What Tronox (TROX) Said on Its Q3 Earnings Call

Key Points

• Q3 results improved year over year: Revenue rose 18% to $827 million and adjusted EBITDA increased 36% to $101 million, though Tronox reported a $55 million net loss and an adjusted loss of $0.34 per share.
• Q4 earnings are expected to decline: Tronox forecast adjusted EBITDA of $80 million to $90 million as weaker demand, lower sales volumes and $15 million to $20 million of higher input costs weigh on results. The company expects to largely hold TiO2 pricing gains and raise zircon prices sequentially.
• Cost pressures and investment plans remain in focus: Tronox cited roughly $100 million each in year-over-year raw-material cost increases and unfavorable foreign-exchange effects, while targeting more than $175 million in annualized savings by the end of 2026. It also cut its 2026 capital spending plan by about $30 million to approximately $230 million.

Tronox NYSE: TROX reported higher third-quarter revenue and adjusted earnings before interest, taxes, depreciation and amortization, but forecast a sequential decline in fourth-quarter earnings as weaker demand and higher input costs weigh on the titanium dioxide producer.

Revenue rose 18% from a year earlier to $827 million, while adjusted EBITDA increased 36% to $101 million, Chief Financial Officer John Srivisal said. The company reported a net loss attributable to Tronox of $55 million and an adjusted diluted loss of $0.34 per share. Free cash flow was positive $5 million.

Chief Executive Officer John Romano said the prolonged Middle East conflict disrupted natural gas supplies to the company’s Yanbu operation in Saudi Arabia, causing unplanned downtime and lower operating rates. The facility has resumed operations. On the earnings call, Romano said the unplanned outage lasted about four days and that he did not expect a material fourth-quarter impact from it.

The conflict also contributed to weaker demand and higher costs, Romano said. Nevertheless, price increases announced in the second quarter were implemented across all markets in the third quarter, he said.

Fourth-Quarter Outlook

Tronox expects fourth-quarter adjusted EBITDA of $80 million to $90 million, down from $101 million in the third quarter. Its outlook includes approximately $15 million to $20 million in higher-than-expected input costs, primarily for natural gas, sulfur and sulfuric acid. Romano said the pressure is concentrated mainly at the Stallingborough and Bahia sites.

The company forecasts titanium dioxide, or TiO2, sales volumes will fall sequentially by a high-single-digit to low-double-digit percentage, reflecting seasonal patterns and weaker demand, particularly in Europe and Asia-Pacific. Zircon volumes are expected to soften moderately because of limited inventory availability.

Tronox expects to maintain its third-quarter TiO2 pricing gains in the fourth quarter and anticipates a mid-single-digit sequential increase in zircon pricing. It has announced additional price increases in Europe, although Romano said pricing alone would not fully offset higher costs.

Free cash flow is projected at $20 million to $45 million in the fourth quarter, resulting in a full-year cash outflow of approximately $25 million to $50 million. The company reduced its 2026 capital spending plan by about $30 million to approximately $230 million. Srivisal said some of the reduction represents deferred spending; both he and Romano indicated spending in the mid-$250 million range could be manageable in a more typical year.

Pricing Gains and Trade Measures

Third-quarter TiO2 revenue fell 7% from the second quarter as an 11% volume decline was partly offset by a 4% increase in average selling prices, including product mix. Zircon revenue declined 4% sequentially: Volumes fell 13%, primarily because of inventory availability, while average selling prices, including mix, rose 9%.

Romano said anti-dumping duties and changes in industry supply helped support pricing despite soft demand. Duties have been reinstated in India, a strategic market for Tronox, while investigations are progressing in the United Kingdom and Australia, and Japan has launched an investigation, he said.

In India, Romano expects Tronox’s volumes to improve in the first half of 2027 as inventories accumulated before the duties were reinstated are worked through. He also said an ongoing European anti-absorption investigation could lead to significantly higher duties, though its outcome remains pending.

Tronox restarted its West mine and Namakwa furnace, moves intended to improve future inventory availability, particularly for zircon. Srivisal said the company plans to ramp up pigment production in the fourth quarter as it builds inventory for normal early-year buying patterns, rather than in anticipation of a market recovery.

Costs and Liquidity

Tronox expects its cost improvement program to deliver more than $175 million in annualized run-rate savings by the end of 2026, exceeding the high end of its original target. Romano said the company plans to establish similar targets for 2027 and 2028.

Srivisal said higher expenses have offset some of the savings, including approximately $100 million in year-over-year raw material and related cost increases, as well as about $100 million in unfavorable foreign exchange effects.

The company ended the third quarter with $3.2 billion in total debt and $509 million in liquidity, including $136 million in cash and cash equivalents. Srivisal said Tronox expects to maintain its liquidity level through year-end and is comfortable operating with approximately $200 million in total liquidity, though it prefers more heading into the first quarter’s typical working-capital buildup.

Rare Earths Partnership

Tronox and JX Advanced Metals agreed in September to jointly fund approximately $32 million, split equally, for studies of a proposed Australian cracking and leaching facility and a proposed U.S. rare earth refinery.

The studies will evaluate a platform capable of producing up to 10,000 tons of total rare earth oxides annually. Romano said the Australian definitive feasibility study is expected to be completed by the end of 2027. Subject to successful studies, an investment decision and third-party funding, construction could begin in mid-to-late 2028 and finish in late 2030.

The U.S. refinery is currently projected to be completed in late 2031. Romano said it was too early to estimate the opportunity’s profitability and that financing work remains to be done.

About Tronox (NYSE:TROX)

Tronox Holdings plc NYSE: TROX is a global producer of titanium dioxide pigment and other titanium products. Its titanium dioxide is used to provide whiteness, brightness and opacity in paints and coatings, plastics, paper, inks and related applications. The company also produces zircon and other mineral sands products used in ceramics, refractories, foundries and industrial applications.

Tronox operates an integrated business that includes the mining of mineral sands, production of titanium-bearing feedstocks, and manufacture of titanium dioxide pigment and specialty products.

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