Tronox Limited (NYSE:TROX) today reported second quarter 2016 revenue of $537 million compared to $617 million in the second quarter 2015 and $475 million in the first quarter 2016. Income from operations of $8 million improved from an operating loss of $50 million in the year-ago quarter and an operating loss of $29 million in the prior quarter. Net loss attributable to Tronox Limited was $50 million, or $0.42 per diluted share, which included restructuring income of $1 million, or $0.01per diluted share, compared to a net loss attributable to Tronox Limited of $119 million, or $1.03 per diluted share in the year-ago quarter and a net loss attributable to Tronox Limited of $91 million, or $0.78 per diluted share in the prior quarter. Adjusted net loss attributable to Tronox Limited was $51 million, or $0.43 per diluted share. Adjusted EBITDA was $71 million compared to $67 million in the year-ago quarter and $40 million in the prior quarter.

Tom Casey, chairman and CEO of Tronox, said: "Our TiO2 business generated considerable momentum in the second quarter, reporting adjusted EBITDA of $59 million, which represents a 168 percent improvement over our first quarter result. We benefited from pigment selling price increases, healthy demand growth and our continued strong operating cost performance. Pigment selling prices increased sequentially for the first time since 2012 and we expect to see another sequential improvement in the third quarter as announced price increases roll across our global customer base. We continue to match pigment production volumes to robust sales volumes and keep inventory at or below normal levels, even though our utilization rate increased to the mid-90s percent range in the quarter. We believe pigment inventories are normal or below normal at both customer and producer levels across the globe. Our Alkali business continues to operate in a sold-out mode and deliver significant free cash flow to the company. Both TiO2 and Alkali ratified new multi-year labor contracts for our operations in South Africa and Green River, Wyo, respectively."

Casey concluded: "We believe that the second quarter marked the turn in pigment pricing and we expect feedstock prices to follow within a few quarters. It also marked the halfway point of our three-year Operational Excellence program in TiO2 to generate more than $600 million of aggregate cash from cost and working capital reductions over the period 2015-2017. We are ahead of schedule in meeting our targets. Cash generated from annual cost reduction totals $220 million through the first half of 2016. 2015 initiatives generated $90 million in 2015 and, after an additional $3 million of costs to achieve the 2015 savings that were paid in 2016, we sustained $87 million of these savings in the first half of 2016. 2016 initiatives generated an additional $43 million in the first half. Cash delivered from working capital reductions totals $202 million through the first half of 2016. In 2015, $98 million was delivered and an additional $104 million was delivered in the first half of 2016. Total Operational Excellence aggregate cash generation totals $422 million through the first half 2016."

Second Quarter 2016

Tronox TiO2

TiO2 segment revenue of $333 million was 19 percent lower than $409 million in the year-ago quarter, primarily the result of lower pigment selling prices and lower titanium slag sales volumes. Pigment products sales of$244 million declined 8 percent compared to $266 million in the year-ago quarter, as sales volumes increased 3 percent and average selling prices declined 11 percent (11 percent on a local currency basis). Higher sales volumes were realized in North America and Asia-Pacific, while sales volumes in EMEA and Latin America were lower than year-ago levels. Selling prices were lower in all regions. Titanium feedstock and co-products sales of $73 million were 37 percent lower than $116 million in the year-ago quarter, driven primarily by lower sales for titanium slag and pig iron and lower zircon selling prices. Titanium slag sales volumes in the quarter were one-third the level of those in the year-ago quarter and selling prices were 23 percent lower. Sales volumes for natural rutile increased 58 percent while selling prices declined 14 percent. Zircon sales volumes increased 3 percent and selling prices were 16 percent lower than the year-ago quarter. Pig iron sales volumes declined 27 percent and selling prices were 24 percent lower. Lower pig iron sales can be attributed to lower production as production was curtailed at two furnaces starting in the second quarter of last year. Pig iron is a by-product of making titanium slag in our furnaces in South Africa. Pig iron selling prices are correlated to market pricing for iron ore.

Compared sequentially, TiO2 segment revenue of $333 million increased 17 percent versus $285 million in the first quarter, driven by higher pigment sales and feedstock and co-products sales volumes. Pigment products sales of $244 million increased 13 percent compared to $216 million in the first quarter, as sales volumes increased 8 percent and selling prices increased 5 percent (4 percent on a local currency basis). Sales volumes were higher in North America and Asia-Pacific and lower in EMEA and Latin America. Selling prices were higher in all regions. Titanium feedstock and co-products sales of $73 million increased 28 percent compared to $57 million in the first quarter, led by higher titanium slag and zircon sales volumes. Zircon sales volumes increased 56 percent, including a shipment that was rescheduled from the first quarter to the second quarter, while selling prices were 10 percent lower than the prior quarter. In the second quarter, our first shipment of zircon was made from our new Fairbreeze mine. We expect zircon sales volumes in 2016 to exceed those of 2015 by approximately 5 percent as we ramp up production to match market demand. Natural rutile sales volumes and selling prices were level to the first quarter. Pig iron sales volumes increased 9 percent and selling prices remained level.

TiO2 segment operating income of $6 million improved from an operating loss of $41 million in the year-ago quarter and an operating loss of $36 million in the prior quarter. With cash provided by operating activities of$67 million and capital expenditures of $18 million, TiO2 delivered free cash flow of $49 million in the second quarter.

Despite lower selling prices in all major products in the segment, TiO2 segment adjusted EBITDA of $59 millionincreased 64 percent from $36 million in the year-ago quarter, driven by significant cost reductions resulting from the Operational Excellence program and the favorable impact of foreign exchange on production costs, partially offset by the impact of feedstock production curtailments.

Compared sequentially, adjusted EBITDA of $59 million improved by 168 percent from $22 million in the first quarter, driven by significant pigment price increases and production cost reductions, higher sales volumes across the segment and the benefit of higher pigment production efficiency and plant utilization.

TiO2 successfully negotiated a new two-year labor agreement for its South Africa operations. The new agreement, which expires on June 30, 2018, was negotiated and ratified without any work stoppages.

Tronox Alkali

Alkali segment revenue of $204 million was 2 percent lower than $208 million in the year-ago quarter, as sales volumes and selling prices were both 1 percent lower. In the domestic market, sales volumes increased 5 percent, driven by continued strong demand growth, particularly in flat glass and chemicals markets. Domestic selling prices were level, as price increases in the low single-digit percent range implemented in annual contracts at the beginning of the year were offset by customer mix in the quarter. In export markets, sales volumes were 6 percent lower, as a higher portion of production volumes was allocated to domestic markets to meet strong demand growth. Selling prices in export markets declined 6 percent primarily due to lower prices in Asia. Chinese soda ash producers lowered domestic and export prices in the fourth quarter last year as raw material, shipping and energy cost deflation and currency devaluation lowered their costs.

Compared sequentially, Alkali revenue of $204 million increased 7 percent from $190 million in the first quarter. Sales volumes increased 10 percent driven by broad-based domestic and export demand growth. Domestic sales volumes increased 8 percent and export sales volumes increased 12 percent. Selling prices were 2 percent lower, as domestic selling prices declined 2 percent due to customer mix while export selling prices were level to the prior quarter.

Alkali segment operating income of $11 million declined from $25 million in the year-ago quarter and $20 millionin the prior quarter. With cash provided by operating activities of $21 million and capital expenditures of $4 million, Alkali delivered free cash flow of $17 million in the second quarter.

Alkali segment adjusted EBITDA of $28 million declined from a record $50 million in the year-ago quarter, driven primarily by items in the current quarter totaling approximately $9 million that did not occur in the year-ago quarter, as well as by lower export sales, higher inflation-driven operating costs and unplanned maintenance. These items were the move of our longwall mining machine, the transition from a shared services agreement with the business' prior owner to a Tronox system and labor agreement supply reliability planning costs. Compared sequentially, Alkali adjusted EBITDA of $28 million declined from $35 million, as higher sales volumes were more than offset by the same items totaling approximately $9 million that also did not occur in the prior quarter.

Alkali successfully negotiated a new three-year labor agreement with employees at its Green River, Wyo.production facility. The new agreement, which expires June 30, 2019, was negotiated and ratified without work stoppage.

Corporate

Corporate loss from operations was $9 million in the second quarter compared to a loss from operations of $34 million in the year-ago quarter, which included $21 million of professional fees incurred for the Alkali acquisition, and a loss from operations of $13 million in the prior quarter. Corporate adjusted EBITDA was ($16) millioncompared to adjusted EBITDA of ($19) million in the year-ago quarter and adjusted EBITDA of ($17) million in the prior quarter. Corporate cash used in operations was $20 million in the quarter.

Consolidated

Selling, general and administrative expenses in the second quarter were $50 million, compared to $72 million in the year-ago quarter, which included $21 million of professional fees incurred for the Alkali acquisition, and $47 million in the prior quarter. Interest and debt expense of $46 million compares to $52 million in the year-ago quarter, which included an $8 million bridge financing fee related to the Alkali acquisition, and $46 million in the prior quarter. On June 30, 2016, gross consolidated debt was $3,055 million, and debt, net of cash and cash equivalents, was $2,867 million. Liquidity was $460 million including cash and cash equivalents on the balance sheet of $188 million as of June 30, 2016. Capital expenditures were $22 million and depreciation, depletion and amortization was $60 million.

About Tronox

Tronox Limited operates two vertically integrated mining and inorganic chemical businesses. Tronox TiO2 mines and processes titanium ore, zircon and other minerals, and manufactures titanium dioxide pigments that add brightness and durability to paints, plastics, paper, and other everyday products. Tronox Alkali mines trona ore and manufactures natural soda ash, sodium bicarbonate, caustic soda, and other compounds which are used in the production of glass, detergents, baked goods, animal nutrition supplements, pharmaceuticals, and other essential products. For more information, visit www.tronox.com