Financial Performance - For the first nine months of 2024, the company reported net income of $99.4 million, or $0.86 per share, compared to a net loss of $43.8 million, or $0.38 per share, in the same period of 2023[73]. - The company experienced a net income of $71.8 million, or $0.62 per share, in the third quarter of 2024, compared to a net loss of $20.4 million, or $0.18 per share, in the third quarter of 2023[73]. - Net sales in Q3 2024 increased by 22%, or $87.8 million, compared to Q3 2023, driven by a 21% increase in sales volumes[87]. - Net sales for the first nine months of 2024 increased by 16%, or $197.6 million, compared to the same period in 2023, primarily due to a 26% increase in sales volumes[97]. - Income from operations was $38.9 million in Q3 2024, compared to a loss of $25.3 million in Q3 2023, aided by favorable currency exchange rates[93]. Sales and Production - The average TiO2 selling prices increased by 4% during the first nine months of 2024, although they were still 7% lower than the average prices during the first nine months of 2023[80]. - Sales volumes of TiO2 increased by 21% in the third quarter of 2024 compared to the same period in 2023, reaching 130 thousand metric tons[86]. - Sales volumes increased by 21% in Q3 2024 due to higher overall demand across all major markets[88]. - Cost of sales increased by $21.0 million, or 6%, in Q3 2024, with a significant contribution from a 21% increase in sales volumes[89]. - The company operated at 93% of practical capacity utilization in the first nine months of 2024, a significant increase from 71% in the same period of 2023[81]. Cost Management - The cost of sales per metric ton of TiO2 sold in the first nine months of 2024 was significantly lower compared to the same period in 2023, primarily due to decreases in production costs[83]. - Cost of sales as a percentage of net sales decreased to 81% in the first nine months of 2024 from 91% in the same period of 2023[99]. - Gross margin as a percentage of net sales improved to 21% in Q3 2024 from 9% in Q3 2023, primarily due to higher sales and production volumes[91]. - Gross margin as a percentage of net sales increased to 19% in the first nine months of 2024 from 9% in the same period of 2023[100]. - The company implemented cost reduction initiatives throughout 2023, which began to positively impact gross margins in 2024[114]. Investments and Acquisitions - The company acquired the remaining 50% interest in Louisiana Pigment Company for $185 million, with an additional potential earn-out payment of up to $15 million based on EBITDA for 2025 and 2026[72]. - The company recognized a non-cash, pre-tax gain of $64.5 million from the measurement of its investment in LPC in the first nine months of 2024[74]. - The company recognized a gain of $64.5 million on the remeasurement of its investment in LPC in Q3 2024 due to the acquisition[94]. - The LPC acquisition was financed through borrowings of $132.1 million under the Global Revolver, with the remaining amount paid in cash[126]. Cash Flow and Debt Management - Cash provided by operating activities was $23.2 million in the first nine months of 2024, a significant increase of $82.1 million compared to cash used of $58.9 million in the same period of 2023[118]. - As of September 30, 2024, the company's consolidated debt included €351.174 million on 9.50% Senior Secured Notes due March 2029 and $53.7 million on a subordinated term loan from Contran[125]. - The quarterly dividend rate was reduced from $0.19 per share to $0.05 per share to manage increased debt service costs and working capital needs[115]. - The company is in compliance with all debt covenants as of September 30, 2024, and expects to maintain compliance through the maturity of its credit facility[127]. Market Outlook - The company anticipates long-term demand growth for TiO2 of 2% to 3% per year, consistent with GDP growth expectations[69]. - The company expects sales volumes in 2024 to exceed those of 2023, despite a moderation in customer demand during the third quarter[113]. - The TiO2 industry is cyclical, and changes in pricing, production volumes, and customer demand could significantly affect the company's liquidity[131]. Operational Metrics - The average days sales outstanding (DSO) increased to 68 days as of September 30, 2024, while days sales in inventory (DSI) decreased to 60 days[122]. - As of September 30, 2024, approximately $268 million was available for borrowings under the Global Revolver, which was amended to increase the maximum borrowing amount from $225 million to $300 million and extend the maturity date to July 2029[126]. - The company intends to invest approximately $42 million in capital expenditures during 2024, including $17.2 million spent through September 30, 2024[134]. - The company has 1,017,518 shares available for repurchase under its stock repurchase program as of September 30, 2024[135].

Core Viewpoint - Kronos Worldwide, Inc. (KRO) is expected to benefit from increased demand for titanium dioxide (TiO2) and reduced pricing pressure, alongside cost-reduction initiatives that will support margins [1] Group 1: Stock Performance - KRO has outperformed its industry over the past year, with shares increasing by 32.8% compared to a 9.6% decline in the industry [2] - The Zacks Consensus Estimate for KRO's earnings in 2024 is projected at 88 cents, indicating a year-over-year growth of 304.7% [2] Group 2: Earnings Estimates - Earnings estimates for KRO have been revised upward over the past 60 days, with the 2024 estimate increasing by 3.5% and the third-quarter estimate rising by 9.7% [3] Group 3: Demand and Production - KRO is well-positioned to benefit from higher TiO2 demand, with consumption growing at a compound annual growth rate of approximately 2% since 2000 [4] - The company anticipates that sales volumes in 2024 will exceed those of 2023 due to improved demand [5] Group 4: Cost Management - KRO is implementing cost-reduction strategies and aligning production with expected demand, which is expected to enhance margins [6] - The company expects to report improved margins in 2024 due to reduced energy costs, cost-cutting initiatives, and sustained selling price increases [7]

Earnings Performance - Kronos Worldwide reported Q2 2024 earnings of 17 cents per share, compared to a loss of 7 cents per share in the same quarter last year, but missed the Zacks Consensus Estimate of 21 cents [2] - Net sales increased by approximately 12.9% year over year to $500.5 million, driven by higher sales volumes due to stronger demand for TiO2, although it missed the Zacks Consensus Estimate of $504.2 million [3] Production and Sales Volumes - TiO2 production volumes rose by 53.9% year over year to 137 thousand metric tons in Q2 [4] - TiO2 sales volumes increased by 28.8% to 134 thousand metric tons during the same period [4] - TiO2 segment profit was $41.1 million, a significant improvement from a segment loss of $2.3 million a year ago, primarily due to increased sales and production volumes [4] Financial Position - At the end of the quarter, Kronos had cash and cash equivalents of $133.8 million, a decrease of roughly 22% year over year [5] - Long-term debt decreased by 6% to $423.7 million [5] Future Outlook - The company anticipates continued improvement in demand for 2024, with expected sales volumes higher than in 2023 [6] - Kronos has increased production rates in response to current and anticipated demand, expecting these rates to remain elevated for the remainder of 2024 [6] - The company has implemented TiO2 price hikes that need to be sustained to achieve historical margin levels [6] Estimate Trends - In the past month, there has been a downward trend in fresh estimates for Kronos, with the consensus estimate shifting down by 6.8% [7] - Despite the downward estimate revisions, Kronos holds a Zacks Rank 2 (Buy), indicating expectations for above-average returns in the coming months [10] Industry Comparison - Kronos Worldwide is part of the Zacks Chemical - Diversified industry, where Eastman Chemical has seen a 2.7% gain over the past month [11] - Eastman Chemical reported revenues of $2.36 billion for the last quarter, reflecting a year-over-year change of +1.7% [11]

Investors interested in Basic Materials stocks should always be looking to find the best-performing companies in the group. Has Kronos Worldwide (KRO) been one of those stocks this year? A quick glance at the company's year-to-date performance in comparison to the rest of the Basic Materials sector should help us answer this question. Kronos Worldwide is a member of the Basic Materials sector. This group includes 236 individual stocks and currently holds a Zacks Sector Rank of #15. The Zacks Sector Rank gau ...

Kronos Worldwide, Inc.'s (KRO) shares have shot up 31% over the past six months. The rally has resulted in the stock outperforming its industry's increase of 3.1% over the same time frame. KRO has also topped the S&P 500's roughly 8.9% rise over the same period. Let's dive into the factors behind this Zacks Rank #2 (Buy) stock's price appreciation. Image Source: Zacks Investment Research Higher TiO2 Demand, Cost Actions Drive KRO KRO is well-placed to benefit from higher demand for TiO2 in major markets. Pe ...

The Basic Materials group has plenty of great stocks, but investors should always be looking for companies that are outperforming their peers. Is Kronos Worldwide (KRO) one of those stocks right now? Let's take a closer look at the stock's year-to-date performance to find out. Kronos Worldwide is one of 236 individual stocks in the Basic Materials sector. Collectively, these companies sit at #12 in the Zacks Sector Rank. The Zacks Sector Rank gauges the strength of our 16 individual sector groups by measuri ...

Kronos Worldwide, Inc. (KRO) reported second-quarter 2024 earnings of 17 cents per share against a loss of 7 cents incurred in the year-ago quarter. However, the figure missed the Zacks Consensus Estimate of 21 cents. Net sales increased around 12.9% year over year to $500.5 million due to higher sales volumes as a result of stronger demand for titanium dioxide (TiO2) in all of KRO's major markets, which was somewhat offset by lower average TiO2 selling prices. The top line, however, missed the Zacks Consen ...

Kronos Worldwide (KRO) came out with quarterly earnings of $0.17 per share, missing the Zacks Consensus Estimate of $0.21 per share. This compares to loss of $0.07 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of -19.05%. A quarter ago, it was expected that this maker of titanium dioxide pigments would post earnings of $0.04 per share when it actually produced earnings of $0.07, delivering a surprise of 75%. Over the last four ...

[Executive Summary & Financial Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Financial%20Highlights) Kronos Worldwide, Inc. achieved a significant financial turnaround in Q2 and H1 2024, reversing prior year net losses due to higher sales, production, and lower costs [Overall Financial Performance](index=1&type=section&id=Overall%20Financial%20Performance) The company achieved net income in Q2 and H1 2024, reversing prior year losses, driven by higher income from operations, increased sales, and reduced production costs Net Income and EPS Performance (YoY) | Metric | Q2 2024 | Q2 2023 | H1 2024 | H1 2023 | | :-------------------- | :------ | :------ | :------ | :------ | | Net Income (Millions USD) | $19.5 | $(8.2) | $27.6 | $(23.4) | | EPS (per share) | $0.17 | $(0.07) | $0.24 | $(0.20) | - Net income increased in 2024 periods primarily due to higher income from operations, resulting from higher sales and production volumes and lower production costs (energy, raw materials), partially offset by lower average TiO2 selling prices[1](index=1&type=chunk) - Demand for products improved in all major markets in Q1 and Q2 2024, contributing to improved profitability[1](index=1&type=chunk) [Net Sales Analysis](index=1&type=section&id=Net%20Sales%20Analysis) Net sales increased by 13% in Q2 and H1 2024, driven by higher TiO2 sales volumes, offsetting lower average selling prices, with minor currency impact Net Sales and Volume Changes (YoY) | Metric | Q2 2024 | Q2 2023 | Change (YoY) | H1 2024 | H1 2023 | Change (YoY) | | :-------------------- | :------ | :------ | :----------- | :------ | :------ | :----------- | | Net Sales (Millions USD) | $500.5 | $443.2 | +13% | $979.3 | $869.5 | +13% | | TiO2 Sales Volumes (%) | 29% higher | - | +29% | 28% higher | - | +28% | | Average TiO2 Selling Prices (%) | 8% lower | - | -8% | 9% lower | - | -9% | - Changes in currency exchange rates (primarily the euro) increased net sales by approximately **$2 million in Q2 2024** and **$6 million in H1 2024**[2](index=2&type=chunk) [TiO2 Segment Performance](index=1&type=section&id=TiO2%20Segment%20Performance) The TiO2 segment returned to profitability in Q2 and H1 2024, driven by higher production volumes, improved capacity utilization, and lower costs, partially offset by specific charges TiO2 Segment Profit and Production Volumes (YoY) | Metric | Q2 2024 | Q2 2023 | H1 2024 | H1 2023 | | :-------------------- | :------ | :------ | :------ | :------ | | TiO2 Segment Profit (Millions USD) | $41.1 | $(2.3) | $64.5 | $(17.1) | | TiO2 Production Volumes (%) | 54% higher | - | +54% | 33% higher | - | +33% | | Capacity Utilization (H1) (%) | 93% | 70% | - | - | - Unabsorbed fixed production costs decreased significantly to **$12 million in H1 2024** (incurred in Q1) from **$54 million in H1 2023**[3](index=3&type=chunk) - Segment profit in Q2 and H1 2024 includes a **$2 million charge for workforce reductions** and approximately **$10 million in non-cash charges** for accelerated depreciation related to the closure of a sulfate process line in Canada[3](index=3&type=chunk) [EBITDA and Other Operational Items](index=3&type=section&id=EBITDA%20and%20Other%20Operational%20Items) EBITDA grew substantially in Q2 and H1 2024, reflecting improved operational performance, including specific charges and gains like a deferred financing cost write-off EBITDA Performance (YoY) | Metric | Q2 2024 | Q2 2023 | H1 2024 | H1 2023 | | :-------------------- | :------ | :------ | :------ | :------ | | EBITDA (Millions USD) | $56.2 | $3.6 | $87.9 | $1.4 | - Currency exchange rates decreased segment profit by approximately **$3 million** in both Q2 and H1 2024 comparisons[4](index=4&type=chunk) - H1 2024 income from operations includes a **$1.5 million charge** for a write-off of deferred financing costs[4](index=4&type=chunk) - H1 2023 loss from operations included a **$2.2 million insurance settlement gain** and a **$1.3 million settlement loss** related to a UK pension plan termination[5](index=5&type=chunk) [Strategic Initiatives and Capital Structure](index=3&type=section&id=Strategic%20Initiatives%20and%20Capital%20Structure) Kronos Worldwide acquired full ownership of Louisiana Pigment Company, adjusted its capital structure, and revised its dividend policy for financial flexibility [Louisiana Pigment Company (LPC) Acquisition](index=3&type=section&id=Louisiana%20Pigment%20Company%20(LPC)%20Acquisition) Kronos Worldwide acquired the remaining 50% interest in LPC for $185 million cash, making it a wholly-owned subsidiary to enhance growth and achieve synergies - Acquired the remaining **50% joint venture interest** in Louisiana Pigment Company, L.P. (LPC), making it an indirect, wholly-owned subsidiary[6](index=6&type=chunk) - Acquisition cost: **$185 million upfront cash payment** (subject to working capital adjustments) and a potential earn-out payment of up to **$15 million**[6](index=6&type=chunk) - Financing: **$132 million borrowed** under the global revolving credit facility, with the remainder from cash on hand[6](index=6&type=chunk) - Strategic benefits include strengthening competitive footprint in North America, expanding product offerings, significant synergies (logistical cost optimization, commercial/overhead efficiencies), and opportunity to increase LPC's annual production capacity (currently **156,000 metric tons**)[7](index=7&type=chunk) [Financing Activities and Liquidity Management](index=3&type=section&id=Financing%20Activities%20and%20Liquidity%20Management) Kronos amended its Global Revolver, increasing borrowing capacity and extending maturity, and issued new notes to reduce revolver borrowings, supporting liquidity - Completed an amendment to the Global Revolver, increasing maximum borrowing to **$300 million** (from **$225 million**), extending maturity to **2029**, and expanding the borrowing base to include LPC and its receivables/inventories[8](index=8&type=chunk) - Issued an additional **€75 million principal amount of 9.50% Senior Secured Notes due 2029**, generating net proceeds of approximately **$90 million**[8](index=8&type=chunk) - Proceeds from the Additional New Notes were used to pay down borrowings under the Global Revolver[8](index=8&type=chunk) [Dividend Policy Update](index=3&type=section&id=Dividend%20Policy%20Update) Effective Q3 2024, the company reduced its quarterly dividend to $0.05 per share to enhance financial flexibility and support strategic investments - Lowered quarterly dividend to **$0.05 per share**, effective beginning in the **third quarter of 2024**[7](index=7&type=chunk) - The dividend reduction provides flexibility to absorb increased debt service costs, manage working capital, reduce leverage, and support strategic capital investment opportunities[7](index=7&type=chunk) [Non-GAAP Financial Measures Explanation](index=5&type=section&id=Non-GAAP%20Financial%20Measures%20Explanation) Kronos Worldwide provides non-GAAP financial measures, Segment Profit and EBITDA, to offer additional insights into TiO2 operations performance and management's assessment [Definition of Segment Profit](index=5&type=section&id=Definition%20of%20Segment%20Profit) Segment profit is a non-GAAP measure used by management to evaluate TiO2 operations, defined as net income before income tax expense and certain general corporate items - Segment profit is used by management to assess the performance of the Company's TiO2 operations[11](index=11&type=chunk) - Defined as net income before income tax expense and certain general corporate items (corporate expense and components of other income/expense except trade interest income)[11](index=11&type=chunk) [Definition of EBITDA](index=5&type=section&id=Definition%20of%20EBITDA) EBITDA is a non-GAAP measure used by management to assess TiO2 operations, calculated as net income before interest expense, income taxes, and depreciation and amortization - EBITDA is used by management to assess the performance of the Company's TiO2 operations[11](index=11&type=chunk) - Defined as net income before interest expense, income taxes and depreciation and amortization expense[11](index=11&type=chunk) [Condensed Consolidated Financial Information](index=5&type=section&id=Condensed%20Consolidated%20Financial%20Information) This section presents condensed consolidated financial statements, including operations, segment profit, and EBITDA reconciliations, detailing financial performance and key drivers [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The condensed consolidated statements show significant improvements in gross margin, income from operations, and net income for Q2 and H1 2024, driven by increased TiO2 sales and production Condensed Consolidated Statements of Operations (Millions USD, except per share and metric ton data) | Metric | Q2 2023 | Q2 2024 | H1 2023 | H1 2024 | | :------------------------------------------------ | :------ | :------ | :------ | :------ | | Net sales | $443.2 | $500.5 | $869.5 | $979.3 | | Cost of sales | 399.1 | 400.3 | 794.6 | 807.6 | | Gross margin | 44.1 | 100.2 | 74.9 | 171.7 | | Selling, general and administrative expense | 50.1 | 57.9 | 103.3 | 112.1 | | Income (loss) from operations | (6.7) | 35.9 | (25.0) | 55.4 | | Net income (loss) | $(8.2) | $19.5 | $(23.4) | $27.6 | | Net income (loss) per basic and diluted share (per share) | $(0.07) | $0.17 | $(0.20) | $0.24 | | TiO2 Sales volumes (thousands metric tons) | 104 | 134 | 206 | 264 | | TiO2 Production volumes (thousands metric tons) | 89 | 137 | 194 | 258 | [Reconciliation of Segment Profit (Loss)](index=7&type=section&id=Reconciliation%20of%20Segment%20Profit%20(Loss)) This reconciliation demonstrates segment profit (loss) calculation from income (loss) from operations, adjusting for trade interest income and corporate expense, showing a strong return to profitability Reconciliation of Income (Loss) from Operations to Segment Profit (Loss) (Millions USD) | Metric | Q2 2023 | Q2 2024 | H1 2023 | H1 2024 | | :-------------------------- | :------ | :------ | :------ | :------ | | Income (loss) from operations | $(6.7) | $35.9 | $(25.0) | $55.4 | | Adjustments: | | | | | | Trade interest income | 0.4 | 1.5 | 0.7 | 1.9 | | Corporate expense | 4.0 | 3.7 | 7.2 | 7.2 | | Segment profit (loss) | $(2.3) | $41.1 | $(17.1) | $64.5 | [Reconciliation of Net Income (Loss) to EBITDA](index=7&type=section&id=Reconciliation%20of%20Net%20Income%20(Loss)%20to%20EBITDA) The reconciliation of net income (loss) to EBITDA illustrates improved core operating profitability by adding back non-cash and non-operating expenses like depreciation, interest, and taxes Reconciliation of Net Income (Loss) to EBITDA (Millions USD) | Metric | Q2 2023 | Q2 2024 | H1 2023 | H1 2024 | | :-------------------------- | :------ | :------ | :------ | :------ | | Net income (loss) | $(8.2) | $19.5 | $(23.4) | $27.6 | | Adjustments: | | | | | | Depreciation expense | 11.6 | 18.4 | 24.5 | 29.3 | | Interest expense | 4.3 | 9.8 | 8.5 | 19.0 | | Income tax expense (benefit) | $(4.1) | $8.5 | $(11.0) | $12.0 | | EBITDA | $3.6 | $56.2 | $(1.4) | $87.9 | [Impact of Percentage Change in Net Sales](index=7&type=section&id=Impact%20of%20Percentage%20Change%20in%20Net%20Sales) This table details factors contributing to the 13% net sales increase for Q2 and H1 2024, showing higher TiO2 sales volumes as the primary driver, partially offset by lower pricing and mix Impact of Percentage Change in Net Sales | Factor | Q2 2024 vs 2023 (%) | H1 2024 vs 2023 (%) | | :-------------------------- | :-------------- | :-------------- | | TiO2 sales volumes | 29 % | 28 % | | TiO2 product pricing | (8) % | (9) % | | TiO2 product mix/other | (8) % | (7) % | | Changes in currency exchange rates | - % | 1 % | | **Total** | **13 %** | **13 %** | [Forward-Looking Statements and Risk Factors](index=3&type=section&id=Forward-Looking%20Statements%20and%20Risk%20Factors) This section highlights substantial risks and uncertainties for Kronos Worldwide's forward-looking statements, where actual results may differ due to market dynamics, operational challenges, and economic changes - Future results are subject to substantial risks and uncertainties, including supply and demand for products, ability to realize cost savings and integrate acquisitions (LPC)[9](index=9&type=chunk)[10](index=10&type=chunk) - Risks include dependence on market sectors, business cyclicality, changes in raw material and operating costs, and availability of raw materials[10](index=10&type=chunk) - Global economic and political conditions, operating interruptions, technology-related disruptions, competitive factors, and fluctuations in currency exchange rates and interest rates are significant risks[10](index=10&type=chunk) - Other factors include liquidity, tax matters, environmental regulations, government laws, and potential litigation[10](index=10&type=chunk)

Group 1 - Kronos Worldwide (KRO) has experienced significant selling pressure, resulting in a 19.2% decline in stock price over the past four weeks, but it is now considered to be in oversold territory [1] - Wall Street analysts anticipate that KRO will report better earnings than previously predicted, with a consensus EPS estimate increase of 13.4% over the last 30 days [3] - The Relative Strength Index (RSI) for KRO is currently at 29.59, indicating that the heavy selling may be exhausting itself, suggesting a potential bounce back in stock price [3] Group 2 - KRO holds a Zacks Rank 1 (Strong Buy), placing it in the top 5% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, indicating a strong potential for a turnaround [3]