Investment Thesis
Tronox is in severe financial distress with negative operating cash flow (-$68M), unsustainable free cash flow burn (-$135M), and an inability to service $3.1B debt from operations (negative -0.2x interest coverage). The company lost $103M on declining revenues with razor-thin 5.8% gross margins, eroding shareholder equity at an ROE of -8.0%.
Strengths
- Current ratio of 2.42x provides near-term liquidity buffer
- Established industrial chemicals market position with $6.1B asset base
- Modest insider trading activity (18 Form 4 filings) may indicate confidence
Risks
- Operating cash flow negative (-$68M) with unsustainable free cash flow burn (-$135M annually)
- Debt/Equity of 2.42x ($3.1B debt) with -0.2x interest coverage—operationally insolvent on debt service
- Negative operating margin (-5.4%) and net margin (-13.6%) destroying value; $103M loss on declining $760M revenue
- Liquidity crisis within 12 months at current burn rate ($135M FCF burn vs. $126M cash on hand)
- Commodity-exposed sector with weak pricing power evidenced by 5.8% gross margin
Key Metrics to Watch
- Operating cash flow (must return to positive)
- Gross margin expansion (currently unviable at 5.8%)
- Debt refinancing ability and covenant compliance status
- Revenue trajectory (currently -5.7% YoY)
- Interest coverage ratio (currently negative)
Financial Metrics
Revenue
760.0M
Net Income
-103.0M
EPS (Diluted)
$-0.65
Free Cash Flow
-135.0M
Total Assets
6.1B
Cash
126.0M
Profitability Ratios
Gross Margin
5.8%
Operating Margin
-5.4%
Net Margin
-13.6%
ROE
-8.0%
ROA
-1.7%
FCF Margin
-17.8%
Balance Sheet & Liquidity
Current Ratio
2.42x
Quick Ratio
0.66x
Debt/Equity
2.42x
Debt/Assets
78.2%
Interest Coverage
-0.22x
Long-term Debt
3.1B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-08T12:49:59.264340 |
Data as of: 2026-03-31 |
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