UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



Form 10-Q



(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________to ___________

1-35573
(Commission file number)



TRONOX HOLDINGS PLC
(Exact Name of Registrant as Specified in its Charter) extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.



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
 
Laporte Road, Stallingborough
Grimsby, North East Lincolnshire, DN40 2PR
United Kingdom 

Registrant’s telephone number, including area code: (203) 705-3800

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
 
Name of each exchange on which registered
Ordinary Shares, par value $0.01 per share
 
New York Stock Exchange

Trading Symbol: TROX

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  No

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:

Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
 
 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

Indicate by check mark whether the Registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes No

As of October 31, 2019, the Registrant had 141,888,865 ordinary shares outstanding.




Table of Contents

 
 
Page
PART I – FINANCIAL INFORMATION
 
Item 1.
3
Item 2.
34
Item 3.
58
Item 4.
59
PART II – OTHER INFORMATION
 
Item 1.
60
Item 1A.
60
Item 2.
61
Item 3.
61
Item 4.
61
Item 5.
61
Item 6.
61
 
 
 
63

2

Item 1.
Financial Statements (Unaudited)

Page
No.
 
 
4
5
6
7
8-9
10


3

TRONOX HOLDINGS PLC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Millions of U.S. dollars, except share and per share data)

 
Three Months Ended September 30,
   
Nine Months Ended September 30,
 
   
2019
   
2018
   
2019
   
2018
 
Net sales
 
$
768
   
$
456
   
$
1,949
   
$
1,390
 
Cost of goods sold
   
635
     
335
     
1,614
     
1,010
 
Contract loss
   
     
     
19
     
 
Gross profit
   
133
     
121
     
316
     
380
 
Selling, general and administrative expenses
   
82
     
62
     
252
     
217
 
Restructuring
   
3
     
     
13
     
 
Impairment loss
   
     
6
     
     
31
 
Income from operations
   
48
     
53
     
51
     
132
 
Interest expense
   
(51
)
   
(47
)
   
(154
)
   
(144
)
Interest income
   
4
     
8
     
16
     
23
 
Loss on extinguishment of debt
   
     
     
(2
)
   
(30
)
Other (expense) income, net
   
(1
)
   
7
     
2
     
27
 
Income (loss) from continuing operations before income taxes
   
     
21
     
(87
)
   
8
 
Income tax (provision) benefit
   
(12
)
   
(6
)
   
(10
)
   
16
 
Net (loss) income from continuing operations
   
(12
)
   
15
     
(97
)
   
24
 
Net income from discontinued operations, net of tax
   
6
     
     
5
     
 
Net (loss) income
   
(6
)
   
15
     
(92
)
   
24
 
Net income attributable to noncontrolling interest
   
7
     
9
     
17
     
26
 
Net (loss) income attributable to Tronox Holdings plc
 
$
(13
)
 
$
6
   
$
(109
)
 
$
(2
)
                                 
Net (loss) income per share, basic:
                               
Continuing operations
 
$
(0.13
)
 
$
0.05
   
$
(0.82
)
 
$
(0.01
)
Discontinued operations
 
$
0.04
   
$
   
$
0.04
   
$
 
Net (loss) income per share, basic
 
$
(0.09
)
 
$
0.05
   
$
(0.78
)
 
$
(0.01
)
Net (loss) income per share, diluted:
                               
Continuing operations
 
$
(0.13
)
 
$
0.05
   
$
(0.82
)
 
$
(0.01
)
Discontinued operations
 
$
0.04
   
$
   
$
0.04
   
$
 
Net (loss) income per share, diluted
 
$
(0.09
)
 
$
0.05
   
$
(0.78
)
 
$
(0.01
)
Weighted average shares outstanding, basic (in thousands)
   
142,278
     
123,121
     
139,158
     
122,850
 
Weighted average shares outstanding, diluted (in thousands)
   
142,278
     
126,302
     
139,158
     
122,850
 

See accompanying notes to unaudited condensed consolidated financial statements.

4

TRONOX HOLDINGS PLC
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(Unaudited)
(Millions of U.S. dollars)

   
Three Months Ended September 30,
   
Nine Months Ended September 30,
 
 
 
2019
   
2018
   
2019
   
2018
 
Net (loss) income
 
$
(6
)
 
$
15
   
$
(92
)
 
$
24
 
Other comprehensive income:
                               
Foreign currency translation adjustments
   
(79
)
   
(33
)
   
(57
)
   
(159
)
Pension and postretirement plans:
                               
Amortization of unrecognized actuarial losses, net of taxes of less than $1 million in each of the three and nine months ended September 30, 2019 and 2018
   
     
     
1
     
2
 
Settlement gain reclassified from accumulated other comprehensive loss
   
     
(3
)
   
     
(3
)
Change in fair value of derivative hedges
   
(5
)
   
1
     
(28
)
   
1
 
 
                               
Other comprehensive (loss) income
   
(84
)
   
(35
)
   
(84
)
   
(159
)
 
                               
Total comprehensive (loss)
   
(90
)
   
(20
)
   
(176
)
   
(135
)
 
                               
Comprehensive (loss) income attributable to noncontrolling interest:
                               
Net income
   
7
     
9
     
17
     
26
 
Foreign currency translation adjustments
   
(14
)
   
(9
)
   
1
     
(40
)
Comprehensive (loss) income attributable to noncontrolling interest
   
(7
)
   
     
18
     
(14
)
 
                               
Comprehensive (loss) income attributable to Tronox Holdings plc
 
$
(83
)
 
$
(20
)
 
$
(194
)
 
$
(121
)

See accompanying notes to unaudited condensed consolidated financial statements.

5

TRONOX HOLDINGS PLC
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Millions of U.S. dollars, except share and per share data)

 
 
September 30, 2019
   
December 31, 2018
 
ASSETS
           
Current Assets
           
Cash and cash equivalents
 
$
305
   
$
1,034
 
Restricted cash
   
11
     
662
 
Accounts receivable, net of allowance for doubtful accounts
   
573
     
317
 
Inventories, net
   
1,035
     
479
 
Prepaid and other assets
   
125
     
50
 
Income taxes receivable
   
3
     
2
 
Assets held for sale
   
1
     
 
Total current assets
   
2,053
     
2,544
 
Noncurrent Assets
               
Property, plant and equipment, net
   
1,710
     
1,004
 
Mineral leaseholds, net
   
810
     
796
 
Intangible assets, net
   
222
     
176
 
Lease right of use assets, net
   
101
     
 
Deferred tax assets
   
110
     
37
 
Other long-term assets
   
151
     
85
 
Total assets
 
$
5,157
   
$
4,642
 
 
               
LIABILITIES AND EQUITY
               
Current Liabilities
               
Accounts payable
 
$
246
   
$
133
 
Accrued liabilities
   
283
     
140
 
Short-term lease liabilities
   
35
     
 
Long-term debt due within one year
   
55
     
22
 
Income taxes payable
   
6
     
5
 
Liabilities held for sale
   
4
     
 
Total current liabilities
   
629
     
300
 
Noncurrent Liabilities
               
Long-term debt, net
   
3,067
     
3,139
 
Pension and postretirement healthcare benefits
   
144
     
93
 
Asset retirement obligations
   
151
     
68
 
Environmental liabilities
   
62
     
1
 
Long-term lease liabilities
   
65
     
 
Long-term deferred tax liabilities
   
159
     
163
 
Other long-term liabilities
   
56
     
16
 
Total liabilities
   
4,333
     
3,780
 
 
               
Commitments and Contingencies
   
     
 
Shareholders’ Equity
               
Tronox Holdings plc ordinary shares, par value $0.01141,888,454 shares issued and outstanding at September 30, 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
   
1,838
     
1,579
 
Accumulated deficit
   
(486
)
   
(357
)
Accumulated other comprehensive loss
   
(686
)
   
(540
)
Total Tronox Holdings plc shareholders’ equity
   
667
     
683
 
Noncontrolling interest
   
157
     
179
 
Total equity
   
824
     
862
 
Total liabilities and equity
 
$
5,157
   
$
4,642
 

See accompanying notes to unaudited condensed consolidated financial statements.

6


TRONOX HOLDINGS PLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Millions of U.S. dollars)

 
 
Nine Months Ended
September 30,
 
 
 
2019
   
2018
 
Cash Flows from Operating Activities:
           
Net (loss) income
 
$
(92
)
 
$
24
 
Net income from discontinued operations, net of tax
   
5
     
 
Net (loss) income from continuing operations
 
$
(97
)
 
$
24
 
Adjustments to reconcile net (loss) income from continuing operations to net cash provided by operating activities, continuing operations:
               
Depreciation, depletion and amortization
   
205
     
145
 
Deferred income taxes
   
(7
)
   
(29
)
Share-based compensation expense
   
24
     
16
 
Amortization of deferred debt issuance costs and discount on debt
   
6
     
9
 
Loss on extinguishment of debt
   
2
     
30
 
Contract loss
   
19
     
 
Impairment losses
   
     
31
 
Acquired inventory step-up recognized in earnings
   
95
     
 
Other non-cash items affecting net (loss) income from continuing operations
   
20
     
(9
)
Changes in assets and liabilities:
               
Increase in accounts receivable, net
   
(34
)
   
(21
)
Decrease (increase) in inventories, net
   
14
     
(38
)
Decrease (increase) in prepaid and other assets
   
2
     
(1
)
Increase (decrease) in accounts payable and accrued liabilities
   
6
     
(11
)
Net changes in income tax payables and receivables
   
(5
)
   
11
 
Changes in other non-current assets and liabilities
   
(13
)
   
(14
)
Cash provided by operating activities- continuing operations
   
237
     
143
 
 
               
Cash Flows from Investing Activities:
               
Capital expenditures
   
(140
)
   
(83
)
Cristal Acquisition
   
(1,675
)
   
 
Proceeds from sale of Ashtabula
   
708
     
 
Insurance proceeds
   
10
     
 
Proceeds from sale of business
   
     
1
 
Loans
   
(25
)
   
(39
)
Proceeds from sale of assets
   
2
     
 
Cash used in investing activities- continuing operation
   
(1,120
)
   
(121
)
 
               
Cash Flows from Financing Activities:
               
Repayments of long-term debt
   
(272
)
   
(600
)
Proceeds from long-term debt
   
222
     
615
 
Repurchase of common stock
   
(288
)
   
 
Acquisition of noncontrolling interest
   
(148
)
   
 
Call premium paid
   
     
(22
)
Debt issuance costs
   
(4
)
   
(10
)
Proceeds from the exercise of options and warrants
   
     
6
 
Dividends paid
   
(21
)
   
(17
)
Restricted stock and performance-based shares settled in cash for withholding taxes
   
(6
)
   
(6
)
Cash used in financing activities- continuing operations
   
(517
)
   
(34
)
 
               
Discontinued Operations:
               
Cash provided by operating activities
   
29
     
 
Cash used in investing activities
   
(1
)
   
 
Net cash flows provided by discontinued operations
   
28
     
 
                 
Effects of exchange rate changes on cash and cash equivalents and restricted cash
   
(8
)
   
(21
)
 
               
Net (decrease) increase in cash, cash equivalents and restricted cash
   
(1,380
)
   
(33
)
Cash, cash equivalents and restricted cash at beginning of period
   
1,696
     
1,769
 
Cash, cash equivalents and restricted cash at end of period
 
$
316
   
$
1,736
 

See accompanying notes to unaudited condensed consolidated financial statements.

7


TRONOX HOLDINGS PLC
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Unaudited)
(Millions of U.S. dollars, except for shares)

For the three months and nine months ended September 30, 2019

   
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
     
 
Share-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
 
                                                                 
Net (loss) income
   
     
     
     
(62
)
   
     
(62
)
   
6
     
(56
)
Other comprehensive (loss) income
   
     
     
     
     
(4
)
   
(4
)
   
4
     
 
Share-based compensation
   
20
     
     
7
     
     
     
7
     
     
7
 
Shares cancelled
   
(4
)
   
     
     
     
     
     
     
 
Shares issued for acquisition
   
37,580
     
     
526
     
     
     
526
     
     
526
 
Shares repurchased and cancelled
   
(18,957
)
   
     
(257
)
   
     
     
(257
)
   
     
(257
)
Cristal acquisition
   
     
     
     
     
     
     
36
     
36
 
Ordinary share dividends ($0.045 per share)
   
     
     
     
(7
)
   
     
(7
)
   
     
(7
)
Balance at June 30, 2019
   
144,377
   
$
1
   
$
1,860
   
$
(466
)
 
$
(616
)
 
$
779
   
$
150
   
$
929
 
                                                                 
Net (loss) income
   
     
     
     
(13
)
   
     
(13
)
   
7
     
(6
)
Other comprehensive (loss) income
   
     
     
     
     
(70
)
   
(70
)
   
(14
)
   
(84
)
Share-based compensation
   
10
     
     
9
     
     
     
9
     
     
9
 
Shares cancelled
   
(3
)
   
     
     
     
     
     
     
 
Shares repurchased and cancelled
   
(2,496
)
   
     
(31
)
   
     
     
(31
)
   
     
(31
)
Cristal acquisition
   
     
     
     
     
     
     
14
     
14
 
Ordinary share dividends ($0.045 per share)
   
     
     
     
(7
)
   
     
(7
)
   
     
(7
)
Balance at September 30, 2019
   
141,888
   
$
1
   
$
1,838
   
$
(486
)
 
$
(686
)
 
$
667
   
$
157
   
$
824
 

See accompanying notes to unaudited condensed consolidated financial statements.

8


TRONOX HOLDINGS PLC
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Continued)
(Unaudited)
(Millions of U.S. dollars, except for shares)

For the three months and nine months ended September 30, 2018

   
Tronox
Holdings
plc
Ordinary
Shares (in
thousands)
   
Tronox
Holdings
plc
Ordinary
Shares
   
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
 
Share-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
 
                                                                 
Net (loss) income
   
     
     
     
36
     
     
36
     
14
     
50
 
Other comprehensive income (loss)
   
     
     
     
     
(138
)
   
(138
)
   
(46
)
   
(184
)
Share-based compensation
   
215
     
     
6
     
     
     
6
     
     
6
 
Shares cancelled
   
(93
)
   
     
(2
)
   
     
     
(2
)
   
     
(2
)
Warrants and options exercised
   
292
     
     
     
     
     
     
     
 
Ordinary share dividends ($0.045 per share)
   
     
     
     
(6
)
   
     
(6
)
   
     
(6
)
Balance at June 30, 2018
   
122,900
   
$
1
   
$
1,567
   
$
(347
)
 
$
(496
)
 
$
725
   
$
172
   
$
897
 
                                                                 
Net (loss) income
   
     
     
     
6
     
     
6
     
9
     
15
 
Other comprehensive income (loss)
   
     
     
     
     
(26
)
   
(26
)
   
(