Tronox reports Q3 adjusted EPS (8c), consensus 5c

Reports Q3 revenue $662M, consensus $710.18M. Reports Q3 Adjusted EBITDA of $116M and adjusted EBITDA margin of 17.5%. We delivered Q3 performance within the previously guided range despite softer market conditions by maintaining an unrelenting focus on managing what is within our control,” commented John Romano, co-CEO. Co-CEO Jean-Francois Turgeon added, “We are continuing to prudently manage operating rates at our pigment, mining and upgrading sites as a result of lower customer demand levels to reduce inventory and generate cash. Overall finished goods inventories decreased in the quarter, driven by reduced pigment inventory levels, partially offset by higher zircon inventories as Atlas ramped up against a backdrop of softer market demand. We bolstered the balance sheet by proactively raising $350M of incremental term loan, the proceeds of which enhanced available liquidity and will enable us to prepare for critical vertical integration capital expenditures in 2024…” Romano added, “Looking ahead to Q4, we expect pigment volumes to be relatively flat compared to Q3. We anticipate little to no seasonality in Q4 as we believe customers have largely completed destocking. This represents an approximate 20% increase compared to trough levels realized in fourth quarter 2022. We expect the more stable pricing trends over the last year to continue. On zircon, we expect volumes to continue to recover substantially from Q3 levels. As a result of these current expected market dynamics, we anticipate Adjusted EBITDA for Q4 to be $105M-$125M.”