Tronox Ltd (TROX) saw its loss narrow to $40 million, or $0.35 a share for the quarter ended Sep. 30, 2016. In the previous year period, the company reported a loss of $60 million, or $0.52 a share. On an adjusted basis, net loss for the quarter was $39 million, when compared with $53 million in the last year period. Revenue during the quarter dropped 7.30 percent to $533 million from $575 million in the previous year period. Gross margin for the quarter expanded 823 basis points over the previous year period to 15.01 percent. Operating margin for the quarter period stood at positive 4.69 percent as compared to a negative 3.65 percent for the previous year period.
Operating income for the quarter was $25 million, compared with an operating loss of $21 million in the previous year period.
However, the adjusted EBITDA for the quarter stood at $98 million compared with $81 million in the prior year period. At the same time, adjusted EBITDA margin improved 430 basis points in the quarter to 18.39 percent from 14.09 percent in the last year period.
Tom Casey, chairman and chief executive officer of Tronox, said: "We delivered strong adjusted EBITDA and free cash flow performance in the third quarter. Our TiO2 business generated additional momentum in the quarter to that generated in the second quarter, driven by higher pigment sales volumes and selling prices on both year-on-year and sequential bases coupled with continued strong operating cost performance. Our Alkali business returned to adjusted EBITDA and free cash flow levels that overcame and exceeded the series of one-off items that impacted results in the second quarter. In TiO2, pigment selling prices increased by 6 percent sequentially and were 1 percent above the prior-year quarter. This increase marks the first time since the third quarter of 2012 that pigment prices were higher on a year-on-year basis. We continue to match pigment production volumes to sales volumes and keep inventory at or below normal levels. Moreover, we believe pigment inventories, in the aggregate, are at or below normal levels at both customer and producer locations across the globe resulting in a continued tight supply-demand balance. Our cash generation performance in the quarter further strengthened our balance sheet, as we closed the quarter with $202 million of cash on hand and liquidity of $470 million."
Operating cash flow improves significantlyTronox has generated cash of $123 million from operating activities during the nine month period, up 173.33 percent or $78 million, when compared with the last year period. The company has spent $86 million cash to meet investing activities during the nine month period as against cash outgo of $1,794 million in the last year period.
The company has spent $67 million cash to carry out financing activities during the nine month period as against cash inflow of $637 million in the last year period.
Cash and cash equivalents stood at $202 million as on Sep. 30, 2016, up 39.31 percent or $57 million from $145 million on Sep. 30, 2015.
Working capital declines
Tronox has witnessed a decline in the working capital over the last year. It stood at $669 million as at Sep. 30, 2016, down 22.57 percent or $195 million from $864 million on Sep. 30, 2015. Current ratio was at 2.26 as on Sep. 30, 2016, down from 2.66 on Sep. 30, 2015.
Cash conversion cycle (CCC) has decreased to 94 days for the quarter from 170 days for the last year period. Days sales outstanding were almost stable at 75 days for the quarter, when compared with the last year period.
Days inventory outstanding has decreased to 57 days for the quarter compared with 128 days for the previous year period. At the same time, days payable outstanding went up to 37 days for the quarter from 33 for the same period last year.
Debt comes down marginally
Tronox has recorded a decline in total debt over the last one year. It stood at $3,055 million as on Sep. 30, 2016, down 2.30 percent or $72 million from $3,127 million on Sep. 30, 2015. Total debt was 62.03 percent of total assets as on Sep. 30, 2016, compared with 59.04 percent on Sep. 30, 2015. Debt to equity ratio was at 3.03 as on Sep. 30, 2016, up from 2.38 as on Sep. 30, 2015.
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