$TROX earnings report

Tronox reported Q3 2026 revenue of $827 million, up 18% from $699 million in Q3 2025 but down 5% from $868 million in Q2 2026. TiO2 revenue rose 19% year over year to $653 million, supported by a 10% volume increase and a 9% increase in average selling prices including mix. Zircon revenue increased 58% to $93 million on a 49% volume increase and a 9% price and mix increase. Sequential demand was softer, as TiO2 revenue declined 7% and zircon revenue declined 4%, both reflecting lower volumes despite pricing gains.

Profitability improved substantially from the comparative periods but remained negative on a GAAP basis. Income from operations was $12 million, compared with a loss from operations of $(43) million in Q3 2025 and $(21) million in Q2 2026. Net loss attributable to Tronox was $(55) million, while adjusted net loss attributable to Tronox was $(54) million. Adjusted EBITDA increased 36% year over year and 38% sequentially to $101 million, while Adjusted EBITDA margin improved to 12.2% from 10.6% in the prior-year quarter and 8.4% in Q2 2026. Management attributed the improvement to price realization and lower corporate costs, partly offset by unfavorable exchange rates, higher production costs, higher freight costs, and lower sequential volumes.

Cash flow was positive in the quarter, with $62 million of cash provided by operating activities, $57 million of capital expenditures, and $5 million of free cash flow. For the nine months ended September 30, 2026, however, free cash flow was $(70) million. Tronox ended the quarter with $136 million of cash and cash equivalents, $509 million of available liquidity, $3.2 billion of total debt, and $3.1 billion of net debt. The net leverage ratio increased to 10.5x on a trailing twelve-month basis from 9.0x at December 31, 2025. The company also paid $(24) million of dividends during the nine-month period.

The Q4 outlook calls for a sequential TiO2 volume decline in the high-single to low double-digit percentage range and moderately softer zircon volumes. Management expects TiO2 pricing gains to hold and zircon pricing to increase sequentially in the mid-single-digit percentage range, but forecasts Q4 Adjusted EBITDA of $80-$90 million, below Q3's $101 million. The guidance reflects approximately $15-20 million of higher input costs and lower TiO2 sales revenue than previously anticipated, tied to the prolonged Middle East conflict. The company expects Q4 positive free cash flow of $20-$45 million but now expects full-year 2026 free cash flow to be a use of approximately $25-$50 million.

Operational and strategic execution remain important. Tronox ramped the Namakwa furnace and West Mine to improve inventory availability, particularly for zircon, while Yanbu experienced unplanned downtime associated with the temporary closure of Saudi Arabia's East-West natural gas pipeline. Management stated that its cost-improvement program is on track to deliver more than $175 million of run-rate savings by the end of 2026. Separately, the company announced a cooperation and investment agreement with JX Advanced Metals under which the companies will fund on a 50/50 basis approximately $32 million in aggregate for rare-earth project studies and a US-based pilot facility.

Tronox delivered stronger sales momentum in the second quarter. Revenue increased 19% year over year and 14% sequentially to $868 million. TiO2 revenue increased 19% year over year, supported by an 18% volume increase, while zircon revenue increased 43% on a 61% volume increase. Sequentially, both TiO2 and zircon benefited from 5% increases in average selling prices including mix, alongside higher volumes. Other products remained a drag year over year, with revenue declining 7% on lower sales volumes, although sequential revenue rose 29% primarily on pig iron volumes.

Profitability remained weak despite the sales recovery. Tronox reported a loss from operations of $21 million and a net loss attributable to Tronox of $171 million, including a $103 million tax valuation allowance. Adjusted EBITDA was $73 million, down 22% from $93 million in the prior-year quarter, and Adjusted EBITDA margin declined to 8.4% from 12.7%. The company cited unfavorable exchange rate movements, lower average selling prices including mix, higher production costs, freight and other costs as the principal year-over-year EBITDA pressures, partly offset by higher sales volumes.

The sequential earnings trajectory improved. Adjusted EBITDA increased 18% from $62 million in the first quarter, and margin improved 20 bps from 8.2%, as higher TiO2 and zircon pricing and higher volumes more than partly offset higher production costs, unfavorable exchange rates, freight and other costs. Completed planned outages raised second-quarter costs, but the company said the sale of more lower-cost inventory provided a partial offset. Management also maintained that its cost improvement program is on track for the higher end of its $125-$175 million annual run-rate savings target by the end of 2026.

Cash flow and working capital were the clearest balance-sheet positives. Tronox generated $60 million of free cash flow after capital expenditures of $45 million and reduced total inventory approximately $120 million from first-quarter levels. Liquidity totaled $527 million, but total debt of $3.2 billion, net debt of $3.0 billion and net leverage of 11.4x remain central constraints. The company expects Q3 free cash flow to be relatively neutral, while retaining its outlook for meaningful positive free cash flow for full year 2026.

The Q3 outlook calls for pricing-led earnings improvement. TiO2 volumes are expected to decline in the mid-single-digit percentage range sequentially and zircon volumes are expected to moderate slightly, but both TiO2 and zircon pricing are expected to rise sequentially. Tronox expects Adjusted EBITDA of $95-$115 million and sequential margin improvement, supported by pricing actions and higher operating rates after extended outages. Elevated input costs related to Middle East volatility are expected to partly offset those benefits.