☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
England and Wales
|
98-1467236
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
|
263 Tresser Boulevard, Suite 1100
Stamford, Connecticut 06901
|
25 Bury Street, 3rd Floor
London SW1Y 2AL, England
|
Title of each class
|
Name of each exchange on which registered
|
|
Ordinary Shares, par value $0.01 per share
|
New York Stock Exchange
|
Large accelerated filer
|
☒ |
Accelerated filer
|
☐ |
Non-accelerated filer
|
☐ |
Smaller reporting company
|
☐ |
Emerging growth company
|
☐ |
Page
|
||
PART I – FINANCIAL INFORMATION
|
||
Item 1.
|
4
|
|
Item 2.
|
26
|
|
Item 3.
|
35
|
|
Item 4.
|
36
|
|
PART II – OTHER INFORMATION
|
||
Item 1.
|
37
|
|
Item 1A.
|
37
|
|
Item 2.
|
37
|
|
Item 3.
|
37
|
|
Item 4.
|
37
|
|
Item 5.
|
37
|
|
Item 6.
|
38
|
|
40
|
Item 1. |
Financial Statements (Unaudited)
|
|
Page
No.
|
4
|
|
5
|
|
6
|
|
7
|
|
8
|
|
9
|
Three Months
Ended March 31,
|
||||||||
2019
|
2018
|
|||||||
Net sales
|
$
|
390
|
$
|
442
|
||||
Cost of goods sold
|
307
|
327
|
||||||
Gross profit
|
83
|
115
|
||||||
Selling, general and administrative expenses
|
67
|
76
|
||||||
Impairment loss
|
—
|
25
|
||||||
Income from operations
|
16
|
14
|
||||||
Interest expense
|
(49
|
)
|
(49
|
)
|
||||
Interest income
|
9
|
8
|
||||||
Loss on extinguishment of debt
|
(2
|
)
|
—
|
|||||
Other expense, net
|
(2
|
)
|
(9
|
)
|
||||
Loss before income taxes
|
(28
|
)
|
(36
|
)
|
||||
Income tax provision
|
(2
|
)
|
(5
|
)
|
||||
Net loss
|
(30
|
)
|
(41
|
)
|
||||
Net income attributable to noncontrolling interest
|
4
|
3
|
||||||
Net loss attributable to Tronox Holdings plc
|
$
|
(34
|
)
|
$
|
(44
|
)
|
||
Net loss per share, basic and diluted
|
$
|
(0.27
|
)
|
$
|
(0.36
|
)
|
||
Weighted average shares outstanding, basic and diluted (in thousands)
|
124,296
|
122,327
|
|
|
Three Months Ended
March 31,
|
|
|||||
2019
|
2018
|
|||||||
Net loss
|
$
|
(30
|
)
|
$
|
(41
|
)
|
||
Other comprehensive income:
|
||||||||
Foreign currency translation adjustments
|
—
|
59
|
||||||
Pension and postretirement plans:
|
||||||||
Amortization of unrecognized actuarial losses, net of taxes of nil and less than $1 million for the
three months ended March 31, 2019 and 2018, respectively
|
—
|
1
|
||||||
Other comprehensive income
|
—
|
60
|
||||||
Total comprehensive (loss) income
|
(30
|
)
|
19
|
|||||
Comprehensive income attributable to noncontrolling interest:
|
||||||||
Net income
|
4
|
3
|
||||||
Foreign currency translation adjustments
|
11
|
15
|
||||||
Comprehensive income attributable to noncontrolling interest
|
15
|
18
|
||||||
Comprehensive (loss) income attributable to Tronox Holdings plc
|
$
|
(45
|
)
|
$
|
1
|
March 31,
2019
|
December 31,
2018
|
|||||||
ASSETS
|
||||||||
Current Assets
|
||||||||
Cash and cash equivalents
|
$
|
1,068
|
$
|
1,034
|
||||
Restricted cash
|
666
|
662
|
||||||
Accounts receivable, net of allowance for doubtful accounts
|
300
|
317
|
||||||
Inventories, net
|
486
|
479
|
||||||
Prepaid and other assets
|
49
|
50
|
||||||
Income taxes receivable
|
2
|
2
|
||||||
Total current assets
|
2,571
|
2,544
|
||||||
Noncurrent Assets
|
||||||||
Property, plant and equipment, net
|
992
|
1,004
|
||||||
Mineral leaseholds, net
|
787
|
796
|
||||||
Intangible assets, net
|
169
|
176
|
||||||
Lease right of use assets
|
62
|
—
|
||||||
Deferred tax assets
|
35
|
37
|
||||||
Other long-term assets
|
110
|
85
|
||||||
Total assets
|
$
|
4,726
|
$
|
4,642
|
||||
LIABILITIES AND EQUITY
|
||||||||
Current Liabilities
|
||||||||
Accounts payable
|
$
|
150
|
$
|
133
|
||||
Accrued liabilities
|
119
|
140
|
||||||
Short-term lease liabilities
|
19
|
—
|
||||||
Short-term debt
|
94
|
—
|
||||||
Long-term debt due within one year
|
58
|
22
|
||||||
Income taxes payable
|
2
|
5
|
||||||
Total current liabilities
|
442
|
300
|
||||||
Noncurrent Liabilities
|
||||||||
Long-term debt, net
|
3,223
|
3,139
|
||||||
Pension and postretirement healthcare benefits
|
91
|
93
|
||||||
Asset retirement obligations
|
70
|
68
|
||||||
Long-term lease liabilities
|
44
|
—
|
||||||
Long-term deferred tax liabilities
|
159
|
163
|
||||||
Other long-term liabilities
|
17
|
17
|
||||||
Total liabilities
|
4,046
|
3,780
|
||||||
Commitments and Contingencies
|
||||||||
Shareholders’ Equity
|
||||||||
Tronox Holdings plc ordinary shares, par value $0.01 — 125,738,462 shares issued and outstanding at
March 31, 2019 and 123,015,301 shares issued and 122,933,845 shares outstanding at December 31, 2018
|
1
|
1
|
||||||
Capital in excess of par value
|
1,584
|
1,579
|
||||||
Accumulated deficit
|
(397
|
)
|
(357
|
)
|
||||
Accumulated other comprehensive loss
|
(612
|
)
|
(540
|
)
|
||||
Total Tronox Holdings plc shareholders’ equity
|
576
|
683
|
||||||
Noncontrolling interest
|
104
|
179
|
||||||
Total equity
|
680
|
862
|
||||||
Total liabilities and equity
|
$
|
4,726
|
$
|
4,642
|
Three Months Ended
March 31,
|
||||||||
2019
|
2018
|
|||||||
Cash Flows from Operating Activities:
|
||||||||
Net loss
|
$
|
(30
|
)
|
$
|
(41
|
)
|
||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
|
||||||||
Depreciation, depletion and amortization
|
47
|
48
|
||||||
Deferred income taxes
|
(3
|
)
|
3
|
|||||
Share-based compensation expense
|
8
|
7
|
||||||
Amortization of deferred debt issuance costs and discount on debt
|
2
|
5
|
||||||
Impairment loss
|
—
|
25
|
||||||
Loss on extinguishment of debt
|
2
|
—
|
||||||
Other non-cash affecting net loss
|
6
|
10
|
||||||
Changes in assets and liabilities:
|
||||||||
Decrease in accounts receivable, net
|
19
|
1
|
||||||
Increase in inventories, net
|
(10
|
)
|
(9
|
)
|
||||
Increase in prepaid and other assets
|
(1
|
)
|
(1
|
)
|
||||
Increase (decrease) in accounts payable and accrued liabilities
|
8
|
(47
|
)
|
|||||
Net changes in income tax payables and receivables
|
(3
|
)
|
(2
|
)
|
||||
Changes in other non-current assets and liabilities
|
(6
|
)
|
(3
|
)
|
||||
Cash provided by (used in) operating activities
|
39
|
(4
|
)
|
|||||
Cash Flows from Investing Activities:
|
||||||||
Capital expenditures
|
(25
|
)
|
(28
|
)
|
||||
Loans
|
(25
|
)
|
—
|
|||||
Cash used in investing activities
|
(50
|
)
|
(28
|
)
|
||||
Cash Flows from Financing Activities:
|
||||||||
Repayments of long-term debt
|
(101
|
)
|
(6
|
)
|
||||
Proceeds from short-term debt
|
94
|
—
|
||||||
Proceeds from long-term debt
|
222
|
—
|
||||||
Acquisition of noncontrolling interest
|
(148
|
)
|
—
|
|||||
Debt issuance costs
|
(4
|
)
|
(1
|
)
|
||||
Proceeds from the exercise of warrants
|
—
|
2
|
||||||
Dividends paid
|
(7
|
)
|
(6
|
)
|
||||
Restricted stock and performance-based shares settled in cash for withholding taxes
|
(6
|
)
|
(4
|
)
|
||||
Cash provided by (used in) financing activities
|
50
|
(15
|
)
|
|||||
Effects of exchange rate changes on cash and cash equivalents and restricted cash
|
(1
|
)
|
7
|
|||||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
38
|
(40
|
)
|
|||||
Cash, cash equivalents and restricted cash at beginning of period
|
1,696
|
1,769
|
||||||
Cash, cash equivalents and restricted cash at end of period
|
$
|
1,734
|
$
|
1,729
|
Tronox
Holdings plc Ordinary
Shares (in
thousands)
|
Tronox
Holdings plc Ordinary
Shares
(Amount)
|
Capital
in Excess of par Value |
(Accumulated Deficit) |
Accumulated
Other Comprehensive Loss |
Total
Tronox
Holdings plc
Shareholders’
Equity
|
Non-
controlling Interest |
Total
Equity |
|||||||||||||||||||||||||
Balance at December 31, 2018
|
122,934
|
$
|
1
|
$
|
1,579
|
$
|
(357
|
)
|
$
|
(540
|
)
|
$
|
683
|
$
|
179
|
$
|
862
|
|||||||||||||||
Net (loss) income
|
—
|
—
|
—
|
(34
|
)
|
—
|
(34
|
)
|
4
|
(30
|
)
|
|||||||||||||||||||||
Other comprehensive (loss) income
|
—
|
—
|
—
|
—
|
(11
|
)
|
(11
|
)
|
11
|
—
|
||||||||||||||||||||||
Shares-based compensation
|
3,306
|
—
|
8
|
—
|
—
|
8
|
—
|
8
|
||||||||||||||||||||||||
Shares cancelled
|
(502
|
)
|
—
|
(6
|
)
|
—
|
—
|
(6
|
)
|
—
|
(6
|
)
|
||||||||||||||||||||
Acquisition of noncontrolling interest
|
—
|
—
|
3
|
—
|
(61
|
)
|
(58
|
)
|
(90
|
)
|
(148
|
)
|
||||||||||||||||||||
Ordinary share dividends ($0.045 per share)
|
—
|
—
|
—
|
(6
|
)
|
—
|
(6
|
)
|
—
|
(6
|
)
|
|||||||||||||||||||||
Balance at March 31, 2019
|
125,738
|
$
|
1
|
$
|
1,584
|
$
|
(397
|
)
|
$
|
(612
|
)
|
$
|
576
|
$
|
104
|
$
|
680
|
Tronox
Holdings plc Ordinary
Shares (in
thousands)
|
Tronox
Holdings plc Ordinary Shares (Amount) |
Capital
in Excess of par Value |
(Accumulated Deficit) |
Accumulated
Other Comprehensive Loss |
Total
Tronox
Holdings plc
Shareholders’
Equity
|
Non-
controlling Interest |
Total
Equity |
|||||||||||||||||||||||||
Balance at December 31, 2017
|
121,271
|
$
|
1
|
$
|
1,558
|
$
|
(327
|
)
|
$
|
(403
|
)
|
$
|
829
|
$
|
186
|
$
|
1,015
|
|||||||||||||||
Net (loss) income
|
—
|
—
|
—
|
(44
|
)
|
—
|
(44
|
)
|
3
|
(41
|
)
|
|||||||||||||||||||||
Other comprehensive income (loss)
|
—
|
—
|
—
|
—
|
45
|
45
|
15
|
60
|
||||||||||||||||||||||||
Shares-based compensation
|
1,099
|
—
|
7
|
—
|
—
|
7
|
—
|
7
|
||||||||||||||||||||||||
Shares cancelled
|
(222
|
)
|
—
|
(4
|
)
|
—
|
—
|
(4
|
)
|
—
|
(4
|
)
|
||||||||||||||||||||
Warrants and options exercised
|
338
|
—
|
2
|
—
|
—
|
2
|
—
|
2
|
||||||||||||||||||||||||
Ordinary share dividends ($0.045 per share)
|
—
|
—
|
—
|
(6
|
)
|
—
|
(6
|
)
|
—
|
(6
|
)
|
|||||||||||||||||||||
Balance at March 31, 2018
|
122,486
|
$
|
1
|
$
|
1,563
|
$
|
(377
|
)
|
$
|
(358
|
)
|
$
|
829
|
$
|
204
|
$
|
1,033
|
1. |
The Company
|
2. |
Cristal Acquisition
|
3. |
Revenue
|
Three Months Ended
March 31,
|
||||||||
2019
|
2018
|
|||||||
North America
|
$
|
138
|
145
|
|||||
South and Central America
|
13
|
16
|
||||||
Europe, Middle-East and Africa
|
130
|
146
|
||||||
Asia Pacific
|
109
|
135
|
||||||
Total net sales
|
$
|
390
|
$
|
442
|
Three Months Ended
March 31,
|
||||||||
2019
|
2018
|
|||||||
Pigment
|
$
|
286
|
333
|
|||||
Zircon
|
64
|
61
|
||||||
Pig iron
|
19
|
19
|
||||||
Feedstock and other products
|
21
|
17
|
||||||
Electrolytic
|
—
|
12
|
||||||
Total net sales
|
$
|
390
|
$
|
442
|
4.
|
Asset Sale
|
5. |
Income Taxes
|
Three Months Ended
March 31,
|
||||||||
2019
|
2018
|
|||||||
Income tax provision
|
$
|
(2
|
)
|
$
|
(5
|
)
|
||
Loss before income taxes
|
$
|
(28
|
)
|
$
|
(36
|
)
|
||
Effective tax rate
|
(7
|
)%
|
(14
|
)%
|
6. |
Loss Per Share
|
Three Months Ended
March 31,
|
||||||||
2019
|
2018
|
|||||||
Numerator – Basic and Diluted:
|
||||||||
Net loss
|
$
|
(30
|
)
|
$
|
(41
|
)
|
||
Less: Net income attributable to noncontrolling interest
|
4
|
3
|
||||||
Undistributed net loss attributable to Tronox Holdings plc
|
$
|
(34
|
)
|
$
|
(44
|
)
|
||
Denominator – Basic and Diluted:
|
||||||||
Weighted-average ordinary shares (in thousands)
|
124,296
|
122,327
|
||||||
Net loss per Ordinary Share:
|
||||||||
Basic and diluted net loss per ordinary share
|
$
|
(0.27
|
)
|
$
|
(0.36
|
)
|
March 31,
|
||||||||
2019
|
2018
|
|||||||
Options
|
1,307,735
|
1,707,133
|
||||||
Restricted share units
|
5,176,210
|
5,388,754
|
7. |
Inventories, Net
|
March 31,
2019
|
December 31,
2018
|
|||||||
Raw materials
|
$
|
91
|
$
|
102
|
||||
Work-in-process
|
46
|
43
|
||||||
Finished goods, net
|
245
|
225
|
||||||
Materials and supplies, net
|
104
|
109
|
||||||
Inventories, net – current
|
$
|
486
|
$
|
479
|
8.
|
Property, Plant and Equipment, Net
|
March 31,
2019
|
December 31,
2018
|
|||||||
Land and land improvements
|
$
|
96
|
$
|
96
|
||||
Buildings
|
245
|
242
|
||||||
Machinery and equipment
|
1,415
|
1,395
|
||||||
Construction-in-progress
|
55
|
63
|
||||||
Other
|
39
|
39
|
||||||
Subtotal
|
1,850
|
1,835
|
||||||
Less: accumulated depreciation
|
(858
|
)
|
(831
|
)
|
||||
Property, plant and equipment, net
(1)
|
$
|
992
|
$
|
1,004
|
Three Months Ended
March 31,
|
||||||||
2019
|
2018
|
|||||||
Cost of goods sold
|
$
|
32
|
$
|
33
|
||||
Selling, general and administrative expenses
|
1
|
1
|
||||||
Total
|
$
|
33
|
$
|
34
|
9. |
Mineral Leaseholds, Net
|
March 31,
2019
|
December 31,
2018
|
|||||||
Mineral leaseholds
|
$
|
1,237
|
$
|
1,238
|
||||
Less: accumulated depletion
|
(450
|
)
|
(442
|
)
|
||||
Mineral leaseholds, net
|
$
|
787
|
$
|
796
|
10. |
Intangible Assets, Net
|
March 31, 2019
|
December 31, 2018
|
|||||||||||||||||||||||
Gross Cost
|
Accumulated
Amortization
|
Net Carrying
Amount
|
Gross Cost
|
Accumulated
Amortization
|
Net Carrying
Amount
|
|||||||||||||||||||
Customer relationships
|
$
|
291
|
$
|
(158
|
)
|
$
|
133
|
$
|
291
|
$
|
(154
|
)
|
$
|
137
|
||||||||||
TiO
2
technology
|
32
|
(13
|
)
|
19
|
32
|
(13
|
)
|
19
|
||||||||||||||||
Internal-use software
|
47
|
(30
|
)
|
17
|
47
|
(27
|
)
|
20
|
||||||||||||||||
Intangible assets, net
|
$
|
370
|
$
|
(201
|
)
|
$
|
169
|
$
|
370
|
$
|
(194
|
)
|
$
|
176
|
Three Months Ended
March 31,
|
||||||||
2019
|
2018
|
|||||||
Cost of goods sold
|
$
|
—
|
$
|
—
|
||||
Selling, general and administrative expenses
|
6
|
6
|
||||||
Total
|
$
|
6
|
$
|
6
|
11.
|
Accrued Liabilities
|
March 31,
2019
|
December 31,
2018
|
|||||||
Employee-related costs and benefits
|
$
|
45
|
$
|
69
|
||||
Interest
|
33
|
16
|
||||||
Sales rebates
|
15
|
18
|
||||||
Taxes other than income taxes
|
7
|
5
|
||||||
Asset retirement obligations
|
5
|
6
|
||||||
Derivatives
|
—
|
6
|
||||||
Professional fees and other
|
14
|
20
|
||||||
Accrued liabilities
|
$
|
119
|
$
|
140
|
12. |
Debt
|
Original
Principal
|
Annual
Interest Rate
|
Maturity
Date
|
March 31,
2019
|
December 31,
2018
|
|||||||||||||
Term Loan Facility, net of unamortized discount
(1) (2)
|
$
|
2,150
|
Variable
|
9/22/2024
|
$
|
2,019
|
$
|
2,119
|
|||||||||
Senior Notes due 2025
|
450
|
5.75
|
%
|
10/01/2025
|
450
|
450
|
|||||||||||
Senior Notes due 2026
|
615
|
6.50
|
%
|
4/15/2026
|
615
|
615
|
|||||||||||
Standard Bank Term Loan Facility
|
222
|
Variable
|
03/25/2024
|
222
|
—
|
||||||||||||
Finance leases
|
15
|
16
|
|||||||||||||||
Long-term debt
|
3,321
|
3,200
|
|||||||||||||||
Less: Long-term debt due within one year
|
(58
|
)
|
(22
|
)
|
|||||||||||||
Debt issuance costs
|
(40
|
)
|
(39
|
)
|
|||||||||||||
Long-term debt, net
|
$
|
3,223
|
$
|
3,139
|
|
(1) |
Average effective interest rate of 5.6% and 5.5% during the three months ended March 31, 2019 and 2018, respectively.
|
|
(2) |
The Term Loan Facility consists of (i) a U.S. dollar term facility in an aggregate principal amount of $1.5 billion (the “Term Loans”) with our subsidiary, Tronox
Finance LLC (“Tronox Finance”) as the borrower and (ii) a U.S. dollar term facility in an aggregate principal amount of $650 million (the “Blocked Term Loan”) with our unrestricted subsidiary, Tronox Blocked Borrower LLC (the “Blocked
Borrower”) as the borrower, which Blocked Term Loan was funded into a blocked account. Upon consummation of the Cristal Transaction on April 10, 2019, the Blocked Borrower merged with and into Tronox Finance, and the Blocked Term Loan
became available to Tronox Finance. In the event of an asset sale, some or all of the net proceeds from the sale may be required to be used to prepay borrowings under the Term Loan Facility based on the ratio of the total combined debt
outstanding under the Term Loan Facility and the Wells Fargo Revolver to the consolidated EBITDA, as defined in the Term Loan Facility, for the previous four quarters. If this ratio is greater than 3, then all of the net proceeds from
an asset sale would be required to be used to prepay borrowings under the Term Loan Facility, while if the ratio were less than 3 but greater than 2.75, 50% of the net proceeds would be required for prepayment and if the ratio were less
than 2.75, no prepayment would be required.
|
13. |
Fair Value
|
March 31,
2019
|
December 31,
2018
|
|||||||
Term Loan Facility
|
$
|
2,013
|
$
|
2,074
|
||||
Standard Bank Term Loan Facility
|
222
|
—
|
||||||
Senior Notes due 2025
|
419
|
368
|
||||||
Senior Notes due 2026
|
586
|
518
|
14. |
Leases
|
March 31,
2019
|
||||
Operating lease expense
|
$
|
7
|
||
Finance lease expense:
|
||||
Amortization of right-of-use assets
|
$
|
—
|
||
Interest on lease liabilities
|
1
|
|||
Short term lease expense
|
4
|
|||
Variable lease expense
|
4
|
|||
Total lease expense
|
$
|
16
|
March 31,
2019
|
||||
Cost of goods sold
|
$
|
15
|
||
Selling, general and administrative expenses
|
1
|
|||
Total
|
$
|
16
|
March 31,
2019
|
||||
Weighted-average remaining lease term:
|
||||
Operating leases
|
4.0
|
|||
Finance leases
|
11.3
|
|||
Weighted-average discount rate:
|
||||
Operating leases
|
9.6
|
%
|
||
Finance leases
|
14.2
|
%
|
Operating
Leases
|
Finance
Leases
|
|||||||
2019
|
$
|
19
|
$
|
2
|
||||
2020
|
22
|
3
|
||||||
2021
|
16
|
3
|
||||||
2022
|
8
|
3
|
||||||
2023
|
4
|
3
|
||||||
Thereafter
|
8
|
17
|
||||||
Total lease payments
|
77
|
31
|
||||||
Less: imputed interest
|
(14
|
)
|
(16
|
)
|
||||
Present value of lease payments
|
$
|
63
|
$
|
15
|
Operating
Leases
|
Finance
Leases
|
|||||||
2019
|
$
|
15
|
$
|
3
|
||||
2020
|
6
|
3
|
||||||
2021
|
5
|
3
|
||||||
2022
|
4
|
3
|
||||||
2023
|
3
|
3
|
||||||
Thereafter
|
4
|
18
|
||||||
Total lease payments
|
$
|
37
|
$
|
33
|
March 31,
2019
|
||||
Cash paid for amounts included in the measurement of lease liabilities:
|
||||
Operating cash flows used for operating leases
|
$
|
7
|
||
Operating cash flows used for finance leases
|
1
|
|||
Financing cash flows used for finance leases
|
—
|
March 31,
2019
|
||||
ROU assets obtained in exchange for lease obligations:
|
||||
Operating leases
|
$
|
3
|
||
Finance leases (recorded in “Property, plant, and equipment, net”)
|
—
|
15. |
Asset Retirement Obligations
|
Three Months Ended
March 31,
|
||||||||
2019
|
2018
|
|||||||
Beginning balance
|
$
|
74
|
$
|
82
|
||||
Additions
|
—
|
4
|
||||||
Accretion expense
|
1
|
1
|
||||||
Remeasurement/translation
|
—
|
1
|
||||||
Settlements/payments
|
—
|
(1
|
)
|
|||||
Transferred with the sale of Henderson Electrolytic
|
—
|
(4
|
)
|
|||||
Balance, March 31,
|
$
|
75
|
$
|
83
|
March 31,
2019
|
December 31,
2018
|
|||||||
Current portion included in “Accrued liabilities”
|
$
|
5
|
$
|
6
|
||||
Noncurrent portion included in “Asset retirement obligations”
|
70
|
68
|
||||||
Asset retirement obligations
|
$
|
75
|
$
|
74
|
16. |
Commitments and Contingencies
|
17.
|
Accumulated Other Comprehensive Loss Attributable to Tronox Holdings plc
|
Cumulative
Translation
Adjustment
|
Pension
Liability
Adjustment
|
Total
|
||||||||||
Balance, January 1, 2019
|
$
|
(445
|
)
|
$
|
(95
|
)
|
$
|
(540
|
)
|
|||
Other comprehensive loss
|
(11
|
)
|
—
|
(11
|
)
|
|||||||
Acquisition of noncontrolling interest
|
(61
|
)
|
—
|
(61
|
)
|
|||||||
Balance, March 31, 2019
|
$
|
(517
|
)
|
$
|
(95
|
)
|
$
|
(612
|
)
|
Cumulative
Translation
Adjustment
|
Pension
Liability
Adjustment
|
Unrealized
Gains
(Losses) on
Derivatives
|
Total
|
|||||||||||||
Balance, January 1, 2018
|
$
|
(312
|
)
|
$
|
(90
|
)
|
$
|
(1
|
)
|
$
|
(403
|
)
|
||||
Other comprehensive income
|
44
|
—
|
—
|
44
|
||||||||||||
Amounts reclassified from accumulated other comprehensive income (loss)
|
—
|
1
|
—
|
1
|
||||||||||||
Balance, March 31, 2018
|
$
|
(268
|
)
|
$
|
(89
|
)
|
$
|
(1
|
)
|
$
|
(358
|
)
|
18. |
Share-Based Compensation
|
19. |
Pension and Other Postretirement Healthcare Benefits
|
Three Months
Ended March 31,
|
||||||||
2019
|
2018
|
|||||||
Net periodic cost:
|
||||||||
Service cost
|
$
|
—
|
$
|
—
|
||||
Interest cost
|
3
|
3
|
||||||
Expected return on plan assets
|
(3
|
)
|
(4
|
)
|
||||
Net amortization of actuarial losses
|
—
|
1
|
||||||
Total net periodic cost
|
$
|
—
|
$
|
—
|
20. |
Related Parties
|
21. |
Segment Information
|
22. |
Subsequent Events
|
Three Months Ended March 31,
|
||||||||||||
2019
|
2018
|
Variance
|
||||||||||
(Millions of U.S. Dollars)
|
||||||||||||
Net sales
|
$
|
390
|
$
|
442
|
$
|
(52
|
)
|
|||||
Cost of goods sold
|
307
|
327
|
(20
|
)
|
||||||||
Gross profit
|
83
|
115
|
(32
|
)
|
||||||||
Gross Margin
|
21
|
%
|
26
|
%
|
(5) pts
|
|||||||
Selling, general and administrative expenses
|
67
|
76
|
(9
|
)
|
||||||||
Impairment loss
|
—
|
25
|
(25
|
)
|
||||||||
Income from operations
|
16
|
14
|
2
|
|||||||||
Interest expense
|
(49
|
)
|
(49
|
)
|
—
|
|||||||
Interest income
|
9
|
8
|
1
|
|||||||||
Loss on extinguishment of debt
|
(2
|
)
|
—
|
(2
|
)
|
|||||||
Other income (expense), net
|
(2
|
)
|
(9
|
)
|
7
|
|||||||
Income (loss) from operations before income taxes
|
(28
|
)
|
(36
|
)
|
8
|
|||||||
Income tax provision
|
(2
|
)
|
(5
|
)
|
3
|
|||||||
Net income (loss) from operations
|
$
|
(30
|
)
|
$
|
(41
|
)
|
$
|
11
|
||||
Effective tax rate
|
(7
|
)%
|
(14
|
)%
|
(7) pts
|
|||||||
EBITDA
(1)
|
$
|
59
|
$
|
53
|
$
|
6
|
||||||
Adjusted EBITDA
(1)
|
$
|
80
|
$
|
117
|
$
|
(37
|
)
|
|||||
Adjusted EBITDA as% of Net Sales
|
21
|
%
|
26
|
%
|
(5) pt
s
|
|
(1) |
EBITDA and Adjusted EBITDA are Non-U.S. GAAP financial measures. Please refer to the “Non-U.S. GAAP Financial Measures” section of this Management’s Discussion and Analysis
of Financial Condition and Results of Operations for a discussion of these measures and a reconciliation of these measures to Net income (loss) from operations.
|
Three Months Ended
March 31,
|
||||||||||||||||
(Millions of dollars)
|
2019
|
2018
|
Variance
|
Percentage
|
||||||||||||
Pigment
|
$
|
286
|
$
|
333
|
$
|
(47
|
)
|
(14
|
)%
|
|||||||
Zircon
|
64
|
61
|
3
|
5
|
%
|
|||||||||||
Pig iron
|
19
|
19
|
—
|
—
|
%
|
|||||||||||
Feedstock and other products
|
21
|
17
|
4
|
24
|
%
|
|||||||||||
Electrolytic
|
—
|
12
|
(12
|
)
|
(100
|
)%
|
||||||||||
Total net sales
|
$
|
390
|
$
|
442
|
$
|
(52
|
)
|
(12
|
)%
|
March 31, 2019
|
December 31, 2018
|
|||||||
(Millions of U.S. dollars)
|
||||||||
Cash and cash equivalents
|
$
|
1,068
|
$
|
1,034
|
||||
Available under the Wells Fargo Revolver
|
158
|
197
|
||||||
Available under the Standard Bank Revolver
|
55
|
—
|
||||||
Available under the ABSA Revolver
|
—
|
52
|
||||||
Total
|
$
|
1,281
|
$
|
1,283
|
Three Months Ended March 31,
|
||||||||
2019
|
2018
|
|||||||
(Millions of U.S. dollars)
|
||||||||
Net cash provided by (used in) operating activities
|
$
|
39
|
$
|
(4
|
)
|
|||
Net cash used in investing activities
|
(50
|
)
|
(28
|
)
|
||||
Net cash provided by (used in) financing activities
|
50
|
(15
|
)
|
|||||
Effect of exchange rate changes on cash
|
(1
|
)
|
7
|
|||||
Net increase (decrease) in cash and cash equivalents
|
$
|
38
|
$
|
(40
|
)
|
|
Three Months Ended March 31,
|
|||||||
|
2019
|
2018
|
||||||
|
(Millions of U.S. dollars)
|
|||||||
Net loss from operations
|
$
|
(30
|
)
|
$
|
(41
|
)
|
||
Net adjustments to reconcile net loss to net cash provided by operating activities
|
62
|
98
|
||||||
Income related cash generation
|
32
|
57
|
||||||
Net change in assets and liabilities (“working capital changes”)
|
7
|
(61
|
)
|
|||||
Net cash provided by our operating activities
|
$
|
39
|
$
|
(4
|
)
|
Contractual Obligation
Payments Due by Year
(3)(4)
|
||||||||||||||||||||
Total
|
Less than
1 year
|
1-3
years
|
3-5
years
|
More than
5 years
|
||||||||||||||||
(Millions of U.S. dollars)
|
||||||||||||||||||||
Long-term debt, net and lease financing (including interest)
(1)
|
$
|
4,560
|
353
|
505
|
527
|
3,175
|
||||||||||||||
Purchase obligations
(2)
|
348
|
137
|
93
|
54
|
64
|
|||||||||||||||
Operating leases
|
77
|
25
|
34
|
11
|
7
|
|||||||||||||||
Asset retirement obligations
|
75
|
5
|
4
|
3
|
63
|
|||||||||||||||
Total
|
$
|
5,060
|
520
|
636
|
595
|
3,309
|
(1) |
We calculated the Term Loan interest at a base rate of 2.5% plus a margin of 3.0%. See Note 12 of notes to our unaudited condensed consolidated financial statements.
|
(2) |
Includes obligations for purchase requirements of process chemicals, supplies, utilities and services. We have various purchase commitments for materials, supplies, and
services entered into in the ordinary course of business. Included in the purchase commitments table above are contracts, which require minimum volume purchases that extend beyond one year or are renewable annually and have been renewed
for 2019. Certain contracts allow for changes in minimum required purchase volumes in the event of a temporary or permanent shutdown of a facility. We believe that all of our purchase obligations will be utilized in our normal
operations.
|
(3) |
The table excludes contingent obligations, as well as any possible payments for uncertain tax positions given the inability to estimate the possible amounts and timing of
any such payments.
|
(4) |
The table excludes commitments pertaining to our pension and other postretirement obligations.
|
|
• |
Reflect our ongoing business in a manner that allows for meaningful period-to-period comparison and analysis of trends in our business, as they exclude income and expense
that are not reflective of ongoing operating results;
|
|
• |
Provide useful information in understanding and evaluating our operating results and comparing financial results across periods;
|
|
• |
Provide a normalized view of our operating performance by excluding items that are either noncash or infrequently occurring.
|
Three Months Ended
March 31,
|
||||||||
2019
|
2018
|
|||||||
(Millions of U.S. Dollars)
|
||||||||
Net loss (U.S. GAAP)
|
$
|
(30
|
)
|
$
|
(41
|
)
|
||
Interest expense
|
49
|
49
|
||||||
Interest income
|
(9
|
)
|
(8
|
)
|
||||
Income tax provision
|
2
|
5
|
||||||
Depreciation, depletion and amortization expense
|
47
|
48
|
||||||
EBITDA (non-U.S. GAAP)
|
59
|
53
|
||||||
Impairment loss
(a)
|
—
|
25
|
||||||
Share based compensation
(b)
|
8
|
7
|
||||||
Transaction costs
(c)
|
8
|
20
|
||||||
Loss on extinguishment of debt
(d)
|
2
|
—
|
||||||
Foreign currency remeasurement
(e)
|
(1
|
)
|
10
|
|||||
Other items
(f)
|
4
|
2
|
||||||
Adjusted EBITDA (non-U.S. GAAP)
|
$
|
80
|
117
|
(a) |
Represents a pre-tax charge for the impairment and loss on sale of the assets of our Tronox Electrolytic Operations which was recorded in “Impairment loss” in the unaudited
Condensed Consolidated Statements of Operations. See Note 4 of Notes to unaudited condensed consolidated financial statements.
|
(b) |
Represents non-cash share-based compensation. See Note 18 of notes to unaudited condensed consolidated financial statements.
|
(c) |
Represents transaction costs associated with the Cristal Transaction which were recorded in “Selling, general and administrative expenses” in the unaudited Condensed
Consolidated Statements of Operations.
|
(d) |
Represents the loss in connection with the modification of the Wells Fargo Revolver and termination of the ABSA Revolver. See Note 12 of notes to unaudited condensed
consolidated financial statements.
|
(e) |
Represents realized and unrealized gains and losses associated with foreign currency remeasurement related to third-party and intercompany receivables and liabilities
denominated in a currency other than the functional currency of the entity holding them, which are included in “Other expense, net” in the unaudited Condensed Consolidated Statements of Operations. Prior to the first quarter of 2019,
realized gains and losses associated with third party receivables and liabilities had been included in Adjusted EBITDA. Commencing with 2019, we are now excluding these amounts from Adjusted EBITDA and prior period amounts have been
revised for comparability purposes. The exclusion of all of the realized and unrealized gains and losses is consistent with the reporting of Adjusted EBITDA we make to our lenders.
|
(f) |
Includes noncash pension and postretirement costs, accretion expense and other items included in “Selling general and administrative expenses”, “Cost of goods sold” and
“Other expense, net” in the unaudited Condensed Consolidated Statements of Operations. Amounts for 2019 also include the potential payment to Exxaro for South African capital gains tax on the disposal of its ordinary shares in Tronox
Holdings plc included in “Other expense, net” in the unaudited Condensed Consolidated Statements of Operations.
|
Exhibit No.
|
|
Stock Purchase Agreement, dated as of March 14, 2019, by and among
Tronox Limited, INEOS AG and INEOS Joliet US Holdco, LLC
(incorporated by reference to Exhibit 2.1 of the Current Report on Form 8-K filed on March 19, 2019).
|
|
Amendment No. 2 to Transaction Agreement dated March 28, 2019
(incorporated
by reference to Exhibit 2.1 of the Current Report on Form 8-K filed on April 2, 2019).
|
|
Articles of Association of Tronox Holdings plc
(incorporated
by reference to Exhibit 3.1 of the Current Report on Form 8-K filed on March 27, 2019).
|
|
Specimen ordinary share certificate of Tronox Holdings plc
(incorporated
by reference to Exhibit 4.1 of the Current Report on Form 8-K filed on March 27, 2019).
|
|
First Supplemental Indenture dated as of April 1, 2019 among Tronox Finance plc, the guarantors named therein and Wilmington Trust, National
Association, as trustee (filed herewith).
|
|
First Supplemental Indenture dated as of April 1, 2019 among Tronox Incorporated, the guarantors named therein and Wilmington Trust,
National Association, as trustee (filed herewith).
|
|
Shareholders Agreement, dated April 10, 2019
(incorporated
by reference to Exhibit 4.1 of the Current Report on Form 8-K filed on April 11, 2019).
|
|
Second Supplemental Indenture dated as of April 12, 2019 among Tronox Finance plc, the guarantors named therein and Wilmington Trust,
National Association, as trustee (incorporated by reference to Exhibit 4.1 of the Current Report on Form 8-K filed on April 15, 2019).
|
|
Second Supplemental Indenture dated as of April 12, 2019 among Tronox Incorporated, the guarantors named therein and Wilmington Trust,
National Association, as trustee (incorporated by reference to Exhibit 4.2 of the Current Report on Form 8-K filed on April 15, 2019).
|
|
Consent and Amendment No. 2 to the Revolving Syndicated Facility
Agreement, dated as of March 22, 2019, among the Company and certain of the Company’s subsidiaries, with the lenders party thereto and Wells Fargo Bank, National Association, as administrative agent
(incorporated by reference to
Exhibit 10.1 of the Current Report on Form 8-K filed on March 26, 2019).
|
|
Amendment No. 2 to the First Lien Term Loan Credit Agreement, dated
as of March 22, 2019, among Tronox Finance LLC, Tronox Blocked Borrower LLC and certain of the Company’s other subsidiaries, with the lenders party thereto and Bank of America, N.A. as administrative agent and collateral agent
(incorporated
by reference to Exhibit 10.2 of the Current Report on Form 8-K filed on March 26, 2019).
|
|
Shareholder’s Deed by and between Tronox Holdings plc and Exxaro
Resources Limited, dated March 22, 2019
(incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed on March 27, 2019).
|
|
Tronox Holdings plc Amended and Restated Management Equity
Incentive Plan
(incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K filed on March 27, 2019).
|
|
Tronox Holdings plc Amended and Restated Annual Bonus Incentive
Plan
(incorporated by reference to Exhibit 10.3 of the Current Report on Form 8-K filed on March 27, 2019).
|
Date: May 10, 2019
|
||
TRONOX HOLDINGS PLC (Registrant)
|
||
By:
|
/s/ Robert Loughran
|
|
Name:
|
Robert Loughran
|
|
Title:
|
Vice President, Corporate Controller
|
By:
|
/s/ Timothy Carlson
|
|
Name:
|
Timothy Carlson
|
|
Title:
|
Senior Vice President and Chief Financial Officer
|
Tronox Finance plc
|
|||
By:
|
/s/ Steven A. Kaye
|
||
|
Name:
|
Steven A. Kaye
|
|
|
Title:
|
Director
|
U.S. GUARANTORS
:
|
|
Tronox Incorporated
|
|
Tronox LLC
|
|
Tronox Pigments LLC
|
|
Tronox US Holdings Inc.
|
By:
|
/s/ Steven A. Kaye
|
||
|
Name:
|
Steven A. Kaye
|
|
|
Title:
|
Vice President and Assistant Secretary
|
Tronox Finance LLC
|
|||
By:
|
/s/ Steven A. Kaye
|
||
|
Name:
|
Steven A. Kaye
|
|
|
Title:
|
Assistant Secretary
|
U.K. GUARANTORS
:
|
|
Tronox UK Holdings Limited
|
|
Tronox UK Limited
|
|
Tronox Holdings PLC
|
|
Tronox UK Merger Company Limited
|
|
Tronox Investment Holdings Limited
|
By:
|
/s/ Steven A. Kaye
|
||
|
Name:
|
Steven A. Kaye
|
|
|
Title:
|
Director or, in the case of Tronox Holdings PLC, attorney
|
Tronox International Finance LLP
|
|||
By:
|
/s/ Steven A. Kaye
|
||
|
Name:
|
Steven A. Kaye
|
|
|
Title:
|
Representative Member of Tronox UK Holdings
|
/s/ Steven A. Kaye
|
||
Signature of attorney
|
||
|
||
/s/ Julie A. Constantinides
|
Steven Kaye
|
|
Signature of witness
|
Name
|
|
Julie A. Constantinides
|
15 September 2017
|
|
Name
|
Date of power of attorney
|
SIGNED, SEALED
and
DELIVERED
for
TRONOX LIMITED
under power of attorney in the presence of:
|
||
/s/ Steven A. Kaye
|
||
Signature of attorney
|
||
/s/ Julie A. Constantinides
|
Steven Kaye
|
|
Signature of witness
|
Name
|
|
Julie A. Constantinides
|
15 September 2017
|
|
Name
|
Date of power of attorney
|
DUTCH GUARANTORS
:
|
|||
Tronox Holdings Coöperatief U.A.
|
|||
By:
|
/s/ Steven A. Kaye
|
||
Name:
|
Steven A. Kaye
|
||
Title:
|
Director A
|
By:
|
/s/ Anthony Martin Orrell
|
||
Name:
|
Anthony Martin Orrell
|
||
Title:
|
Director B
|
|
Tronox Worldwide Pty Limited, acting for itself, on behalf of Tronox Global holdings Pty Ltd as limited partner of Tronox Holdings
Europe C.V., and in its capacity as general partner of Tronox Holdings Europe C.V.
|
By:
|
/s/ Steven A. Kaye
|
||
Name:
|
Steven A. Kaye
|
||
Title:
|
Authorized Signatory
|
Tronox Pigments (Netherlands) B.V.
|
|||
By:
|
/s/ Steven A. Kaye
|
||
Name:
|
Steven A. Kaye
|
||
Title:
|
Managing Director
|
Tronox Pigments (Holland) B.V.
|
|||
By:
|
/s/ Steven A. Kaye
|
||
Name:
|
Steven A. Kaye
|
||
Title:
|
Managing Director
|
SWITZERLAND GUARANTORS
:
|
|||
Tronox International Holdings GmbH
|
|||
By:
|
/s/ Steven A. Kaye
|
||
Name:
|
Steven A. Kaye
|
||
Title:
|
Chairman of Management Board
|
Wilmington Trust, National Association, as Trustee
|
|||
By:
|
/s/ Jane Y. Schweiger
|
||
Name:
|
Jane Y. Schweiger
|
||
Title:
|
Vice President
|
Tronox Incorporated
|
|||
By:
|
/s/ Steven A. Kaye
|
||
Name:
|
Steven A. Kaye
|
||
Title:
|
Vice President and Assistant Secretary
|
U.S. GUARANTORS
:
|
|
Tronox LLC
|
|
Tronox Pigments LLC
|
|
Tronox US Holdings Inc.
|
By:
|
/s/ Steven A. Kaye
|
Name:
|
Steven A. Kaye
|
|
Title:
|
Vice President and Assistant Secretary
|
Tronox Finance LLC
|
||
By:
|
/s/Steven A. Kaye
|
Name:
|
Steven A. Kaye
|
|
Title:
|
Assistant Secretary
|
U.K. GUARANTORS
:
|
|
Tronox UK Holdings Limited
|
|
Tronox UK Limited
|
|
Tronox Finance PLC
|
|
Tronox Holdings PLC
|
|
Tronox UK Merger Company Limited
|
|
Tronox Investment Holdings Limited
|
By:
|
/s/ Steven A. Kaye
|
Name:
|
Steven A. Kaye
|
|
Title:
|
Director or, in the case of Tronox Holdings PLC, attorney
|
Tronox International Finance LLP
|
||
By:
|
/s/ Steven A. Kaye
|
Name:
|
Steven A. Kaye
|
|
Title:
|
Representative Member of Tronox UK Holdings
|
/s/ Steven A. Kaye
|
||
Signature of attorney
|
||
|
||
/s/ Julie A. Constantinides
|
Steven Kaye
|
|
Signature of witness
|
Name
|
|
Julie A. Constantinides
|
15 September 2017
|
|
Name
|
Date of power of attorney
|
SIGNED, SEALED
and
DELIVERED
for
TRONOX LIMITED
under power of attorney in the presence of:
|
|
|
/s/ Steven A. Kaye
|
||
Signature of attorney
|
||
/s/ Julie A. Constantinides
|
Steven Kaye
|
|
Signature of witness
|
Name
|
|
Julie A. Constantinides
|
15 September 2017
|
|
Name
|
Date of power of attorney
|
DUTCH GUARANTORS
:
|
|||
Tronox Holdings Coöperatief U.A.
|
|||
By:
|
/s/ Steven A. Kaye
|
||
Name:
|
Steven A. Kaye
|
||
Title:
|
Director A
|
By:
|
/s/ Anthony Martin Orrell
|
||
Name:
|
Anthony Martin Orrell
|
||
Title:
|
Director B
|
|
Tronox Worldwide Pty Limited, acting for itself, on behalf of Tronox Global holdings Pty Ltd as limited partner of Tronox Holdings
Europe C.V., and in its capacity as general partner of Tronox Holdings Europe C.V.
|
By:
|
/s/ Steven A. Kaye
|
||
Name:
|
Steven A. Kaye
|
||
Title:
|
Authorized Signatory
|
Tronox Pigments (Netherlands) B.V.
|
|||
By:
|
/s/ Steven A. Kaye
|
||
Name:
|
Steven A. Kaye
|
||
Title:
|
Managing Director
|
Tronox Pigments (Holland) B.V.
|
|||
By:
|
/s/ Steven A. Kaye
|
||
Name:
|
Steven A. Kaye
|
||
Title:
|
Managing Director
|
SWITZERLAND GUARANTORS
:
|
|||
Tronox International Holdings GmbH
|
|||
By:
|
/s/ Steven A. Kaye
|
||
Name:
|
Steven A. Kaye
|
||
Title:
|
Chairman of Management Board
|
Wilmington Trust, National Association, as Trustee
|
|||
By:
|
/s/ Jane Y. Schweiger
|
||
Name:
|
Jane Y. Schweiger
|
||
Title:
|
Vice President
|
Date: May 10, 2019
|
|
|
|
/s/ Jeffry N. Quinn
|
|
Jeffry N. Quinn
|
|
President and Chief Executive Officer
|
Date: May 10, 2019
|
|
|
|
/s/ Timothy Carlson
|
|
Timothy Carlson
|
|
Senior Vice President and Chief Financial Officer
|
/s/ Jeffry N. Quinn
|
|
Jeffry N. Quinn
|
|
President and Chief Executive Officer
|
/s/ Timothy Carlson
|
|
Timothy Carlson
|
|
Senior Vice President and Chief Financial Officer
|