TROX US Equity☆

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with Tronox Holdings plc's consolidated financial statements and the related notes included elsewhere in this Annual Report on Form 10-K. This discussion and other sections in this Annual Report on Form 10-K contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties, and actual results could differ materially from those discussed in the forward-looking statements as a result of numerous factors. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements also can be identified by words such as “future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “will,” “would,” “could,” “can,” “may,” and similar terms. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements. In particular, you should consider the numerous risks and uncertainties outlined in Item 1A. “Risk Factors.”

This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains certain financial measures, in particular the presentation of earnings before interest, taxes, depreciation and amortization (“EBITDA”) and Adjusted EBITDA, which are not presented in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). We are presenting these non-U.S. GAAP financial measures because we believe they provide us and readers of this Form 10-K with additional insight into our operational performance relative to earlier periods and relative to our competitors. We do not intend for these non-U.S. GAAP financial measures to be a substitute for any U.S. GAAP financial information. Readers of these statements should use these non-U.S. GAAP financial measures only in conjunction with the comparable U.S. GAAP financial measures. A reconciliation of net income (loss) to EBITDA and Adjusted EBITDA is also provided herein.

Executive Overview

Tronox Holdings plc (referred to herein as "Tronox", "we", "us", or "our") operates titanium-bearing mineral sand mines and beneficiation operations in Australia, South Africa and Brazil to produce feedstock materials that can be processed into TiO2 for pigment, high purity titanium chemicals, including titanium tetrachloride, and Ultrafine© titanium dioxide used in certain specialty applications. It is our long-term strategic goal to be vertically integrated and consume all of our feedstock materials in our own nine TiO2 pigment facilities which we operate in the United States, Australia, Brazil, UK, France, the Netherlands, China and the Kingdom of Saudi Arabia (“KSA”). We believe that vertical integration is the best way to achieve our ultimate goal of delivering low cost, high-quality pigment to our coatings and other TiO2 customers throughout the world. The mining, beneficiation and smelting of titanium bearing mineral sands creates meaningful quantities of zircon, which we also supply to customers around the world.

We are a public limited company formed under the laws of England and Wales. Tronox was formerly listed on the New York Stock Exchange as Tronox Limited, a company formed under the laws of Western Australia. However, in March 2019, we re-domiciled to the United Kingdom, and as a result of the re-domiciling, Tronox Limited became a wholly-owned subsidiary of Tronox Holdings plc. Another significant corporate milestone occurred on April 10, 2019 when we completed the acquisition from National Industrialization Company ("Tasnee") of the TiO2 business of The National Titanium Dioxide Company Limited (“Cristal”) (the “Cristal Transaction”). The Cristal Transaction doubled our size and expanded the number of TiO2 pigment facilities we operate from three to nine and gave us control of several new mines, particularly in Australia. In order to obtain

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regulatory approval for the Cristal Transaction, we were required to divest Cristal's North American TiO2 business, which was sold in May 2019. See Note 3 for further details on the Cristal Transaction.

Business Environment

The following discussion includes trends and factors that may affect future operating results:

Throughout the current COVID-19 pandemic, our operations have been designated as essential to support the continued manufacturing of products such as food and medical packaging, medical equipment, pharmaceuticals, and personal protective gear.

The COVID-19 pandemic has impacted our industry and business and the Company has taken, and will continue to take, measures, to minimize the impact to our operations and maintain liquidity. In response to the initial pandemic, some of these measures have included delaying capital expenditures, delaying merit increases, increased working capital management cost reductions and incremental borrowings to maintain incremental liquidity. We will continue to monitor the pandemic, related impact to our business and will take additional precautions as deemed necessary.

During the second and third quarters of 2020, the Company experienced a significant reduction in TiO2 and Zircon sales volumes which was in line with expectations as a result of the decline in global GDP. Sales in the fourth quarter of 2020 increased 13% compared to the prior year period. Sequentially, revenues increased 16% in the fourth quarter compared to the third quarter of 2020 driven by a continued demand recovery as well as delivery on our synergy targets from the Cristal Transaction. In the fourth quarter of 2020, TiO2 sales volumes increased in the Asia, Europe, Middle East and Africa regions with slight decrease in North America. Average TiO2 selling prices were stable in the North American market and were slightly up in the Asia, Europe, Middle East, Africa and South and Central American regions. Based upon current conditions we believe our TiO2 business will continue to benefit from an expected global industry recovery in 2021.

Gross profit increased sequentially from the third quarter to the fourth quarter of 2020 due to the favorable impacts of TiO2 and Zircon sales volumes as well as favorable impact of foreign currency on sales. Gross profit was also positively impacted by $10 million for synergies realized in relation to the Cristal Transaction however was more than offset by a negative impact of $17 million on foreign currency on costs of goods sold primarily due to the South African rand and Australian dollar. In addition, the fourth quarter included a $4 million reimbursement from claims related to the Ginkgo concentrator failure we inherited as part of the Cristal Transaction.

As of December 31, 2020, our total available liquidity was $1,041 million, including $619 million in cash and cash equivalents and $422 million available under revolving credit agreements including $285 million available under our Asset Backed Lending ("ABL") facility. Our total debt was $3.3 billion and net debt to trailing-twelve month Adjusted EBITDA was 4.1x.

Additionally, consistent with our previously stated capital allocation priorities, in December 2020, the Company made a voluntary prepayment of $200 million on its Term Loan Facility. The Company anticipates making a voluntary repayment of $300 million on the Term Loan Facility during the first quarter of 2021 from the cash on our Consolidated Balance Sheet originally intended for the TTI acquisition. There are no upcoming maturities on the Company's term loan or bonds until 2024. The Company also has no financial covenants on its term loan or bonds and only one springing financial covenant on its ABL facility which we do not expect to be triggered based on our current scenario planning.

Pro Forma Income Statement Information

The acquisition of the TiO2 business of Cristal on April 10, 2019 impacts the comparability of the reported results for 2020 compared to 2019. Since Tronox and Cristal have combined their respective businesses effective with the merger date of April 10, 2019, the year ended December 31, 2020 reflects the results of the combined business, without any pro forma adjustments, while the year ended December 31, 2019 reflect the results of the combined business from April 10, 2019. To assist with a discussion of the 2020 and 2019 results on a comparable basis, certain supplemental unaudited pro forma income statement information is provided on a consolidated basis and is referred to as "pro forma information".

The pro forma information has been prepared on a basis consistent with Article 11 of Regulation S-X, assuming the merger and merger-related divestitures of Cristal’s North American TiO2 business and the 8120 paper laminate grade had been consummated on January 1, 2018. In preparing this pro forma information, the historical financial information has been adjusted to give effect to pro forma adjustments that are (i) directly attributable to the business combination and other transactions presented herein, such as the merger-related divestitures, (ii) factually supportable, and (iii) expected to have a continuing impact on the combined entity’s consolidated results. The pro forma information is based on management’s assumptions and is presented

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for illustrative purposes and does not purport to represent what the results of operations would actually have been if the business combination and merger-related divestitures had occurred as of the dates indicated or what the results would be for any future periods. Also, the pro forma information does not include the impact of any revenue, cost or other operation synergies in the periods prior to the acquisition that may result from the business combination or any related restructuring costs.

Consolidated Results of Operations from Continuing Operations

Year Ended December 31, 2020 Compared to the Year Ended December 31, 2019

Reported Amounts Pro Forma Amounts (1)

Year Ended December 31, Year Ended December 31,

(Millions of U.S. Dollars) (Millions of U.S. Dollars)

Contract loss — 19 (19) — — —

Selling, general and administrative expenses 347 347 — 347 354 (7)

Loss on extinguishment of debt (2) (3) 1 (2) (3) 1

Adjusted EBITDA as % of Net Sales 24 % 23 % 1 pt 24 % 23 % 1 pt

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(1) The pro forma amounts have been prepared on a basis consistent with Article 11 of Regulation S-X. See "Supplemental Pro Forma Information" section of this MD&A for further detail.

(2) EBITDA and Adjusted EBITDA are Non-U.S. GAAP financials measures. Please refer to the “Non-U.S. GAAP Financial Measures” section of this Management’s Discussion and Analysis of Financial Condition and Results of Operations for a discussion of these measures and a reconciliation of these measures to Net income (loss) from continuing operations.

Reported net sales of $2,758 million for the year ended December 31, 2020 increased by 4% compared to $2,642 million for the same period in 2019. The year ended December 31, 2020 includes approximately $352 million of revenue from Cristal operations for the first quarter of 2020 and the first nine days of April 2020 for which there were no comparable amounts in the prior year period given the acquisition closed on April 10, 2019. Excluding this Cristal revenue, revenue decreased 9% primarily due to lower TiO2 sales volumes as a result of the COVID-19 pandemic as well as lower Zircon average selling prices. On a pro forma basis, net sales for the year ended December 31, 2020 decreased $250 million in comparison to the same period in 2019 primarily due to the decreases in sales volumes of TiO2 and pig iron as well as lower average selling prices of Zircon. Net sales by type of product for the years ended December 31, 2020 and 2019 were as follows:

The table below presents reported revenue by product:

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Year Ended December 31,

(Millions of dollars, except percentages) 2020 2019 Variance Percentage

Feedstock and other products 299 303 (4) (1) %

The table below presents pro forma revenue by product:

Year Ended December 31,

(Millions of dollars, except percentages) 2020 2019 Variance Percentage

Feedstock and other products 299 324 (25) (8) %

On a reported basis, for the year ended December 31, 2020, TiO2 revenue increased $127 million, or 6%, compared to the prior year. Given the acquisition of Cristal on April 10, 2019, there is approximately $306 million of revenue in the first quarter of 2020 and first nine days of April 2020 for which there were no comparable amounts in the same period of the prior year. Excluding this revenue generated from the Cristal operations, TiO2 revenue decreased by $179 million due to a $152 million decrease in sales volumes as a result of the COVID-19 pandemic and a decrease of $42 million in average selling prices. Foreign currency positively impacted TiO2 revenue by $15 million due primarily to the strengthening of the Euro. Zircon revenues for the Cristal operation in the first quarter of 2020 and first nine days of April 2020 were approximately $17 million. Excluding this Cristal related revenue, Zircon revenue decreased $24 million primarily due to a $34 million reduction in average selling prices partially offset by an $11 million increase in sales volumes. Feedstock and other products revenues for the Cristal operations in the first quarter of 2020 and first nine days of April 2020 were approximately $29 million. Excluding this Cristal related revenue, feedstock and other products revenue decreased $32 million primarily due to lower sales volumes of CP slag, ilmenite, and rutile prime.

On a pro forma basis, for the year ended December 31, 2020, TiO2 revenue was lower by $198 million or 8% compared to the prior year driven by a 7% or $160 million decrease in sales volumes, a 2% decrease in average selling prices impacting revenue by $47 million and a $1 million decrease in product mix. Foreign currency increased TiO2 revenue by $10 million due to the strengthening of the Euro. Zircon revenue declined $27 million, or 9%, due to a 13% decrease in average selling prices partially offset by a 4% increase in sales volumes. Feedstock and other product revenue was lower by $25 million, or 8%, compared to the prior year due to decreases in ilmenite sales and decreases in CP slag sales volumes.

On a reported basis, our gross margin of $621 million for the year ended December 31, 2020 was 23% of net sales compared to 18% of net sales for the same period in 2019. The increase in gross margin is primarily due to:

•the favorable impact of 4 points due to the value of the inventory of Cristal being stepped up to fair value on the acquisition date in the prior year period, which resulted in the recognition of higher expense the prior year period;

•the favorable impact of 4 points due to the synergies realized from the Cristal Transaction;

•the net favorable impact of 3 points due to changes in foreign exchange rates, primarily due to the South African Rand, Euro and Brazilian Real;

•the favorable impact of 1 point due to the recognition of a $19 million charge for contract losses expected to be incurred on the 8120 supply agreement with Venator in the prior year period;

•the unfavorable impact of 3 points primarily due to a decrease in average selling prices of TiO2 and Zircon;

•the unfavorable impact of 2 points due to inflationary cost pressures and unfavorable fixed overhead absorption, including idle facility charges and lower of cost or market charges, on lower volumes as we reduced production to match demand;

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•the unfavorable impact of 1 point due to sales volumes and product mix; and

•the unfavorable impact of 1 point due to deferred margin recognized in the year-ago period which did not recur during the current period.

On a pro forma basis, our gross margin of $621 million for the year ended December 31, 2020 was 23% of net sales compared to 21% of net sales for the same period in 2019. The increase in gross margin is primarily due to:

•the favorable impact of 4 points due to the synergies realized from the Cristal Transaction;

•the net favorable impact of 3 points due to changes in foreign exchange rates, primarily due to the South African Rand, Euro and Brazilian Real;

•the favorable impact of 1 point due to sales volumes and product mix;

•the unfavorable impact of 3 points primarily due to a decrease in average selling prices of TiO2 and Zircon;

•the unfavorable impact of 2 points due to inflationary cost pressures and unfavorable fixed overhead absorption, including idle facility charges and lower of cost or market charges, on lower volumes as we reduced production to match demand; and

•the unfavorable impact of 1 point due to deferred margin recognized in the year-ago period which did not recur during the current period.

On a reported basis, selling, general and administrative ("SG&A") expenses remained consistent for the year ended December 31, 2020 compared to the prior year. Given the acquisition of Cristal on April 10, 2019, there are approximately $23 million of expenses in the first quarter of 2020 and the first nine days of April 2020 for which there were no comparable amounts in the same period of the prior year. Excluding the effect of Cristal, SG&A expenses decreased $23 million primarily driven by $13 million of lower professional fees, a decrease of $12 million in travel and entertainment expenses as a result of the COVID-19 pandemic, a $6 million decrease in research and development expenses, lower integration costs of $5 million and lower agent commissions of $3 million partially offset by $12 million increase in employee costs primarily driven by higher incentive compensation, higher costs of $2 million for IT and communication expenses, and higher costs of $3 million related to the transitional service agreement associated with the Cristal acquisition. On a pro forma basis, selling, general and administrative expenses decreased primarily due to $21 million of synergies, lower travel and entertainment expenses of $13 million partially offset by transaction costs of $14 million included in 2020 related to the TTI acquisition of which all transaction costs in 2019 related to the Cristal Transaction were excluded for proforma purposes, $9 million increase in incentive compensation and $6 million due to merit increases.

On both a reported and pro forma basis, we recorded restructuring expenses of $3 million for employee-related costs associated with headcount reductions during the year ended December 31, 2020. See Note 4 of notes to consolidated financial statements.

On a reported basis, income from operations for the year ended December 31, 2020 of $271 million, increased by $176 million or 185% compared to the same period in 2019 which is primarily attributable to the higher gross margin and lower restructuring charges.

On a pro forma basis, income from operations for the year ended December 31, 2020 was $271 million, an increase of $3 million compared to $268 million in the prior year due to lower SG&A expenses and lower restructuring costs partially offset by the lower gross margin in the current year.

On both a reported basis and a proforma basis, Adjusted EBITDA as a percentage of net sales was 24% for the year ended December 31, 2020, an increase of 1 point from 23% in the prior year. On a reported basis, the higher gross profit, as a result of the reflection of synergies related to the Cristal Transaction, were the primary drivers of the year-over-year increase in Adjusted EBITDA percentage. On a proforma basis, the lower SG&A expenses as a result of the reflection of synergies related to the Cristal Transaction, offset by the lower gross profit was the primary driver of the increase in Adjusted EBITDA percentage.

On a reported basis and a pro forma basis, interest expense for the year ended December 31, 2020 decreased by $12 million and $18 million, respectively, compared to the same period in 2019 primarily due to lower average debt outstanding balances and lower average interest rates mainly on the Term Loan Facility and Standard Bank Term Loan Facility.

On a reported and pro forma basis, interest income for the year ended December 31, 2020 decreased by $10 million and $4 million, respectively, compared to the prior year primarily due to lower cash balances from the use of cash and previously restricted cash in the second quarter of 2019 for the acquisition of the Cristal Transaction as well as the overall decrease in interest rates on our cash investments period over period.

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Loss on extinguishment of debt of $2 million for the year ended December 31, 2020 resulted from the voluntary prepayment of $200 million on our Term Loan Facility in December 2020.

On a reported basis and pro forma basis, other income (expense), net for the year ended December 31, 2020 primarily consisted of $4 million net realized and unrealized foreign currency gains, an approximate $2 million adjustment associated with a curtailment gain due to the freezing of plan benefits partially offset by pension settlements, and a $11 million reimbursement from claims related to the Ginkgo concentrator failure we inherited as part of the Cristal Transaction, and $5 million associated with the monthly technical service fee relating to the Jazan slagger we receive from AMIC. Refer to Note 24 for further information. On a reported basis, other income (expense), net for the year ended December 31, 2019 primarily consisted of $5 million net realized and unrealized foreign currency gains and a $2 million adjustment associated with a settlement gain related to the Cristal U.S. pension plan.

We maintain full valuation allowances related to the total net deferred tax assets in Australia and the United Kingdom. For entities acquired in the Cristal Transaction, we have full valuation allowances in Australia, Saudi Arabia, and Switzerland. The provisions for income taxes associated with these jurisdictions include no tax benefits with respect to losses incurred and tax expense only to the extent of current tax payments. Additionally, we have valuation allowances against other specific tax assets.

On a reported basis, the effective tax rate was (773)% and (16)% for the years ended December 31, 2020 and 2019, respectively. The large negative effective tax rate for the year ended December 31, 2020 is caused by the release of valuation allowances for deferred tax assets in the U.S. and Brazil, partially offset by the recording of valuation allowances in Saudi Arabia and the U.K. The net impact was $905 million benefit to the income tax provision. Refer to Note 8 for further information. Additionally, the effective tax rates for the years ended December 31, 2020 and 2019 are influenced by a variety of factors, primarily income and losses in jurisdictions with valuation allowances, disallowable expenditures, restructuring impacts, and our jurisdictional mix of income at tax rates different than the U.K. statutory rate.

Year Ended December 31, 2019 Compared to the Year Ended December 31, 2018

A discussion of our results of operations for the year ended December 31, 2019 versus December 31, 2018 is included in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Results of Operation”, included in our Annual Report on Form 10-K for the year ended December 31, 2019.

Other Comprehensive Income (Loss)

There was an other comprehensive loss of $20 million for the year ended December 31, 2020 compared to other comprehensive income of $11 million for the year ended December 31, 2019 representing a reduction of $31 million year over year. This reduction was primarily driven by negative movements year-over year foreign currency translation adjustments of $23 million coupled with an increase of $7 million of comprehensive losses associated with pension and post retirement plans. Unrecognized losses on derivative instruments of $12 million year over year was largely offset by $11 million of recognized gains on derivatives during the same period.

A discussion of our comprehensive (loss) income for the year ended December 31, 2019 versus December 31, 2018 is included in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Other Comprehensive (Loss) Income”, included in our Annual Report on Form 10-K for the year ended December 31, 2019.

Liquidity and Capital Resources

During 2020, our liquidity increased by $393 million to $1,041 million.

The table below presents our liquidity, including amounts available under our credit facilities, as of the following dates:

Cash and cash equivalents $ 619 $ 302

Available under the Wells Fargo Revolver 285 209

Available under the Standard Credit Facility 68 72

Available under the Emirates Revolver 50 46

Available under the SABB Facility 19 19

Historically, we have funded our operations and met our commitments through cash generated by operations, issuance of unsecured notes, bank financings and borrowings under lines of credit. In the next twelve months, we expect that our operations

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and available borrowings under our debt refinancing and revolving credit agreements (see Note 15 of notes to consolidated financial statements) will provide sufficient cash for our operating expenses, capital expenditures, interest payments and debt repayments. This is predicated on our achieving our forecast which could be negatively impacted by items outside of our control, in particular, macroeconomic conditions including the economic impacts caused by continued impact of the COVID-19 pandemic. Consistent with our actions in 2020 in response to the COVID-19 pandemic, if negative events occur in the future, we may need to reduce our capital spend, cut back on operating costs, and other items within our control to maintain appropriate liquidity.

Working capital (calculated as current assets less current liabilities) was $1.7 billion at December 31, 2020, compared to $1.4 billion at December 31, 2019.

As of and for the year ended December 31, 2020, the non-guarantor subsidiaries of our Senior Notes due 2025 represented approximately 17% of our total consolidated liabilities, approximately 27% of our total consolidated assets, approximately 42% of our total consolidated net sales and approximately 45% of our Consolidated EBITDA (as such term is defined in the 2025 Indenture). In addition, as of December 31, 2020, our non-guarantor subsidiaries had $791 million of total consolidated liabilities (including trade payables but excluding intercompany liabilities), all of which would have been structurally senior to the 2025 Notes. See Note 15 of notes to consolidated financial statements for additional information.

At December 31, 2020, we had outstanding letters of credit and bank guarantees of $71 million. See Note 15 of notes to consolidated financial statements.

Principal factors that could affect our ability to obtain cash from external sources include (i) debt covenants that limit our total borrowing capacity; (ii) increasing interest rates applicable to our floating rate debt; (iii) increasing demands from third parties for financial assurance or credit enhancement; (iv) credit rating downgrades, which could limit our access to additional debt; (v) a decrease in the market price of our common stock and debt obligations; and (vi) volatility in public debt and equity markets.

As of December 31, 2020, our credit rating with Moody’s and Standard & Poor’s changed from December 31, 2019 from B1 positive to B1 stable outlook and from B stable to B negative outlook, respectively.

Cash and Cash Equivalents

We consider all investments with original maturities of three months or less to be cash equivalents. As of December 31, 2020, our cash and cash equivalents were invested in money market funds and we also receive earnings credits for some balances left in our bank operating accounts. We maintain cash and cash equivalents in bank deposit and money market accounts that may exceed federally insured limits. The financial institutions where our cash and cash equivalents are held are highly rated and geographically dispersed, and we have a policy to limit the amount of credit exposure with any one institution. We have not experienced any losses in such accounts and believe we are not exposed to significant credit risk.

The use of our cash includes payment of our operating expenses, capital expenditures, servicing our interest and debt repayment obligations, making pension contributions and making quarterly dividend payments.

Repatriation of Cash

At December 31, 2020, we held $619 million in cash and cash equivalents in these respective jurisdictions: $298 million in the United States, $49 million in South Africa, $80 million in Australia, $75 million in Brazil, $33 million in Saudi Arabia, $33 million in China, $50 million in Europe and $1 million in India. Our credit facilities limit transfers of funds from subsidiaries in the United States to certain foreign subsidiaries. In addition, at December 31, 2020, we held $29 million of restricted cash of which $18 million is in Europe and is related to the termination fee associated with the TTI acquisition, $10 million is in Australia related to performance bonds and $1 million is in Saudi Arabia related to vendor supply agreement guarantees.

Tronox Holdings plc has foreign subsidiaries with undistributed earnings at December 31, 2020. We have made no provision for deferred taxes related to these undistributed earnings because they are considered indefinitely reinvested in the foreign jurisdictions.

Debt Obligations

In March 2020, under an abundance of caution given the uncertainty associated with the COVID-19 pandemic, the Company took precautionary measures and drew down $200 million in the aggregate of its outstanding borrowings under its Wells Fargo, Standard Bank, and Emirates revolvers in order to increase liquidity and preserve financial flexibility. As discussed below, the Company repaid the outstanding balances of these short-term credit facilities with a portion of the proceeds of the $500 million 6.5% senior secured notes due 2025. Additionally, during the twelve months ended December 31, 2020, our KSA subsidiary drew down $13 million on its SABB Credit Facility for local working capital purposes. During the fourth quarter of 2020, the Company

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repaid the full $13 million on the SABB Credit Facility. At December 31, 2020, there were no short term debt balances with the exception of the $58 million included in "Long term debt due within one year" on the Consolidated Balance Sheet.

In December 2020, the Company made a voluntary prepayment of $200 million on the Term Loan Facility. No prepayment penalties were required as result of this principal prepayment. As a result of the prepayment, we recorded approximately $2 million in "Loss on extinguishment of debt" in our Consolidated Statement of Operations.

At December 31, 2020 and 2019, our long-term debt, net of unamortized discount and debt issuance costs was $3.3 billion and $3.0 billion, respectively.

At both December 31, 2020 and 2019, our net debt (the excess of our debt over cash and cash equivalents) was $2.7 billion. See Note 15 of notes to consolidated financial statements.

In January 2021, the Company announced the termination of the TTI Acquisition. As a result of the termination, the Company paid to the seller, Eramet, an $18 million termination fee in January 2021. The $18 million was recorded within "Restricted Cash" on our Consolidated Balance Sheet as of December 31, 2020. Additionally, consistent with our previously stated capital allocation priorities, the Company anticipates making a voluntary repayment of $300 million on the Term Loan Facility during the first quarter of 2021 from the cash on our Consolidated Balance Sheet originally intended for the TTI acquisition.

On February 22, 2021, we announced the launch of a possible refinancing of (a) our First Lien Term Loan Credit Agreement, dated as of September 22, 2017, with a new term loan facility, and (b) our Revolving Syndicated Facility Agreement, dated as of September 22, 2017, with a new cash flow revolving facility.

Cash Flows

Years Ended December 31, 2020 and 2019

The following table presents cash flow from continuing operations for the periods indicated:

Year Ended December 31,

(Millions of U.S. dollars)

Net cash provided by operating activities $ 355 $ 412

Net cash used in investing activities (229) (1,185)

Net cash provided by (used in) financing activities 214 (638)

Net cash provided by discontinued operations — 28

Effect of exchange rate changes on cash (3) (2)

Net increase (decrease) in cash and cash equivalents $ 337 $ (1,385)

Cash Flows provided by Operating Activities — Cash provided by our operating activities is driven by net income from continuing operations adjusted for non-cash items and changes in working capital items. The following table summarizes our net cash provided by (used in) operating activities for 2020 and 2019:

Year Ended December 31,

(Millions of U.S. dollars)

Net income (loss) from continuing operations $ 995 $ (102)

Income related cash generation 507 354

Net change in assets and liabilities (152) 58

Net cash provided by our operating activities $ 355 $ 412

Net cash provided by operating activities was $355 million in 2020 as compared to net cash provided by operating activities of $412 million in 2019. The decrease of $57 million period over period is primarily due to an increase of $210 million use of cash for net assets and liabilities which more than offset a $153 million improvement in net income from continuing operations - net of non-cash adjustments. The higher use of cash for working capital was primarily driven by increases in accounts receivable,

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inventories and prepaid and other current assets of $49 million, $21 million and $29 million, respectively. These increases were coupled with an increased use of cash in long-term other assets and liabilities of $68 million.

Cash Flows used in Investing Activities — Net cash used in investing activities for the year ended December 31, 2020 was $229 million as compared to $1,185 million for the year ended December 31, 2019. The $956 million decrease in use of cash year over year is primarily driven by the cash paid of approximately $1,675 million for the acquisition of Cristal partially offset by the proceeds of $701 million received from the sale of the Cristal North America business in the prior period. Capital expenditures of $195 million during the current year were slightly lower than prior year capital expenditure levels of $198 million, which is attributable to a decrease in capital spending during the current year in an effort to preserve liquidity due to the COVID-19 pandemic partially offset by prior year capital expenditures not including Cristal for the first three months and first nine days of April of 2019 as the Cristal Transaction closed on April 10, 2020. In addition, the current year also includes $36 million for a loan to AMIC related to a titanium slag smelter facility (see Note 24 of notes to the consolidated financial statements) as compared to $25 million in the prior period.

Cash Flows (used in) provided by Financing Activities — Net cash provided by financing activities during the year ended December 31, 2020 was $214 million as compared to cash used in financing activities of $638 million for the year ended December 31, 2019. The current year is primarily comprised of $500 million proceeds from the issuances of the 6.5% Senior Secured Notes due 2025 (see Note 15 to the notes to the consolidated financial statements). Partially offsetting these proceeds was a use of cash of $233 million for the repayment of long-term debt, primarily on the Term Loan Facility, $40 million for dividend payments and $10 million for debt issuance costs. The cash used in financing activities during the year ended December 31, 2019 was primarily driven by repayments of long term debt of $387 million versus proceeds of only $222 million from debt, repurchases of common stock of $288 million, the Company's redemption of Exxaro's 26% ownership interest in one of Tronox's South African subsidiary (see Note 24 of notes to consolidated financial statements) for $148 million and $27 million of dividends paid.

Years Ended December 31, 2019 and 2018

A discussion of our cash flows for the year ended December 31, 2019 versus December 31, 2018 is included in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Cash Flows”, included in our Annual Report on Form 10-K for the year ended December 31, 2019.

Contractual Obligations

The following table sets forth information relating to our contractual obligations as of December 31, 2020:

Contractual Obligation Payments Due by Period(3)

Total Less than 1 year 1-3 years 3-5 years More than 5 years

(Millions of U.S. dollars)

Pension and other post-retirement benefit obligations(4) 326 39 67 65 155

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(1)We calculated the Term Loan interest at a LIBOR plus a margin of 3.0%. See Note 15 of notes to our consolidated financial statements.

(2)Includes obligations to purchase requirements of process chemicals, supplies, utilities and services. We have various purchase commitments for materials, supplies, and services entered into in the ordinary course of business. Included in the purchase commitments table above are contracts, which require minimum volume purchases that extend beyond one year or are renewable annually and have been renewed for 2020. Certain contracts allow for changes in minimum required purchase volumes in the event of a temporary or permanent shutdown of a facility. We believe that all of our purchase obligations will be utilized in our normal operations.

(3)The table excludes contingent obligations, as well as any possible payments for uncertain tax positions given the inability to estimate the possible amounts and timing of any such payments.

(4)Pension and other post-retirement benefit ("OPEB") obligations of $326 million include estimates of pension plan contributions and expected future benefit payments for unfunded pension and OPEB plans. Pension plan contributions are forecasted for 2021 only. Expected future unfunded pension and OPEB benefit payments are forecasted only through 2030. Contribution and unfunded benefit payment estimates are based upon current valuation assumptions. Estimates of pension contributions after 2021 and unfunded benefit payments after 2030 are not included in the table because the timing of their resolution cannot be estimated. Refer to Note 23 in notes to consolidated financial statements for further discussion on our pension and OPEB plans.

(5)Asset retirement obligations are shown at the undiscounted and uninflated values.

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Non-U.S. GAAP Financial Measures

EBITDA and Adjusted EBITDA, which are used by management to measure performance, are not presented in accordance with U.S. GAAP. We define EBITDA as net income (loss) excluding the impact of income taxes, interest expense, interest income and depreciation, depletion and amortization. We define Adjusted EBITDA as EBITDA excluding the impact of nonrecurring items such as restructuring charges, gain or loss on debt extinguishments, impairment charges, gains or losses on sale of assets, acquisition-related transaction costs and pension settlements and curtailment gains or losses. Adjusted EBITDA also excludes non-cash items such as share-based compensation costs and pension and postretirement costs. Additionally, we exclude from Adjusted EBITDA, realized and unrealized foreign currency remeasurement gains and losses.

Management believes that EBITDA and Adjusted EBITDA is useful to investors, as it is commonly used in the industry as a means of evaluating operating performance. We do not intend for these non-U.S. GAAP financial measures to be a substitute for any U.S. GAAP financial information. Readers of these statements should use these non-U.S. GAAP financial measures only in conjunction with the comparable U.S. GAAP financial measures. Since other companies may calculate EBITDA and Adjusted EBITDA differently than we do, EBITDA and Adjusted EBITDA, as presented herein, may not be comparable to similarly titled measures reported by other companies. Management believes these non-U.S. GAAP financial measures:

•reflect our ongoing business in a manner that allows for meaningful period-to-period comparison and analysis of trends in our business, as they exclude income and expense that are not reflective of ongoing operating results;

•provide useful information in understanding and evaluating our operating results and comparing financial results across periods; and

•provide a normalized view of our operating performance by excluding items that are either noncash or infrequently occurring.

Adjusted EBITDA is one of the primary measures management uses for planning and budgeting processes, and to monitor and evaluate financial and operating results. In addition, Adjusted EBITDA is a factor in evaluating management’s performance when determining incentive compensation.

The following table reconciles net income (loss) to EBITDA and Adjusted EBITDA for the periods presented:

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Year Ended December 31,

Net (loss) income, (U.S. GAAP) $ 995 $ (97) $ 30

Net (loss) income from continuing operations, (U.S. GAAP) 995 (102) 30

Interest income (8) (18) (33)

Depreciation, depletion and amortization expense 304 280 195

Inventory step-up(a) — 98 —

Impairment loss(b) — — 31

Contract loss(c) — 19 —

Share-based compensation(d) 30 32 21

Restructuring(f) 3 22 —

Integration costs(g) 10 16 —

Loss on extinguishment of debt(h) 2 3 30

Foreign currency remeasurement(i) (4) (6) (28)

Pension settlement and curtailment gains(j) (2) (1) (3)

Charge for capital gains tax payment to Exxaro(k) — 4 —

Reversal of accrual related to tax settlement(l) — — (11)

Insurance proceeds(m) (11) — —

Adjusted EBITDA (non-U.S. GAAP) $ 668 $ 615 $ 513

________________

(a)Represents a pre-tax charge related to the recognition of a step-up in value of inventories as a result of purchase accounting.

(b)Represents a pre-tax charge for the impairment and loss on sale of the assets of our Tronox Electrolytic Operations which was recorded in "Impairment loss" in the Consolidated Statements of Operations. See Note 6 of notes to consolidated financial statements.

(c)Represents a pre-tax charge for the estimated losses we expect to incur under the supply agreement with Venator. See Note 3 of notes to consolidated financial statements.

(d)Represents non-cash share-based compensation. See Note 22 of notes to consolidated financial statements.

(e)2020 amount represents transaction costs associated with the TTI acquisition which were recorded in "Selling, general and administrative expenses" in the Consolidated Statement of Operations. 2019 and 2018 amounts represent transaction costs associated with the Cristal Transaction which were recorded in “Selling, general and administrative expenses” in the Consolidated Statements of Operations.

(f)Represents amounts for employee-related costs, including severance, which was recorded in “Restructuring” in the Consolidated Statements of Operations. See Note 4 of notes to consolidated financial statements.

(g)Represents integration costs associated with the Cristal Transaction after the acquisition which were recorded in "Selling, general and administrative expenses" in the Consolidated Statements of Operations.

(h)2020 amount represents the loss in connection with a voluntary prepayment on the Term Loan Facility. See Note 15 of notes to consolidated financial statements. 2019 amount represents the loss in connection with the modification of the Wells Fargo Revolver and termination of the ABSA Revolver and a voluntary prepayment made on the Term Loan Facility. 2018 amount represents the $30 million loss in connection with the redemption of senior notes, including a call premium of $22 million.

(i)Represents realized and unrealized gains and losses associated with foreign currency remeasurement related to third-party and intercompany receivables and liabilities denominated in a currency other than the functional currency of the entity holding them, which are included in "Other income (expense), net" in the Consolidated Statements of Operations. Prior to the first quarter of 2019, realized gains and losses associated with third-party receivables and liabilities had been included in Adjusted EBITDA. Commencing with 2019, we are now excluding these amounts from Adjusted EBITDA and prior period amounts have been revised for comparability purposes. The exclusion of all of the realized and unrealized gains and losses is consistent with the reporting of Adjusted EBITDA we make to our lenders.

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(j)2020 amount represents a curtailment gain due to the freezing of plan benefits partially offset by pension settlements. 2019 amount represents settlement gain related to the U.S. Pension Plan (acquired as part of the Cristal Transaction). 2018 amount represents settlement gain related to the former U.S. postretirement medical plan.

(k)Represents the payment to Exxaro for capital gains tax on the disposal of its ordinary shares in Tronox Holdings plc included in "Other income (expense), net" in the Consolidated Statements of Operations.

(l)Represents the reversal of an accrual as a result of a tax settlement.

(m)2020 amount represents reimbursement from claims related to the Ginkgo concentrator failure we inherited as a part of the Cristal Transaction.

(n)Includes noncash pension and postretirement costs, accretion expense, severance expense, and other items included in “Selling general and administrative expenses” and “Cost of goods sold” in the Consolidated Statements of Operations.

The following table reconciles net income from continuing operations to Adjusted EBITDA on a pro forma basis for the periods presented (see footnotes under the as reported Adjusted EBITDA table for discussion of adjustments to derive Adjusted EBITDA):

Year Ended December 31,

Net income from continuing operations (U.S. GAAP) $ 995 $ 41

Interest income (8) (12)

Income tax provision (881) 31

Depreciation, depletion and amortization expense 304 323

Share-based compensation 30 32

Transaction costs 14 —

Restructuring 3 22

Integration Costs 10 16

Loss on extinguishment of debt 2 3

Foreign currency remeasurement (4) (6)

Pension settlement and curtailment gains (2) (1)

Charge for capital gains tax payment to Exxaro — 4

Insurance proceeds (11) —

Adjusted EBITDA (non-U.S. GAAP) $ 668 $ 681

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions regarding matters that are inherently uncertain and that ultimately affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. The estimates and assumptions are based on management’s experience and understanding of current facts and circumstances. These estimates may differ from actual results. Certain of our accounting policies are considered critical, as they are both important to reflect our financial position and results of operations and require significant or complex judgment on the part of management. The following is a summary of certain accounting policies considered critical by management.

Asset Retirement Obligations

To the extent a legal obligation exists, an asset retirement obligation (“ARO”) is recorded at its estimated fair value and accretion expense is recognized over time as the discounted liability is accreted to its expected settlement value. Because AROs represent financial obligations to be settled in the future, uncertainties exist in estimating the timing and amount of the associated costs to be incurred. Fair value is measured using expected future cash outflows, adjusted for expected inflation and discounted at our credit-adjusted risk-free interest rate. No market-risk premium has been included in our calculation of ARO balances since we

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can make no reliable estimate. Management believes these estimates and assumptions are reasonable; however, they are inherently uncertain. Refer to Notes 19 to the consolidated financial statements for a summary of the estimates and assumptions utilized. At December 31, 2020, AROs were $166 million of which the long-term portion of $157 million is recorded in "Asset retirement obligations" and the short-term portion of $9 million is recorded in "Accrued liabilities" in the Consolidated Balance Sheet.

Environmental Matters

Liabilities for environmental matters are recognized when remedial efforts are probable and the costs can be reasonably estimated. Such liabilities are based on our best estimate of the undiscounted future costs required to complete the remedial work. The recorded liabilities are adjusted periodically as remediation efforts progress or as additional technical, regulatory or legal information becomes available. Given the uncertainties regarding the status of laws, regulations, enforcement policies, the impact of other potentially responsible parties, technology and information related to individual sites, we do not believe it is possible to develop an estimate of the range or reasonably possible environmental loss in excess of our recorded liabilities. At December 31, 2020, environmental liabilities were $67 million, primarily related to the Cristal Transaction (see Note 3 to the consolidated financial statements).

For further discussion, see Environmental Matters included elsewhere in this section entitled, "Management’s Discussion and Analysis of Financial Condition and Results of Operations" and Notes 2 and 20 to the consolidated financial statements.

Income Taxes

We have operations in several countries around the world and are subject to income and similar taxes in these countries. The estimation of the amounts of income tax involves the interpretation of complex tax laws and regulations and how foreign taxes affect domestic taxes, as well as the analysis of the realizability of deferred tax assets, tax audit findings and uncertain tax positions. Although we believe our tax accruals are adequate, differences may occur in the future, depending on the resolution of pending and new tax matters.

Deferred tax assets and liabilities are determined based on temporary differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided against a deferred tax asset when it is more likely than not that all or some portion of the deferred tax asset will not be realized. We periodically assess the likelihood that we will be able to recover our deferred tax assets, and reflect any changes in our estimates in the valuation allowance with a corresponding adjustment to earnings or other comprehensive income (loss) as appropriate. ASC 740, Income Taxes, requires that all available positive and negative evidence be weighted to determine whether a valuation allowance should be recorded.

The amount of income taxes we pay are subject to ongoing audits by federal, state and foreign tax authorities, which may result in proposed assessments. Our estimate for the potential outcome for any uncertain tax issue is highly judgmental. We assess our income tax positions, and record tax benefits for all years subject to examination based upon our evaluation of the facts, circumstances and information available at the reporting date. For those tax positions for which it is more likely than not that a tax benefit will be sustained, we record the amount that has a greater than 50% likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. Interest and penalties are accrued as part of tax expense, where applicable. If we do not believe that it is more likely than not that a tax benefit will be sustained, no tax benefit is recognized.

See Notes 2 and 8 to the consolidated financial statements for additional information.

Contingencies

From time to time, we may be subject to lawsuits, investigations and disputes (some of which involve substantial amounts claimed) arising out of the conduct of our business, including matters relating to commercial transactions, prior acquisitions and divestitures including our acquisition of Cristal, employee benefit plans, intellectual property, and environmental, health and safety matters. We recognize a liability for any contingency that is probable of occurrence and reasonably estimable. We continually assess the likelihood of adverse judgments of outcomes in these matters, as well as potential ranges of possible losses (taking into consideration any insurance recoveries), based on a careful analysis of each matter with the assistance of outside legal counsel and, if applicable, other experts. Such contingencies are significant and the accounting requires considerable management judgments in analyzing each matter to assess the likely outcome and the need for establishing appropriate liabilities and providing adequate disclosures.

Refer to Notes 2 and 20 to the consolidated financial statements for additional information.

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Long-Lived Assets

Key estimates related to long-lived assets (property, plant and equipment, mineral leaseholds, and intangible assets) include useful lives, recoverability of carrying values, and the existence of any asset retirement obligations. As a result of future decisions, such estimates could be significantly modified. The estimated useful lives of property, plant and equipment range from three to forty years, and depreciation is recognized on a straight-line basis. Useful lives are estimated based upon our historical experience, engineering estimates, and industry information. These estimates include an assumption regarding periodic maintenance. Mineral leaseholds are depreciated over their useful lives as determined under the units of production method. Intangible assets with finite useful lives are amortized on the straight-line basis over their estimated useful lives. The amortization methods and remaining useful lives are reviewed quarterly.

We evaluate the recoverability of the carrying value of long-lived assets that are held and used whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Under such circumstances, we assess whether the projected undiscounted cash flows of our long-lived assets are sufficient to recover the carrying amount of the asset group being assessed. If the undiscounted projected cash flows are not sufficient, we calculate the impairment amount by discounting the projected cash flows using our weighted-average cost of capital. For assets that satisfy the criteria to be classified as held for sale, an impairment loss, if any, is recognized to the extent the carrying amount exceeds fair value, less cost to sell. The amount of the impairment of long-lived assets is written off against earnings in the period in which the impairment is determined.

Pension and Postretirement Benefits

We provide pension benefits for qualifying employees in the United States and internationally, with the largest in the United Kingdom. Because pension benefits represent financial obligations that will ultimately be settled in the future with employees who meet eligibility requirements, uncertainties exist in estimating the timing and amount of future payments, and significant estimates are required to calculate pension expense and liabilities relating to these plans. The company utilizes the services of independent actuaries, whose models are used to help facilitate these calculations. Several key assumptions are used in actuarial models to calculate pension expense and liability amounts recorded in the financial statements; the most significant variables in the models are the expected rate of return on plan assets, the discount rate, and the expected rate of compensation increase. Management believes the assumptions used in the actuarial calculations are reasonable, reflect the company’s experience and expectations for the future and are within accepted practices in each of the respective geographic locations in which it operates. However, actual results in any given year often differ from actuarial assumptions due to economic events and different rates of retirement, mortality, and turnover. Refer to Notes 2 and 23 to the consolidated financial statements for a summary of the plan assumptions and additional information on our pension arrangements.

Expected Return on Plan Assets — In forming the assumption of the long-term rate of return on plan assets, we consider the expected earnings on funds already invested, earnings on contributions expected to be made in the current year, and earnings on reinvested returns. The long-term rate of return estimation methodology for the plans is based on a capital asset pricing model using historical data and a forecasted earnings model. An expected return on plan assets analysis is performed which incorporates the current portfolio allocation, historical asset-class returns, and an assessment of expected future performance using asset-class risk factors. A 100 basis point change in these expected long-term rates of return, with all other variables held constant, would change our pension expense by approximately $5 million.

Discount Rate — The discount rates selected for estimation of the actuarial present value of the benefit obligations are determined based on the prevailing market rate for high-quality, fixed-income debt instruments with maturities corresponding to the expected timing of benefit payments as of the annual measurement date for each of the various plans. These rates change from year to year based on market conditions that affect corporate bond yields. A 100 basis points change in discount rates, with all other variables held constant, would decrease/increase our pension expense by approximately $2 million. A 100 basis points reduction in discount rates would increase the PBO by approximately $80 million whereas a 100 basis point increase in discount rates would have a favorable impact to the PBO of approximately $68 million.

Rates of Compensation Increase - We determine these rates based on review of the underlying long-term salary increase trend characteristic of the local labor markets and historical experience, as well as comparison to peer companies. A 100 basis points change in the expected rate of compensation increase, with all other variables held constant, would change our pension expense by approximately $1 million and would impact the PBO by approximately $6 million.

Recent Accounting Pronouncements

See Note 2 of notes to Consolidated Financial Statements for recently issued accounting pronouncements.

Environmental Matters

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We are subject to a broad array of international, federal, state, and local laws and regulations relating to safety, pollution, protection of the environment, and the generation, storage, handling, transportation, treatment, disposal, and remediation of hazardous substances and waste materials. In the ordinary course of business, we are subject to frequent environmental inspections and monitoring, and occasional investigations by governmental enforcement authorities. Under these laws, we are or may be required to obtain or maintain permits or licenses in connection with our operations. In addition, under these laws, we are or may be required to remove or mitigate the effects on the environment of the disposal or release of chemical, petroleum, low-level radioactive and other substances at our facilities. We may incur future costs for capital improvements and general compliance under environmental, health, and safety laws, including costs to acquire, maintain, and repair pollution control equipment. Environmental laws and regulations are becoming increasingly stringent, and compliance costs are significant and will continue to be significant in the foreseeable future. There can be no assurance that such laws and regulations or any environmental law or regulation enacted in the future is not likely to have a material effect on our business. We believe we are in compliance with applicable environmental rules and regulations in all material respects.

Refer to Item 3. Legal Proceedings for further information.

Supplemental Pro Forma Information

To assist in the discussion of the 2020 and 2019 results on a comparable basis, certain supplemental unaudited pro forma income statement and adjusted EBITDA information is provided on a consolidated basis. The pro forma information has been prepared on a basis consistent with Article 11 of Regulation S-X, assuming the merger and merger-related divestitures of Cristal's North American TiO2 business and the 8120 paper laminate grade had been consummated on January 1, 2018. The unaudited pro forma financial information reflects certain adjustments related to the acquisition, such as:

(1) conforming the accounting policies of Cristal to those applied by Tronox;

(2) conversion to U.S. GAAP from IFRS for Cristal;

(3) the elimination of transactions between Tronox and Cristal;

(4) recording certain incremental expenses resulting from purchase accounting adjustments, such as inventory step-up amortization, depreciation, depletion and amortization expense in connection with fair value adjustments to property, plant and equipment, mineral leases and intangibles assets;

(5) recording the contract loss on the sale of the 8120 product line as a charge in the first quarter of 2018;

(6) recording the effect on interest expense related to borrowings in connection with the Cristal Transaction;

and

(7) recording the related tax effects and impacts to EPS for the shares issued in conjunction with the transaction.

In preparing this pro forma information, the historical financial information has been adjusted to give effect to pro forma adjustments that are (i) directly attributable to the business combination and other transactions presented herein, such as the merger-related divestitures, (ii) factually supportable, and (iii) expected to have a continuing impact on the combined entity's consolidated results. The pro forma information is based on management's assumptions and is presented for illustrative purposes and does not purport to represent what the results of operations would actually have been if the business combination and merger-related divestitures had occurred as of the dates indicated or what the results would be for any future periods. Also, the pro forma information does not include the impact of any revenue, cost or other operating synergies that may result from the business combination or any related restructuring costs.

Events that are not expected to have a continuing impact on the combined results (nonrecurring income/charges) are excluded from the unaudited pro forma information.

The unaudited pro forma statement of operations and adjusted EBITDA have been presented for information purposes only and is not necessarily indicative of what Tronox's results actually would have been had the merger been completed on January 1, 2018. In addition, the unaudited pro forma information does not purport to project the future operating results of the Company.

The following unaudited pro forma information includes:

•Pro forma statement of operations for the year ended December 31, 2019

•Pro forma Adjusted EBITDA for the year ended December 31, 2019

Proforma Information for the year ended December 31, 2020:

For the year ended December 31, 2020, the pro forma statement of operations and pro forma Adjusted EBITDA information were the same as the as reported statement of operations and as reported Adjusted EBITDA information.

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TRONOX HOLDINGS PLC

Pro Forma Statement of Operations Information

For the Year Ended December 31, 2019

(Unaudited)

(Millions of U.S. dollars, except share and per share data)

Pro Forma Adjustments

Tronox Holdings plc Cristal (a) Other Total Pro Forma

Contract loss 19 — (19) (d) (19) —

Selling, general and administrative expenses 347 59 (52) (e) 7 354

Restructuring 22 — — — 22

Interest income 18 — (6) (g) (6) 12

Loss on extinguishment of debt (3) — — — (3)

Other income (expense), net 3 (1) — (1) 2

(Loss) income from continuing operations before income taxes (88) 20 140 160 72

Net income attributable to noncontrolling interest 12 1 10 (h) 11 23

Net (loss) income from continuing operations per share, basic $ (0.81) $ 0.12

Net (loss) income from continuing operations per share, diluted $ (0.81) $ 0.12

Weighted average shares outstanding, basic (in thousands) 139,859 (i) 150,051

Weighted average shares outstanding, diluted (in thousands) 139,859 (i) 151,153

Pro Forma Adjustments

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TRONOX HOLDINGS PLC

Pro Forma Adjusted EBITDA Information

(Millions of U.S. dollars)

Pro Forma Adjustments

Tronox Holdings plc Cristal (a) Other Total Pro Forma

Interest income (18) — 6 6 (12)

Depreciation, depletion and amortization expense 280 42 1 43 323

Inventory step-up 98 — (98) (98) —

Share-based compensation 32 — — — 32

Restructuring 22 — — — 22

Integration Costs 16 — — — 16

Loss on extinguishment of debt 3 — — — 3

Foreign currency remeasurement (6) — — — (6)

Pension settlement gain (1) — — — (1)

Charge for capital gains tax payment to Exxaro 4 — — — 4

Other items 21 — — — 21

Adjusted EBITDA (non-U.S. GAAP) $ 615 $ 68 $ (2) $ 66 $ 681

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to various market, credit, operational, and liquidity risks in the normal course of business, which are discussed below. We manage these risks through normal operating and financing activities and, when appropriate, with derivative instruments. We do not invest in derivative instruments for speculative purposes, but historically have entered into, and may enter into, derivative instruments for hedging purposes in order to reduce the exposure to fluctuations in interest rates, natural gas prices and exchange rates.

Market Risk

A substantial portion of our products and raw materials are commodities that reprice as market supply and demand fundamentals change. Accordingly, product margins and the level of our profitability tend to vary with changes in the business cycle. Our TiO2 prices may do so in the near term as ore prices and pigment prices are expected to fluctuate over the next few years. We try to protect against such instability through various business strategies. These include provisions in sales contracts allowing us to pass on higher raw material costs through timely price increases and formula price contracts to transfer or share

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commodity price risk, as well as using varying contract term lengths and selling to a diverse mix of customers by geography and industry to reap the benefits of a diverse portfolio.

Credit Risk

Credit risk is the risk that a borrower or a counterparty will fail to meet their obligations. A significant portion of our liquidity is concentrated in trade accounts receivable that arise from sales of our products to customers. In the case of TiO2, the high level of industry concentration has the potential to impact our overall exposure to credit risk, either positively or negatively, in that our customers may be similarly affected by changes in economic, industry or other conditions. We have significant exposure to credit risk in industries that are affected by cyclical economic fluctuations. We perform ongoing credit evaluations of our customers from time to time, as deemed appropriate, to mitigate credit risk but generally do not require collateral. Our contracts typically enable us to tighten credit terms if we perceive additional credit risk; however, historic losses due to write offs of bad debt have been relatively low. In addition, due to our international operations, we are subject to potential trade restrictions and sovereign risk in certain countries in which we operate. We maintain allowances for potential credit losses based on specific customer review and current financial conditions. During 2020, 2019 and 2018 our ten largest third-party customers represented 32%, 31%, and 37%, respectively, of our consolidated net sales. During 2020, 2019, and 2018, no single customer accounted for 10% of our consolidated net sales.

Interest Rate Risk

Interest rate risk arises from the possibility that changes in interest rates will impact our financial results. We are exposed to interest rate risk on our floating rate debt, the Term Loan Facility, Standard Bank Term Loan Facility, Tikon Loan and Wells Fargo, Standard Bank Revolver and Emirates Revolver balances. Using a sensitivity analysis as of December 31, 2020, a hypothetical 1% increase in interest rates would result in a net decrease to pre-tax income of approximately $7 million on an annualized basis. This is due to the fact that earnings on our interest earning financial assets of $306 million at December 31, 2020 would increase by the full 1%, offsetting the impact of a 1% increase in interest expense on our floating rate debt of $1.0 billion.

During 2019, we entered into interest-rate swap agreements for a portion of our Term Loan Facility, which effectively convert the variable rate to a fixed rate for a portion of the loan. The agreements expire in September 2024. The Company's objectives in using the interest-rate swap agreements are to add stability to interest expense and to manage its exposure to interest rate movements.

Currency Risk

Currency risk arises from the possibility that fluctuations in foreign exchange rates will impact our balance sheets due to the translation of our assets and liabilities denominated in foreign currencies, as well as our earnings due to the translation of certain of our subsidiaries’ statements of operations from local currencies to U.S. dollars, as well as due to remeasurement of assets and liabilities denominated in currencies other than a subsidiary’s functional currency. A significant portion of our Adjusted EBITDA is derived from jurisdictions that are subject to currency risk with Australia, Europe and South Africa representing the largest contributors. We manufacture and market our products in a number of countries throughout the world and, as a result, are exposed to changes in foreign currency exchange rates, particularly in Australia, Brazil, China, South Africa, the Netherlands and the United Kingdom. The exposure is more prevalent in South Africa and Australia as the majority of revenues are earned in U.S. dollars while expenses are primarily incurred in local currencies. Since we are exposed to movements in the South African rand and the Australian Dollar versus the U.S. dollar, we may enter into forward contracts to buy and sell foreign currencies as “economic hedges” for these foreign currency transactions.

During the third quarter of 2019 and the first quarter of 2020, we entered into foreign currency contracts used to hedge non-functional currency sales for our South African subsidiaries and forecasted non-functional currency cost of goods sold for our Australian subsidiaries. These foreign currency contracts are designated as cash flow hedges. Changes to the fair value of these foreign currency contracts are recorded as a component of other comprehensive income (loss) to the extent such contracts are effective, and are recognized in net sales or costs of goods sold in the period in which the forecasted transaction affects earnings or the transactions are no longer probable of occurring.

As of December 31, 2020, we had notional amounts of 330 million Australian dollars (approximately $254 million at December 31, 2020 exchange rate) that expire between January 29, 2021 and December 30, 2021 to reduce the exposure of our Australian subsidiaries’ cost of sales to fluctuations in currency rates. All of our existing foreign currency contracts that reduced the exposure of our South African subsidiaries' third party sales to fluctuations in currency rates had expired as of December 31, 2020. At December 31, 2020 and December 31, 2019, there was an unrealized net gain of $58 million and an unrealized net gain of $30 million, respectively, recorded in "Accumulated other comprehensive loss" on the Consolidated Balance Sheet.

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From time to time, we enter into foreign currency contracts to reduce exposure of our subsidiaries’ balance sheet accounts not denominated in our subsidiaries’ functional currency to fluctuations in foreign currency exchange rates. At December 31, 2020, the fair value of the foreign currency contracts was a gain of $7 million.

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Item 8. Financial Statements and Supplementary Data

Page No.

Tronox Holdings Audited Annual Financial Statements

Report of Independent Registered Public Accounting Firm 57

Notes to Consolidated Financial Statements 66

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Tronox Holdings plc

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Tronox Holdings plc and its subsidiaries (the “Company”) as of December 31, 2020 and 2019, and the related consolidated statements of operations, of comprehensive income (loss), of changes in shareholders' equity and of cash flows for each of the three years in the period ended December 31, 2020, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

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Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Assessment of the Realizability of the U.S. Deferred Tax Assets

As described in Note 8 to the consolidated financial statements, the Company determined sufficient positive evidence existed to reverse a portion of the valuation allowance attributable to the deferred tax assets associated with its operations in the U.S. This reversal resulted in a non-cash deferred tax benefit of $909 million in 2020. Management’s analysis to assess the realizability of the U.S. deferred tax assets considered positive and negative evidence, including (i) three years of cumulative income for its U.S. subsidiaries, (ii) continuing and improved profitability over the last twelve months in the U.S. jurisdiction, (iii) estimates of continued profitability based on updates to the Company’s forecasts, (iv) changes in the factors that drove losses in the past, primarily interest expenses incurred in the U.S., and (v) risk that certain deferred tax assets may be subject to limitation under IRC Section 382.

The principal considerations for our determination that performing procedures relating to the assessment of the realizability of the U.S. deferred tax assets is a critical audit matter are the significant judgment by management in determining the amount and period when the valuation allowance is to be released, which in turn led to a high degree of auditor judgement, subjectivity and effort in performing procedures and evaluating audit evidence relating to management’s assessment of the realizability of deferred tax assets, and management’s significant assumptions relating to estimates of continued profitability and expected utilization of deferred tax assets considering the risk they may be subject to limitation under IRC Section 382.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the assessment of the realizability of the U.S. deferred tax assets, including controls over the determination of projected taxable income and expected utilization of deferred tax assets. These procedures also included, among others (i) testing the completeness and accuracy of underlying data used by management, (ii) evaluating management’s assessment of the realizability of deferred tax assets in the U.S., and (iii) evaluating the reasonableness of management’s significant assumptions related to estimates of continued profitability and expected utilization of deferred tax assets. Evaluating management’s significant assumptions involved evaluating whether the assumptions were reasonable considering the current and past performance of the Company’s U.S. subsidiaries and whether the assumptions were consistent with evidence obtained in other areas of the audit.

/s/ PricewaterhouseCoopers LLP

Stamford, Connecticut

February 23, 2021

We have served as the Company’s auditor since 2014.

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TRONOX HOLDINGS PLC

CONSOLIDATED STATEMENTS OF OPERATIONS

(Millions of U.S. dollars, except share and per share data)

Year Ended December 31,

Contract loss — 19 —

Selling, general and administrative expenses 347 347 267

Restructuring 3 22 —

Impairment loss — — 31

Loss on extinguishment of debt (2) (3) (30)

Other income (expense), net 26 3 33

Income (loss) from continuing operations before income taxes 114 (88) 43

Income tax benefit (provision) 881 (14) (13)

Net income (loss) from continuing operations 995 (102) 30

Net income from discontinued operations, net of tax — 5 —

Net income attributable to noncontrolling interest 26 12 37

Net income (loss) attributable to Tronox Holdings plc $ 969 $ (109) $ (7)

Net income (loss) per share, basic:

Continuing operations $ 6.76 $ (0.81) $ (0.06)

Discontinued operations $ — $ 0.03 $ —

Net income (loss) per share, basic $ 6.76 $ (0.78) $ (0.06)

Net income (loss) per share, diluted:

Continuing operations $ 6.69 $ (0.81) $ (0.06)

Discontinued operations $ — $ 0.03 $ —

Net income (loss) per share, diluted $ 6.69 $ (0.78) $ (0.06)

See notes to consolidated financial statements.

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TRONOX HOLDINGS PLC

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Millions of U.S. dollars)

Year Ended December 31,

Other comprehensive income (loss):

Foreign currency translation adjustments (4) 19 (177)

Pension and postretirement plans (See Note 23):

Total pension and postretirement losses (16) (9) (5)

Other comprehensive (loss) income (20) 11 (181)

Total comprehensive income (loss) $ 975 $ (86) $ (151)

Comprehensive income (loss) attributable to noncontrolling interest:

Foreign currency translation adjustments (16) 16 (44)

Comprehensive income (loss) attributable to noncontrolling interest 10 28 (7)

See notes to consolidated financial statements.

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TRONOX HOLDINGS PLC

CONSOLIDATED BALANCE SHEETS

(Millions of U.S. dollars, except share and per share data)

December 31,

ASSETS

Current Assets

Cash and cash equivalents $ 619 $ 302

Restricted cash 29 9

Prepaid and other assets 200 143

Income taxes receivable 4 6

Noncurrent Assets

Property, plant and equipment, net 1,759 1,762

Mineral leaseholds, net 803 852

Lease right of use assets, net 81 101

LIABILITIES AND EQUITY

Current Liabilities

Short-term lease liabilities 39 38

Long-term debt due within one year 58 38

Income taxes payable 2 1

Total current liabilities 805 702

Noncurrent Liabilities

Pension and postretirement healthcare benefits 146 160

Asset retirement obligations 157 142

Environmental liabilities 67 65

Long-term lease liabilities 41 62

Deferred tax liabilities 176 184

Other long-term liabilities 42 49

Commitments and Contingencies - Note 20

Shareholders’ Equity

Capital in excess of par value 1,873 1,846

Retained Earnings (accumulated deficit) 434 (493)

Accumulated other comprehensive loss (610) (606)

Total Tronox Holdings plc shareholders’ equity 1,698 748

Noncontrolling interest 173 168

Total liabilities and equity $ 6,568 $ 5,268

See notes to consolidated financial statements.

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TRONOX HOLDINGS PLC

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Millions of U.S. dollars)

Year Ended December 31,

Cash Flows from Operating Activities:

Net income (loss) from discontinued operations, net of tax — 5 —

Net (loss) income from continuing operations 995 (102) 30

Depreciation, depletion and amortization 304 280 195

Deferred income taxes (899) (9) (21)

Share-based compensation expense 30 32 21

Amortization of deferred debt issuance costs and discount on debt 10 8 11

Loss on extinguishment of debt 2 3 30

Contract loss — 19 —

Impairment loss — — 31

Acquired inventory step-up recognized in earnings — 98 —

Other non-cash affecting net income (loss) 65 25 (9)

Changes in assets and liabilities:

(Increase) decrease in accounts receivable, net (49) 78 (11)

(Increase) decrease in inventories, net (21) (59) (47)

(Increase) decrease in prepaid and other assets (29) 20 4

Increase (decrease) in accounts payable and accrued liabilities 17 67 (51)

Net changes in income tax payables and receivables (2) (13) 10

Changes in other non-current assets and liabilities (68) (35) (23)

Cash provided by operating activities – continuing operations 355 412 170

Cash Flows from Investing Activities:

Cristal Acquisition — (1,675) —

Proceeds from sale of Ashtabula — 701 —

Insurance proceeds 1 10 —

Proceeds from sale of businesses — — 6

Proceeds from the sale of assets 1 2 1

Cash used in investing activities – continuing operations (229) (1,185) (174)

Cash Flows from Financing Activities:

Repayments of short-term debt (13) — —

Repayments of long-term debt (233) (387) (606)

Proceeds from short-term debt 13 — —

Repurchase of common stock — (288) —

Acquisition of noncontrolling interest — (148) —

Debt issuance costs (10) (4) (10)

Call premium paid — — (22)

Proceeds from the exercise of warrants and options — — 6

Discontinued Operations:

Cash provided by operating activities — 29 —

Cash used in investing activities — (1) —

Net cash flows provided by discontinued operations — 28 —

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Supplemental cash flow information - continuing operations:

Income taxes paid $ 17 $ 34 $ 28

See notes to consolidated financial statements.

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TRONOX HOLDINGS PC

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Millions of U.S. dollars)

Net (loss) income — — — (7) — (7) 37 30

Other comprehensive income — — — — (137) (137) (44) (181)

Shares cancelled (316) — (6) — — (6) — (6)

Ordinary share dividends ($0.045 per share) — — — (23) — (23) — (23)

Warrants and options exercised 553 — 6 — — 6 — 6

Other comprehensive income — — — — (5) (5) 16 11

Shares cancelled (508) — (6) — — (6) — (6)

Acquisition of noncontrolling interest — — 3 — (61) (58) (90) (148)

Cristal acquisition — — — — — — 51 51

Ordinary share dividends ($0.045 per share) — — — (27) — (27) — (27)

Other comprehensive loss — — — — (4) (4) (16) (20)

Shares cancelled (375) — (3) — — (3) — (3)

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Measurement period adjustment related to Cristal acquisition — — — — — — (3) (3)

Minority interest dividend — — — — — — (2) (2)

Ordinary share dividends ($0.07 per share) — — — (42) — (42) — (42)

See notes to consolidated financial statements.

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TRONOX HOLDINGS PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Millions of U.S. dollars, except share, per share and metric tons data or unless otherwise noted)

1. The Company

Tronox Holdings plc (referred to herein as "Tronox", the "Company", "we", "us", or "our") operates titanium-bearing mineral sand mines and smelter operations in Australia, South Africa and Brazil to produce feedstock materials that can be processed into TiO2 for pigment, high purity titanium chemicals, including titanium tetrachloride, and Ultrafine© titanium dioxide used in certain specialty applications. It is our long-term strategic goal to be vertically integrated and consume all of our feedstock materials in our own nine TiO2 pigment facilities which we operate in the United States, Australia, Brazil, UK, France, the Netherlands, China and the Kingdom of Saudi Arabia (“KSA”). We believe that vertical integration is the best way to achieve our ultimate goal of delivering low cost, high-quality pigment to our coatings and other TiO2 customers throughout the world. The mining, beneficiation and smelting of titanium bearing mineral sands creates meaningful quantities of zircon, which we also supply to customers around the world.

We are a public limited company formed under the laws of England and Wales. Tronox was formerly listed on the New York Stock Exchange as Tronox Limited, a company formed under the laws of Western Australia. However, in March 2019, we re-domiciled to the United Kingdom, and as a result of the re-domiciling, Tronox Limited became a wholly-owned subsidiary of Tronox Holdings plc. Another significant corporate milestone occurred on April 10, 2019 when we completed the acquisition from National Industrialization Company ("Tasnee") of the TiO2 business of The National Titanium Dioxide Company Limited (“Cristal”) (the “Cristal Transaction”). The Cristal Transaction doubled our size and expanded the number of TiO2 pigment facilities we operate from three to nine and gave us control of several new mines, particularly in Australia. In order to obtain regulatory approval for the Cristal Transaction, we were required to divest Cristal's North American TiO2 business, which was sold in May 2019. See Note 3 for further details on the Cristal Transaction.

Basis of Presentation

We are considered a domestic company in the United Kingdom and, as such, are required to comply with filing requirements in the United Kingdom. Additionally, we are not considered a “foreign private issuer” in the U.S.; therefore, we are required to comply with the reporting and other requirements imposed by the U.S. securities law on U.S. domestic issuers, which, among other things, requires reporting under accounting principles generally accepted in the United States of America (“U.S. GAAP”). The consolidated financial statements included in this Form 10-K are prepared in conformity with U.S. GAAP.

Our consolidated financial statements include the accounts of all majority-owned subsidiary companies. All intercompany balances and transactions have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform to the manner and presentation in the current period.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. It is at least reasonably possible that the effect on the financial statements of a change in estimate due to one or more future confirming events could have a material effect on the financial statements.

2. Significant Accounting Policies

Foreign Currency

The U.S. dollar is our reporting currency for our consolidated financial statements in U.S. GAAP. We determine the functional currency of each subsidiary based on a number of factors, including the predominant currency for revenues, expenditures and borrowings. Adjustments from the remeasurement of non-functional currency monetary assets and liabilities are recorded in “Other income (expense), net” in the Consolidated Statements of Operations. When a subsidiary’s functional currency is not the U.S. dollar, translation adjustments resulting from translating the functional currency financial statements into U.S. dollar equivalents are recorded in “Accumulated other comprehensive loss” in the Consolidated Balance Sheets.

Translation adjustments on intercompany foreign currency receivables and payables that are not expected to be settled in the foreseeable future are reported in the same manner as translation adjustments.

Revenue Recognition

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We recognize revenue at a point in time when the customer obtains control of the promised products. For most transactions this occurs when products are shipped from our manufacturing facilities or at a later point when control of the products transfers to the customer at a specified destination or time. All amounts billed to a customer in a sales transaction related to shipping and handling represent revenues earned and are reported as “Net sales” in the Consolidated Statements of Operations. Accruals are made for sales returns, rebates and other allowances, which are recorded in “Net sales” in the Consolidated Statements of Operations and are based on our historical experience and current business conditions. Additionally, we have elected the practical expedient to exclude sales taxes and similar taxes that we collect from customers on behalf of government authorities from the revenue transaction price. See Note 5.

Cost of Goods Sold

Cost of goods sold includes costs for purchasing, receiving, manufacturing, and distributing products, including raw materials, energy, labor, depreciation, depletion, shipping and handling, freight, warehousing, and other production costs.

Research and Development

Research and development costs, included in “Selling, general and administrative expenses” in the Consolidated Statements of Operations comprised of salaries, building costs, utilities, administrative expenses, third party research, and allocations of corporate costs, were $12 million, $17 million, and $11 million during 2020, 2019, and 2018, respectively, and were expensed as incurred.

Selling, General and Administrative Expenses

Selling, general and administrative expenses include costs related to marketing, research and development, agent commissions, and legal and administrative functions such as corporate management, human resources, information technology, investor relations, accounting, treasury, and tax compliance.

Income Taxes

We use the asset and liability method of accounting for income taxes. The estimation of the amounts of income taxes involves the interpretation of complex tax laws and regulations and how foreign taxes affect domestic taxes, as well as the analysis of the realizability of deferred tax assets, tax audit findings, and uncertain tax positions.

Deferred tax assets and liabilities are determined based on temporary differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided against a deferred tax asset when it is more likely than not that all or some portion of the deferred tax asset will not be realized. We periodically assess the likelihood that we will be able to recover our deferred tax assets, and reflect any changes in our estimates in the valuation allowance, with a corresponding adjustment to earnings or other comprehensive income (loss), as appropriate. All available positive and negative evidence is weighted to determine whether a valuation allowance should be recorded.

The amount of income taxes we pay is subject to ongoing audits by federal, state, and foreign tax authorities, which may result in proposed assessments. Our estimate for the potential outcome for any uncertain tax issue is highly judgmental. We assess our income tax positions, and record tax benefits for all years subject to examination based upon our evaluation of the facts, circumstances, and information available at the reporting date. For those tax positions for which it is more likely than not that a tax benefit will be sustained, we record the amount that has a greater than 50% likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. Interest and penalties are accrued as part of tax expense, where applicable. If we do not believe that it is more likely than not that a tax benefit will be sustained, no tax benefit is recognized. See Note 8.

Earnings per Share

Basic and diluted earnings per share are calculated using the two-class method. Under the two-class method, earnings used to determine basic earnings per share are reduced by an amount allocated to participating securities. Participating securities include restricted shares issued under the Tronox Management Equity Incentive Plan (the “MEIP”) (see Note 22), which contains non-forfeitable dividend rights. Our unexercised options and unvested restricted share units do not contain non-forfeitable rights to dividends and, as such, are not considered in the calculation of basic earnings per share. Our unvested restricted shares do not have a contractual obligation to share in losses; therefore, when we record a net loss, none of the loss is allocated to participating securities. Consequently, in periods of net loss, the two-class method does not have an effect on basic loss per share.

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Diluted earnings per share is calculated by dividing net earnings allocable to ordinary shares by the weighted-average number of ordinary shares outstanding for the period, as adjusted for the potential dilutive effect of non-participating restricted share units, options, and prior to February 2018 Series A and Series B Warrants. The options and Series A and Series B Warrants are included in the calculation of diluted earnings per ordinary share utilizing the treasury stock method. See Note 9.

Fair Value Measurement

We measure fair value on a recurring basis utilizing valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs, to the extent possible, and consider counterparty credit risk in our assessment of fair value. The fair value hierarchy is as follows:

•Level 1 – Quoted prices in active markets for identical assets and liabilities;

•Level 2 – Quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active or other inputs that are observable or can be corroborated by observable market data; and,

•Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities

See Note 17.

Cash and Cash Equivalents

We consider all investments with original maturities of three months or less to be cash equivalents. We maintain cash and cash equivalents in bank deposit and money market accounts that may exceed federally insured limits. The financial institutions where our cash and cash equivalents are held are generally highly rated and geographically dispersed, and we have a policy to limit the amount of credit exposure with any one institution. We have not experienced any losses in such accounts and believe we are not exposed to significant credit risk.

At December 31, 2020, we had restricted cash of $29 million comprised of $18 million in Europe related to the termination fee associated with the TTI acquisition, $10 million in Australia related to outstanding performance bonds and $1 million in Saudi Arabia related to vendor supply agreement guarantees. At December 31, 2019, included in restricted cash was $9 million primarily in Australia related to outstanding performance bonds.

Accounts Receivable, net of allowance for credit losses

We perform credit evaluations of our customers, and take actions deemed appropriate to mitigate credit risk. Only in certain specific occasions do we require collateral in the form of bank or parent company guarantees or guarantee payments. We maintain allowances for potential credit losses based on specific customer review and current financial conditions.

Inventories, net

Pigment inventories are stated at the lower of actual cost and net realizable value, net of allowances for obsolete and slow-moving inventory. The cost of inventories is determined using the first-in, first-out method. Carrying values include material costs, labor, and associated indirect manufacturing expenses. Costs for materials and supplies, excluding titanium ore, are determined by average cost to acquire. Feedstock and co-products inventories including titanium ore are stated at the lower of the weighted-average cost of production or market. Inventory costs include those costs directly attributable to products, including all manufacturing overhead but excluding distribution costs. Raw materials are carried at actual cost.

We review the cost of our inventory in comparison to its net realizable value. We also periodically review our inventory for obsolescence. In either case, we record any write-down equal to the difference between the cost of inventory and its estimated net realizable value based on assumptions about alternative uses, market conditions and other factors. Inventories expected to be sold or consumed within twelve months after the balance sheet date are classified as current assets and all other inventories are classified as non-current assets. See Note 10.

Long Lived Assets

Property, plant and equipment, net is stated at cost less accumulated depreciation, and is depreciated over its estimated useful life using the straight-line method as follows:

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Land improvements 10 — 20 years

Buildings 10 — 40 years

Machinery and equipment 3 — 25 years

Furniture and fixtures 10 years

Maintenance and repairs are expensed as incurred, except for costs of replacements or renewals that improve or extend the lives of existing properties, which are capitalized. Upon retirement or sale, the cost and related accumulated depreciation are removed from the respective account, and any resulting gain or loss is included in “Cost of goods sold” or “Selling, general, and administrative expenses” in the Consolidated Statements of Operations. See Note 11.

We capitalize interest costs on major projects that require an extended period of time to complete. See Note 15.

Mineral property acquisition costs are capitalized as tangible assets when management determines that probable future benefits consisting of a contribution to future cash inflows have been identified and adequate financial resources are available or are expected to be available as required to meet the terms of property acquisition and anticipated exploration and development expenditures. Mineral leaseholds are depleted over their useful lives as determined under the units of production method. Mineral property exploration costs are expensed as incurred. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs incurred to develop such property through the commencement of production are capitalized. See Note 12.

Intangible assets are stated at cost less accumulated amortization and are amortized on a straight-line basis over their estimated useful lives, which generally range from 3 to 20 years. See Note 13.

We evaluate the recoverability of the carrying value of long-lived assets that are held and used whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Under such circumstances, we assess whether the projected undiscounted cash flows of our long-lived assets are sufficient to recover the carrying amount of the asset group being assessed. If the undiscounted projected cash flows are not sufficient, we calculate the impairment amount by discounting the projected cash flows using our weighted-average cost of capital. For assets that satisfy the criteria to be classified as held for sale, an impairment loss, if any, is recognized to the extent the carrying amount exceeds fair value, less cost to sell. The amount of the impairment of long-lived assets is written off against earnings in the period in which the impairment is determined.

Business Acquisitions

Business acquisitions are accounted for using the acquisition method under Accounting Standards Codification (“ASC”) 805, Business Combinations (“ASC 805”), which requires recording assets acquired and liabilities assumed at fair value as of the acquisition date. Under the acquisition method of accounting, each tangible and separately identifiable intangible asset acquired and liabilities assumed is recorded based on their preliminary estimated fair values on the acquisition date. The initial valuations are derived from estimated fair value assessments and assumptions used by management. Acquisition related costs are expensed as incurred and are included in “Selling, general and administrative expenses” in the Consolidated Statements of Operations.

Leases

We determine if a contract is or contains a lease at inception of the contract. Our leases are primarily operating leases. Leased assets primarily include office buildings, rail cars and motor vehicles, forklifts, and other machinery and equipment. Our leases primarily have fixed lease payments, with real estate leases typically requiring additional payments for real estate taxes and occupancy-related costs. Certain of our leases also have variable lease payments. Variable lease payments that depend on an index or a rate (such as the Consumer Price Index) are included in our initial measurement of the lease right of use assets and lease liabilities. Variable lease payments that are not index or rate based (such as variable payments based on our performance or use of the leased assets) are recorded as expenses when incurred and excluded from the measurement of right of use assets and lease liabilities. Our leases typically have initial lease terms ranging from 1 to 25 years. Some of our lease agreements include options to renew, extend or early terminate the leases. Lease term is the non-cancellable period of a lease, adjusted by the period covered by an option to extend or terminate the lease if we are reasonably certain to exercise (or not exercise) that option. Our operating leases typically do not contain purchase options we expect to exercise, residual value guarantees or other material covenants.

Operating leases are recorded under “Lease right of use assets”, “Short-term lease liabilities”, and “Long-term lease liabilities” on the Consolidated Balance Sheets. Finance leases are recorded under “Property, plant and equipment net”, “Long-term debt due within one year”, and “Long-term debt” on the Consolidated Balance Sheets. Operating lease right of use ("ROU") assets and lease liabilities are initially recorded at the present value of the future minimum lease payments over the lease term at the commencement date or the acquisition date for leases acquired in the Cristal Transaction. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the lease commencement date in

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determining the present value of future payments. Lease payments for the initial measurement of lease ROU assets and lease liabilities include fixed payments and variable payments that depend on an index or a rate. Variable lease payments that are not index or rate based are recorded as expenses when incurred. Operating lease ROU assets are amortized on a straight-line basis over the period of the lease. Finance lease ROU assets are amortized on a straight-line basis over the shorter of their estimated useful lives of leased asset and the lease terms. See Note 18.

Long-term Debt

Long-term debt is stated net of unamortized original issue premium or discount. Premiums or discounts are amortized using the effective interest method with amortization expense recorded in “Interest and debt expense, net” in the Consolidated Statements of Operations. Deferred debt issuance costs related to a recognized debt liability are presented in the Consolidated Balance Sheets as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts and are amortized using the effective interest method with amortization expense recorded in “Interest and debt expense, net” in the Consolidated Statements of Operations. See Note 15.

Asset Retirement Obligations

Asset retirement obligations are recorded at their estimated fair value, and accretion expense is recognized over time as the discounted liability is accreted to its expected settlement value. Fair value is measured using expected future cash outflows discounted at our credit-adjusted risk-free interest rate, which are considered Level 3 inputs. We classify accretion expense related to asset retirement obligations as a production cost, which is included in “Cost of goods sold” in the Consolidated Statements of Operations. See Note 19.

Environmental Remediation and Other Contingencies

We record an undiscounted liability when litigation has commenced or a claim or assessment has been asserted, or, based on available information, commencement of litigation or assertion of a claim or assessment is probable, and the associated costs can be reasonably estimated. See Note 20.

Self-Insurance

We are self-insured for certain levels of general and vehicle liability, property, workers’ compensation and health care coverage. The cost of these self-insurance programs is accrued based upon estimated fully developed settlements for known and anticipated claims. Any resulting adjustments to previously recorded reserves are reflected in current operating results. We do not accrue for general or unspecific business risks.