. GAAP FINANCIAL MEASURES (UNAUDITED) (Millions of U.S. dollars, except share and per share data) RECONCILIATION OF NET INCOME ATTRIBUTABLE TO TRONOX HOLDINGS PLC (U.S. GAAP) TO ADJUSTED NET INCOME ATTRIB
Slide 28: Consolidated Balance Sheets
TRONOX HOLDINGS PLC Consolidated Balance Sheets CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Millions of U.S. dollars, except share and per share data) September 30, 2022 December 31, 2021 ASSETS Current Assets Cash and cash equivalents $ 91 $ 228 Restricted cash — 4 Accounts receivable (net o
Slide 29: Consolidated Statements of Cash Flows
TRONOX HOLDINGS PLC Consolidated Statements of Cash Flows CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Millions of U.S. dollars) Nine Months Ended September 30, 2022 2021 Cash Flows from Operating Activities: Net income $ 514 $ 216 Adjustments to reconcile net income to net cash provided by op
Slide 30: Reconciliation of Net Income to EBITDA and Adjusted EBITDA
Reconciliation of Net Income to EBITDA and Adjusted EBITDA (Non-U.S. GAAP) TRONOX HOLDINGS PLC RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA (NON-U.S. GAAP) (a) Represents non-cash share-based compensation. (UNAUDITED) (b) Represents breakage fee and other costs associated with the term
Slide 31: Free Cash Flow (Non-U.S. GAAP)
Free Cash Flow (Non-U.S. GAAP) TRONOX HOLDINGS PLC FREE CASH FLOW (NON-U.S. GAAP) (UNAUDITED) (Millions of U.S. dollars) The following table reconciles cash used in operating activities to free cash flow for the three and nine months ended September 30, 2022: Nine Months Ended Six Months Ended Three
Slide 32: Reconciliation of Net Income to EBITDA and Adjusted EBITDA
Reconciliation of Net Income to EBITDA and Adjusted EBITDA (Non-U.S. GAAP) 1 TRONOX HOLDINGS PLC - 2019 figures are proforma to include Cristal. RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA (NON-U.S. GAAP) (UNAUDITED) (a) Represents non-cash share-based compensation. (Millions of U.S.
Slide 33: Reconciliation of Non-U.S. GAAP Financial Measures
Reconciliation of Non-U.S. GAAP Financial Measures TRONOX HOLDINGS PLC RECONCILIATION OF NON-U.S. GAAP FINANCIAL MEASURES (UNAUDITED) (Millions of U.S. dollars, except share and per share data) RECONCILIATION OF NET INCOME ATTRIBUTABLE TO TRONOX HOLDINGS PLC (U.S. GAAP) TO ADJUSTED NET INCOME ATTRIB
Slide 34: Free Cash Flow (Non-U.S. GAAP)
Free Cash Flow (Non-U.S. GAAP) TRONOX HOLDINGS PLC FREE CASH FLOW (NON-U.S. GAAP) (UNAUDITED) (Millions of U.S. dollars) The following table reconciles cash provided by operating activities to free cash flow for the following periods: Year Ended December 31, 2021 2020 2019 2018 Cash provided by oper