OKLAHOMA CITY, July 30 /PRNewswire-FirstCall/ -- Tronox
Incorporated (NYSE: TRX; TRX.B) today reported a preliminary loss
from continuing operations for the 2008 second quarter of $29.9
million ($0.73 per diluted common share), compared with a loss from
continuing operations for the 2007 second quarter of $20.0 million
($0.49 per diluted common share). The decrease in the 2008
second-quarter results compared to the prior-year period was
primarily due to significant increases in process chemical, energy
and transportation costs; unplanned production difficulties at the
company's Uerdingen, Germany and Kwinana, Western Australia
titanium dioxide (TiO(2)) plants; a non-cash impairment charge
related to goodwill of $13.5 million ($0.33 per share pretax); and
a restructuring charge of $4.2 million ($0.10 per share pretax).
These were partially offset by increased sales, lower SG&A and
gain on land sales of $12.4 million ($0.30 per share pretax). In
addition, the company recorded a tax benefit in the 2008 second
quarter versus a tax provision in the prior-year period. Highlights
-- Received in excess of $12 million in proceeds from land sales --
Achieved an additional $15 million in annual cash cost reductions
through Project Cornerstone for cumulative cash cost reductions of
$93 million since the program began in July 2006 -- Increased net
sales 10% in 2008 second quarter versus prior-year period --
Successfully implemented the first of the announced price increases
in all three regions late in June -- Completed amendment to senior
secured credit facility Mitigating the positive impact of these
highlights, during the second quarter, the Tiwest joint venture
(Tronox 50%) TiO(2) plant in Kwinana experienced production
difficulties after a planned shutdown, delaying restart of
production. The company also experienced processing difficulties at
its Uerdingen facility following a planned maintenance outage that
resulted in reduced production volumes and higher costs. The impact
of the Kwinana and Uerdingen difficulties was approximately $11
million (pretax) in the second quarter. Higher natural gas costs at
Tiwest due to the ongoing curtailment of natural gas supply
resulting from the shutdown of Apache's facility in Western
Australia had an impact of approximately $2 million (pretax) in the
quarter. In addition, significant increases in process chemical,
energy and transportation costs more than offset the company's
ongoing cost reduction efforts. In connection with a workforce
reduction announced in May 2008, the company incurred pretax
charges of $1.5 million for severance and other employee related
costs and $2.7 million for noncash special termination benefits
under its pension plan. Net sales for the quarter increased to
$403.8 million compared to $366.5 million in the prior-year
quarter, primarily due to increased TiO(2) volumes, the effects of
foreign exchange and increased pricing for acid sales. Net loss for
the quarter, was $34.4 million ($0.84 per share), versus a net loss
of $21.2 million ($0.52 per share) in the 2007 second quarter.
Three Months Six Months Ended June 30, Ended June 30, (Millions of
dollars, except 2008 2007 2008 2007 per-share amounts) Loss from
Continuing Operations $(29.9) $(20.0) $(31.3) $(29.0) Loss from
Discontinued Operations (4.5) (1.2) (3.3) (1.6) Net Loss $(34.4)
$(21.2) $(34.6) $(30.6) Diluted Earnings Per Share Loss from
Continuing Operations $(0.73) $(0.49) $(0.76) $(0.71) Loss from
Discontinued Operations (0.11) (0.03) (0.08) (0.04) Net Loss
$(0.84) $(0.52) $(0.84) $(0.75) Adjusted EBITDA (1) $6.8 $34.7
$41.8 $73.8 (1) Adjusted EBITDA, which is used by management to
measure performance, is a non-GAAP financial measure. Management
believes that Adjusted EBITDA is useful to investors because it is
used in the company's debt instruments to determine compliance with
financial covenants. It is included as a supplemental measure of
the company's operating performance because it eliminates items
that have less bearing on operating performance and highlights
trends in the core business that may not otherwise be apparent when
relying solely on GAAP financial measures. In addition, Adjusted
EBITDA is one of the primary measures management uses for planning
and budgeting processes and to monitor and evaluate financial and
operating results. Adjusted EBITDA is not a recognized term under
GAAP and does not purport to be an alternative to measures of the
company's financial performance as determined in accordance with
GAAP, such as net income (loss). Because other companies may
calculate Adjusted EBITDA differently, this presentation of
Adjusted EBITDA may not be comparable to other similarly titled
measures of other companies. A detailed reconciliation to the
comparable GAAP financial measures can be found in the tables of
this news release and also can be found in the Investor Relations
section of the company's website at
http://www.tronox.com/ir/GAAP_reconciliation.htm. Outlook Tronox
remains focused on achieving announced price increases and reducing
costs through Project Cornerstone initiatives. At the end of the
quarter, the company was able to implement the first of its
announced TiO(2) price increases in all three regions, which it
expects to positively impact net sales for the remainder of the
year. Sales volumes were strong and inventories declined in the
second quarter, indicating improving demand. In the third quarter,
the company is continuing to see further price increases being
implemented in all three regions of the world. However, we are also
continuing to see cost increases in process chemicals, energy and
transportation. As previously announced, Tronox continues to
evaluate all strategic alternatives to improve the business and
address ongoing challenges, including development opportunities,
mitigation of legacy liabilities, capital restructuring, land sales
and all other options available to it. The company has hired
financial advisor Rothschild Inc. to further assist in its
evaluation of strategic alternatives. There is no assurance that
the company will be successful in pursuing alternatives and options
or that the current price increases will offset the continuing cost
increases that the company is unable to predict and that depend on
numerous factors beyond its control. Pigment Results Pigment sales
for the second quarter of 2008 were $374.4 million, compared with
$340.2 million in the prior-year period. The increase was primarily
a result of increased TiO(2) volumes principally due to strong
demand in the Asia-Pacific region, the effect of foreign exchange
and increased pricing on acid sales, partially offset by lower
TiO(2) pricing compared to the prior-year quarter. Second-quarter
2008 TiO(2) production volumes, including 100% of the Tiwest Joint
Venture, decreased to 143,100 from 147,600 in prior-year quarter,
primarily as a result of unplanned production difficulties at the
Kwinana and Uerdingen plants. For the 2008 second quarter, pigment
recorded an operating loss of $42.3 million, compared with income
of $3.7 million for the 2007 second quarter. The decrease was
mainly due to increased process chemical, energy and transportation
costs, production difficulties at the Uerdingen and Kwinana plants,
the effects of foreign exchange and the non-cash impairment charge
related to goodwill. As a result of the continued cost escalations
and compressed margins, Tronox recorded a $13.5 million non-cash
impairment charge related to its pigment segment goodwill in
accordance with Statement of Financial Accounting Standards No.
142, "Goodwill and Other Intangible Assets." Electrolytic and Other
Chemical Products Results Electrolytic and other chemical products
sales for the 2008 second quarter were $29.4 million, compared with
$26.3 million in the 2007 second quarter, due to increased pricing.
For the 2008 second quarter, the operating profit for electrolytic
and other chemical products was $0.8 million, compared with $0.6
million in the second quarter of 2007. The increase was primarily
due to improved pricing, offset in part by increased costs. Debt
and Cash Balances Total debt at June 30, 2008, was $540.1 million,
including $69 million outstanding on the company's $250 million
revolving credit facility. Cash and cash equivalents at June 30,
2008, were $23.3 million, resulting in net debt outstanding of
$516.8 million. Tronox completed the sale of two parcels of
100%-owned property at the end of June, with net proceeds from the
sales totaling approximately $12 million. The company used $3.2
million of the net proceeds to reduce outstanding debt under its
senior secured credit facility at June 30, 2008, and used the
remainder of the net proceeds, $8.8 million, to reduce outstanding
debt in July. As a result of unexpected impacts in the second
quarter, Tronox requested and received approval for a waiver to its
financial covenants for the 2008 second quarter and an amendment to
its leverage ratio financial covenant for the remainder of the
year. Please see Tronox's current report on Form 8-K filed on July
21, 2008, with the Securities and Exchange Commission ("SEC") for a
description of the amendment. Conference Call Tronox will hold a
conference call today at 10 a.m. EDT to discuss its second-quarter
2008 financial and operating results and expectations for the
future, but does not intend to conduct a question and answer
session. The call will be in listen-only mode. Interested parties
may listen to the call via Tronox's website at
http://www.tronox.com/ or by calling 1-800-231-7043 in the United
States or 617-597-5414 outside the United States. The code for both
dial-in numbers will be 53922647#. A replay of the call will be
available for seven days at 1-888-286-8010 in the United States or
617-801-6888 outside the United States. The code for the replay
will be 97090457#. The webcast will be archived for 30 days on the
company's website. Conference call participants are encouraged to
pre-register for the call at:
https://cossprereg.btci.com/prereg/key.process?key=PR7BEKATT. About
Tronox Headquartered in Oklahoma City, Tronox is the world's
third-largest producer and marketer of titanium dioxide pigment,
with an annual production capacity of 642,000 tonnes. Titanium
dioxide is an inorganic white pigment used in paint, coatings,
plastics, paper and many other everyday products. The company's
five pigment plants, which are located in the United States,
Australia, Germany and the Netherlands, supply high-performance
products to approximately 1,100 customers in 100 countries. In
addition, Tronox produces electrolytic products, including sodium
chlorate, electrolytic manganese dioxide, boron trichloride,
elemental boron and lithium manganese oxide. Results from the
second quarter and challenges facing the company will be further
discussed in the company's quarterly report on Form 10-Q that will
be filed with the SEC on or before Aug. 11, 2008. Forward-Looking
Statements: Some information in this news release regarding the
company's or management's intentions, beliefs or expectations, or
that otherwise speak to future events, are "forward-looking
statements" within the meaning of Section 27A of the Securities
Exchange Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. These forward-looking statements
include those statements preceded by, followed by or that otherwise
include the words "believes," "will," "expects," "anticipates,"
"intends," "estimates," "projects," "target," "budget," "goal,"
"plans," "objective," "outlook," "should," or similar words. Future
results and developments discussed in these statements may be
affected by numerous factors and risks, such as the accuracy of the
assumptions that underlie the statements, the market value of
Tronox's products, the ability to implement price increases, demand
for consumer products for which Tronox's businesses supply raw
materials, the market for raw materials that Tronox uses to produce
TiO(2), its inability to predict the prices of such raw materials,
the financial resources of competitors, the market for debt and/or
equity financing, changes in laws and regulations, the ability to
respond to challenges in international markets, changes in currency
exchange rates, political or economic conditions in areas where
Tronox operates, trade and regulatory matters, general economic
conditions, and other factors and risks identified in the Risk
Factors Section of Tronox's Annual Report on Form 10-K for the year
ended Dec. 31, 2007, and subsequent Quarterly Reports on Form 10-Q,
as filed with the U.S. Securities and Exchange Commission (SEC),
and other SEC filings. Actual results and developments may differ
materially from those expressed or implied in this news release.
The company does not undertake to update forward-looking statements
to reflect the impact of circumstances or events that arise after
the date the forward-looking statement was made. Investors are
urged to consider closely the disclosures and risk factors in
Tronox's filings with the SEC including its Annual Report on Form
10-K for the year ended Dec. 31, 2007, available on Tronox's
website, http://www.tronox.com/. This also can be obtained from the
SEC by calling 1-800-SEC-0330. Media contact: Debbie Schramm
Direct: 405-775-5177 Cell: 405-830-6937 Investor contact: Robert
Gibney Direct: 405-775-5105 TRONOX INCORPORATED AND SUBSIDIARY
COMPANIES Preliminary and Unaudited Second Quarter Ended Six Months
Ended June 30, June 30, (Millions of dollars, except per-share
amounts) 2008 2007 2008 2007 Consolidated Statements of Operations
Net sales $403.8 $366.5 $752.9 $705.6 Cost of sales 403.6 336.5
727.2 638.4 Gross margin 0.2 30.0 25.7 67.2 Selling, general and
administrative expenses 27.2 30.0 54.8 65.0 Impairment charge 13.5
- 13.5 - Gain on land sales (12.4) - (17.7) - Restructuring charges
4.2 - 4.2 - Provision for environmental remediation and
restoration, net of reimbursements 0.5 1.5 0.5 1.7 (32.8) (1.5)
(29.6) 0.5 Interest and debt expense (12.7) (12.4) (25.0) (24.7)
Other income, net 0.7 0.7 6.8 2.4 Loss from continuing operations
before income taxes (44.8) (13.2) (47.8) (21.8) Income tax
(provision) benefit 14.9 (6.8) 16.5 (7.2) Loss from continuing
operations (29.9) (20.0) (31.3) (29.0) Loss from discontinued
operations, net of income taxes (4.5) (1.2) (3.3) (1.6) Net loss
$(34.4) $(21.2) $(34.6) $(30.6) Income (loss) per common share:
Basic - Continuing operations $(0.73) $(0.49) $(0.76) $(0.71)
Discontinued operations (0.11) (0.03) (0.08) (0.04) Net loss
$(0.84) $(0.52) $(0.84) $(0.75) Diluted - Continuing operations
$(0.73) $(0.49) $(0.76) $(0.71) Discontinued operations (0.11)
(0.03) (0.08) (0.04) Net loss $(0.84) $(0.52) $(0.84) $(0.75)
Weighted average shares outstanding (thousands): Basic 40,981
40,698 40,958 40,653 Diluted 40,981 40,698 40,958 40,653 TRONOX
INCORPORATED AND SUBSIDIARY COMPANIES Preliminary and Unaudited
Second Quarter Ended Six Months Ended June 30, June 30, (Millions
of dollars) 2008 2007 2008 2007 Segment Information Net sales
Pigment $374.4 $340.2 $696.0 $655.6 Electrolytic and other chemical
products 29.4 26.3 56.9 50.0 Total $403.8 $366.5 $752.9 $705.6
Operating profit (loss) Pigment $(42.3) $3.7 $(45.3) $11.2
Electrolytic and other chemical products 0.8 0.6 2.5 (0.2) (41.5)
4.3 (42.8) 11.0 Corporate and nonoperating sites (3.2) (4.4) (4.0)
(8.9) Gain on land sales 12.4 - 17.7 - Provision for environmental
remediation and restoration (0.5) (1.4) (0.5) (1.6) Total operating
profit (loss) (32.8) (1.5) (29.6) 0.5 Interest and debt expense
(12.7) (12.4) (25.0) (24.7) Other income, net 0.7 0.7 6.8 2.4
Income tax (provision) benefit 14.9 (6.8) 16.5 (7.2) Loss from
discontinued operations, net of income taxes (4.5) (1.2) (3.3)
(1.6) Net loss $(34.4) $(21.2) $(34.6) $(30.6) Other income, net
Net foreign currency transaction gain (loss) $0.8 $(1.2) $7.8
$(1.5) Equity in net earnings (loss) of equity method investees
(0.1) 1.3 (0.4) 2.0 Interest income 0.1 0.5 0.3 1.3 Loss on sale of
accounts receivable (0.7) - (1.5) - Other income 0.6 0.1 0.6 0.6
Total $0.7 $0.7 $6.8 $2.4 TRONOX INCORPORATED AND SUBSIDIARY
COMPANIES Preliminary and Unaudited Second Quarter Ended Six Months
Ended June 30, June 30, (Volumes and capacity in thousands of
tonnes) 2008 2007 2008 2007 Selected Information Titanium Dioxide
Operating Statistics Production volumes 100% owned facilities 122.9
120.8 244.7 240.2 50% owned production - Tiwest joint venture 10.1
13.4 22.4 26.3 Total Tronox production 133.0 134.2 267.1 266.5
Product purchased from Tiwest joint venture partner 10.1 13.4 22.4
26.3 Total production available to be marketed by Tronox 143.1
147.6 289.5 292.8 Production capacity - period to date 100% owned
facilities 132.7 132.7 263.8 263.8 50% owned production - Tiwest
joint venture 13.7 13.7 27.3 27.3 Total Tronox production capacity
146.4 146.4 291.1 291.1 Production capacity of Tiwest joint venture
partner 13.7 13.7 27.3 27.3 Production capacity available to be
marketed by Tronox 160.1 160.1 318.4 318.4 Percentage change in
average TiO(2) selling price in U.S. dollars Q2, 2008 vs. Q1, 2008
flat At At June 30, Dec. 31, (Millions of dollars) 2008 2007
Selected Balance Sheet Information Cash and cash equivalents $23.3
$21.0 Current assets 703.5 693.1 Total assets 1,710.8 1,723.4
Current liabilities 408.0 448.2 Long-term debt classified as
current 529.8 - Long-term debt - 475.6 Stockholders' equity 446.7
429.6 Shares outstanding at period-end (thousands) 41,622 41,425
Second Quarter Ended Six Months Ended June 30, June 30, (Millions
of dollars) 2008 2007 2008 2007 Selected Cash Flow Information Net
cash flows from operating activities $(11.4) $29.0 $(38.6) $14.1
Depreciation and amortization 29.0 27.9 57.5 55.8 Capital
expenditures 7.3 19.5 15.6 33.8 TRONOX INCORPORATED AND SUBSIDIARY
COMPANIES Preliminary and Unaudited Second Quarter Ended Six Months
Ended June 30, June 30, (Millions of dollars) 2008 2007 2008 2007
Adjusted EBITDA Net loss $(34.4) $(21.2) $(34.6) $(30.6) Interest
and debt expense 12.7 12.4 25.0 24.7 Interest income (0.1) (0.5)
(0.3) (1.3) Income tax provision (14.9) 6.0 (16.5) 6.2 Depreciation
and amortization expense 29.0 27.9 57.5 55.8 EBITDA (7.7) 24.6 31.1
54.8 Loss from discontinued operations 4.5 2.0 3.3 2.6 Provision
for environmental remediation and restoration, net of
reimbursements 0.5 1.5 0.5 1.7 Extraordinary, unusual or
non-recurring items (a) 4.2 - 4.2 - Gain on sale of assets (12.3)
(0.3) (17.7) (0.3) Noncash charges constituting: Loss on sales of
accounts receivable 0.7 - 1.5 - Write-downs of property, plant and
equipment and other assets 0.2 0.2 0.3 0.3 Impairment charge 13.5 -
13.5 - Other items (b) 3.2 6.7 5.1 14.7 Adjusted EBITDA $6.8 $34.7
$41.8 $73.8 (a) Includes costs associated with a work force
reduction program. (b) Includes noncash stock-based compensation,
noncash pension and postretirement cost and accretion. Adjusted
EBITDA, which is used by management to measure performance, is a
non-GAAP financial measure. Management believes that adjusted
EBITDA is useful to investors because it is used in the company's
debt instruments to determine compliance with financial covenants.
It is included as a supplemental measure of the company's operating
performance because it eliminates items that have less bearing on
operating performance and highlights trends in the core business
that may not otherwise be apparent when relying solely on GAAP
financial measures. In addition, adjusted EBITDA is one of the
primary measures management uses for planning and budgeting
processes and to monitor and evaluate financial and operating
results. Adjusted EBITDA is not a recognized term under GAAP and
does not purport to be an alternative to measures of the company's
financial performance as determined in accordance with GAAP, such
as net income (loss). Because other companies may calculate
adjusted EBITDA differently, this presentation of adjusted EBITDA
may not be comparable to other similarly titled measures of other
companies.
http://www.newscom.com/cgi-bin/prnh/20051118/TRONOXLOGO-a
http://www.newscom.com/cgi-bin/prnh/20051118/TRONOX-b
http://photoarchive.ap.org/ DATASOURCE: Tronox Incorporated
CONTACT: media, Debbie Schramm, +1-405-775-5177, cell,
+1-405-830-6937, , or investors, Robert Gibney, +1-405-775-5105, ,
both of Tronox Incorporated Web site: http://www.tronox.com/
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