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Tronox's (TROX) Earnings & Revenues Lag Estimates in Q1

Zacks Equity Research

Tronox Holdings plc TROX recorded a loss of $34 million or 27 cents per share in first-quarter 2019, narrower than a loss of $44 million or 36 cents per share a year ago.

Barring one-time items, adjusted loss for the reported quarter was 18 cents per share. Analysts polled by Zacks were expecting earnings of 6 cents per share on an average for the quarter.

Revenues fell around 12% year over year to $390 million in the reported quarter. It also missed the Zacks Consensus Estimate of $415 million. Sales were affected by lower pigment sales volumes, unfavorable currency translation and absence of revenues from the Electrolytic business sold in 2018. These were partly offset by increased zircon selling prices.

Product Revenues

Revenues from Pigment products fell 14% year over year to $286 million. Sales volumes went down 10% due to customer destocking in Europe and Asia. Selling prices fell 2% on a local currency basis and were down 5% on a U.S. dollar basis.  

Titanium feedstock and co-products sales rose 7% year over year to $104 million.  Zircon sales increased 5% to $64 million while pig iron sales were flat at $19 million.

Feedstock and other products sales climbed around 24% to $21 million on the back of increased synthetic rutile and slag fines sales volumes.


The company ended the quarter with cash and cash equivalents of $1,068 million, essentially flat year over year. Long-term debt was $3,223 million, up around 3% year over year.

Cash provided by operating activities was $39 million in the quarter. Capital expenditures were $25 million.


The company expects adjusted EBITDA in the band of $125 million to $135 million in the second quarter for legacy Tronox operations, reflecting a significant increase from the first quarter’s tally of $80 million driven by improved pigment market conditions, higher zircon shipments and margin benefits of the actions taken before the closing of the Cristal acquisition. Tronox also expects zircon to deliver significant profitability and margin improvement.  

Price Performance

Shares of Tronox have lost 41.3% over a year, underperforming the industry’s  32.8% decline.


Zacks Rank and Stocks to Consider

Tronox currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the basic materials space include Materion Corporation MTRN, Flexible Solutions International Inc. FSI and Air Products and Chemicals, Inc. APD.

Materion has an expected earnings growth rate of 23.1% for the current year and carries a Zacks Rank #1 (Strong Buy). The company’s shares are up around 18% over the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Flexible Solutions has an expected earnings growth rate of 171.4% for the current year and carries a Zacks Rank #2 (Buy). Its shares have rallied roughly 72% in the past year.

Air Products has an expected earnings growth rate of 10.3% for the current fiscal year and carries a Zacks Rank #2. Its shares have gained around 26% in the past year.

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